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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
WORLDWAY CORPORATION
(Name of Subject Company)
WORLDWAY CORPORATION
(Title of Person Filing Statement)
COMMON STOCK, $.50 PAR VALUE PER SHARE
(Name of Class of Securities)
98155F 10 3
(CUSIP Number of Class of Securities)
JOHN B. YORKE
VICE PRESIDENT AND GENERAL COUNSEL
WORLDWAY CORPORATION
400 TWO COLISEUM CENTER, 2400 YORKMONT ROAD
CHARLOTTE, NORTH CAROLINA 28217
(704) 329-0123
(Name, Address and Telephone Number of Person Authorized to Receive Notice and
Communications on Behalf of the Person Filing Statement)
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COPIES TO:
ROBIN L. HINSON
ROBINSON, BRADSHAW & HINSON, P.A.
1900 INDEPENDENCE CENTER
101 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28246
(704) 377-2536
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is WorldWay Corporation, a North Carolina
corporation (the "Company"), and the address of the principal executive offices
of the Company is 400 Two Coliseum Center, 2400 Yorkmont Road, Charlotte, North
Carolina 28217. The title of the class of equity securities to which this
Statement relates is the common stock, $.50 par value per share (the "Shares"),
of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to the tender offer by ABC Acquisition Corporation,
a North Carolina corporation (the "Purchaser"), which is a wholly owned
subsidiary of Arkansas Best Corporation, a Delaware corporation (the "Parent"),
disclosed in a Tender Offer Statement on Schedule 14D-1 dated July 14, 1995 (the
"Schedule 14D-1"), to purchase all of the outstanding Shares at a price of
$11.00 per Share, net to seller in cash (the "Offer Price"), upon the terms and
conditions set forth in the Offer to Purchase dated July 14, 1995 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together constitute
the "Offer" and are contained within the Schedule 14D-1). Capitalized terms used
herein and not otherwise defined herein have the meanings assigned thereto in
the Offer.
The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of shares that represents at least a majority of the Shares outstanding
on a fully diluted basis (the "Minimum Condition"). See Offer to
Purchase -- "Introduction -- The Offer -- Terms of the Offer."
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of July 8, 1995, by and among Parent, the Purchaser, and the Company (the
"Merger Agreement"). The Merger Agreement provides that, following completion of
the Offer and subject to the terms and conditions of the Merger Agreement, the
Purchaser will be merged with and into the Company (the "Merger"), with the
Company being the surviving corporation (the "Surviving Corporation"). At the
time the Merger is effective, each Share then outstanding (other than Shares
held by the Purchaser, Parent, the Company or any of their respective
subsidiaries and other than Shares held by shareholders who have exercised the
right (to the extent such right is available by law) to demand and to receive
the fair value of such Shares (the "Dissenting Shares") under Article 13 of the
North Carolina Business Corporation Act (the "NCBCA")) will be cancelled and
converted into the right to receive from the Surviving Corporation $11.00 in
cash (the "Merger Consideration"). A copy of the Merger Agreement is filed
herewith as Exhibit 1 and incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding and
each actual or potential conflict of interest between the Company or its
affiliates and (i) its executive officers, directors or affiliates or (ii) the
Purchaser, its executive officers, directors, or affiliates is described in the
attached Annex I (which is incorporated herein by reference) or set forth below.
THE MERGER AGREEMENT
The summary of the Merger Agreement contained in the Offer to Purchase
which has been filed with the Securities and Exchange Commission (the
"Commission") as an exhibit to the Schedule 14D-1, a copy of which is enclosed
with this Schedule 14D-9, is incorporated herein by reference. Such summary
should be read in its entirety for a more complete description of the terms and
provisions of the Merger Agreement. The following is a summary of certain
portions of the Merger Agreement that describe the terms of the Offer and that
relate to arrangements among the Company, Parent and the Company's executive
officers and directors.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the initial public announcement of
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the Offer. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 15 of the Offer to
Purchase. Purchaser and Parent have agreed with the Company that, without the
prior written consent of the Company, no change in the Offer may be made that
decreases the price per Share payable in the Offer, that changes the form of
consideration payable in the Offer, that reduces the number of Shares sought
pursuant to the Offer, that modifies or adds to the conditions set forth in the
Merger Agreement, or that changes or waives the condition that there shall have
been validly tendered and not withdrawn prior to the expiration that number of
Shares that represents at least a majority of the Shares outstanding on a fully
diluted basis.
The Purchaser may, without the consent of the Company, extend the Offer (i)
beyond any scheduled expiration date if at such scheduled expiration date any of
the conditions to the Purchaser's obligation to accept for payment, and pay for,
Shares are not satisfied or waived, until such time as such conditions are
satisfied or waived and (ii) for any period required by any rule, regulation,
interpretation or position of the Commission or staff thereof applicable to the
Offer.
Board of Directors. The Merger Agreement provides that, promptly upon the
acceptance for payment of any Shares by the Purchaser pursuant to the Offer, the
Purchaser shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as will give the
Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors equal to at least that number of
directors that equals the product of the total number of directors on such Board
(giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Shares held by the Purchaser,
including Shares accepted for payment pursuant to the Offer, bears to the number
of Shares then outstanding, and the Company and its Board of Directors shall, at
such time, take any and all such action needed to cause the Purchaser's
designees to be appointed to the Company's Board of Directors (including to
cause directors to resign).
Indemnification and Insurance. The Merger Agreement provides that Parent
and the Surviving Corporation agree that the indemnification obligations set
forth in the Company's Articles of Incorporation, as amended, and the Amended
and Restated By-laws on the date of the Merger Agreement and the indemnification
obligations set forth on a schedule to the Merger Agreement shall survive the
Merger and shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who on or prior to the Effective Time were
directors, officers, employees or agents of the Company (the "Indemnified
Parties").
The Merger Agreement provides that for six years from the Effective Time
the Surviving Corporation shall either (x) maintain in effect the Company's
current directors' and officers' liability insurance covering those persons who
are covered on the date of the Merger Agreement by the Company's directors' and
officers' liability insurance policy; provided, however, that in no event shall
the Surviving Corporation be required to expend in any one year an amount in
excess of 200% of the annual premiums currently paid by the Company for such
insurance which the Company represented to be $105,000 for the twelve-month
period ended May 12, 1996; and, provided, further, that if the annual premiums
of such insurance coverage exceed such amount, the Surviving Corporation shall
be obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount or (y) cause Parent's directors' and officers'
liability insurance then in effect to cover those persons who are covered on the
date of the Merger Agreement by the Company's directors' and officers' liability
insurance policy with respect to those matters covered by the Company's
directors' and officers' liability policy (such coverage to be not less
favorable than the coverage provided under such policy to Parent's directors and
officers). Notwithstanding the foregoing, on and after the date two years from
the Effective Time, Parent, at its option, may agree in writing to guarantee or
assume indemnification obligations in lieu of maintaining the insurance
described in clauses (x) or (y) above.
For two years from the Effective Time, the Surviving Corporation shall
maintain in effect the Company's current or similar professional liability
insurance with respect to Company employee attorneys so long as premium amounts
do not exceed $8,000 per year; provided, however, that if the annual premiums of
such
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insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
AGREEMENTS WITH OFFICERS AND DIRECTORS
The Company entered into an employment agreement with Mr. Scott on June 2,
1995 that terminates three (3) years after either party gives notice of
termination. The contract calls for annual compensation of not less than
$250,000 and certain other benefits and perquisites. The agreement also
prohibits Mr. Scott from competing with the Company, or any subsidiary of the
Company, during the term of the Agreement and for six months thereafter. A copy
of the employment agreement is filed herewith as Exhibit 8 and incorporated by
reference herein.
The Company and certain executives, including Messrs. Scott and Hertwig,
have entered into certain amendments to the severance agreements between the
Company and such executives (described in Annex I -- "Compensation of
Officers -- Officer Severance Agreements"). The amendments provide that,
following a change of control, if the officer's employment is terminated for any
reason (including resignation) during the six-month period after the first
anniversary of the change of control, the officer will be entitled to receive a
payment in cash equal to 2.99 times his average W-2 earnings for the five-year
period that immediately precedes the year in which termination occurs. A form of
such amendments is filed herewith as Exhibit 9 and incorporated by reference
herein.
On June 2, 1995, the Company granted certain stock options to certain
executive officers of the Company pursuant to its 1995 Nonqualified Stock Option
Plan, which is described in the Proxy Statement distributed in connection with
the Company's annual meeting of shareholders on May 3, 1995, the pertinent
portion of which is filed herewith as Exhibit 10 and incorporated herein by
reference. See Item 6 below, which is incorporated herein by reference.
CERTAIN CONFLICTS
Vesting of stock options granted to executive officers and directors under
certain of the Company's stock option plans is accelerated under certain
circumstances involving a change of control of the Company. The Company has
entered into severance agreements with certain executives, including Messrs.
Scott and Hertwig, that provide for continued compensation in the event of
certain qualifying terminations of their employment within 24 months after a
change of control. The benefits payable to certain officers of the Company and
its subsidiaries under the Company's Supplemental Benefit Plan are subject to
accelerated payment in the event of a change of control of the Company. The
acquisition of Shares in the Offer will constitute a change of control under
such stock option plans, such severance agreements, and the Supplemental Benefit
Plan. See Annex I -- "Compensation of Officers."
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS. The Board of Directors has
unanimously approved the Merger Agreement and the transactions contemplated
thereby and recommends that the shareholders of the Company accept the Offer and
tender all of their Shares pursuant to the Offer.
(b) BACKGROUND; REASONS FOR THE RECOMMENDATION. The Company is a holding
company with headquarters in Charlotte, North Carolina. The Company was
originally incorporated in 1982 as Carolina Freight Corporation and changed its
name in May 1995 to WorldWay Corporation. The Company owns seven operating
subsidiaries, which offer domestic and international surface transportation
services, logistics management, and certain other transportation-related
services. Its subsidiaries include three regional less-than-truckload ("LTL")
trucking companies: Carolina Freight Carriers Corporation ("Carolina Freight
Carriers"), based in Cherryville, North Carolina; G.I. Trucking Company
("G.I."), based in LaMirada, California; and Red Arrow Freight Lines, Inc. ("Red
Arrow"), based in Dallas, Texas; and one truckload carrier, Cardinal Freight
Carriers, Inc. ("Cardinal"), based in Concord, North Carolina. The Company also
owns The Complete Logistics Company ("Complete Logistics"), based in Buena Park,
California, which provides dedicated truckload, metropolitan LTL, and
warehousing services; Innovative Logistics Incorporated
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("Innovative Logistics"), based in Fort Mill, South Carolina, which provides
transportation-related services including intermodal shipping, rate negotiation,
and freight payment services; and CaroTrans International, Inc. ("CaroTrans"), a
non-vessel operating common carrier based in Cherryville, North Carolina, which
provides international transportation of exported and imported goods.
Historically, the largest part of the Company's revenues has been generated
by its LTL carriers. Through 1991, the Company's LTL operations were generally
profitable; however, deregulation of the trucking industry in the 1980s led to
dramatic changes in the business. While G.I. Trucking has remained profitable,
Carolina Freight Carriers and Red Arrow suffered losses of $668,000 in 1992,
$7.5 million in 1993, and $4.8 million in 1994. The ability of Carolina Freight
Carriers and Red Arrow to avoid a general work stoppage by the International
Brotherhood of Teamsters affecting most unionized trucking companies reduced
1994 losses.
The Company has made several major changes in its operations in an effort
to restore the profitability of its LTL carriers. Among these were major
cost-cutting initiatives, the establishment of a system of metropolitan and
regional distribution centers, restructuring of top management positions, and
implementation of a receivables financing facility to reduce financing costs.
Beginning early in 1994, the Board of Directors also began exploring
long-range strategic options to maximize the value of the Company's stock in the
face of the declining performance of the LTL carriers. At its meeting on March
7, 1994, the Board of Directors began to review a range of possible strategies
identified by the Company's management. On April 11, 1994, the Board authorized
management to engage Donaldson, Lufkin and Jenrette Securities Corporation
("DLJ") to provide advice on strategic alternatives. With the advice of DLJ, the
Board continued to examine long-term alternatives during 1994 and the first two
quarters of 1995.
On January 31, 1994, the Company's Chairman and Chief Executive Officer,
Lary R. Scott, met with Robert A. Young, III, President and Chief Executive
Officer of Parent, at Mr. Young's request, to discuss the potential of Parent
pursuing the acquisition of the Company. On February 16, 1994, Mr. Young, Mr.
William A. Marquard, Chairman of Parent, and a representative from Morgan
Stanley & Co. Incorporated, financial advisor to Parent, met with Mr. Scott and
Mr. K.G. Younger, the former Chairman of the Company, to discuss the issues and
possibilities surrounding such a transaction. During the remainder of the first
quarter of 1994, certain executives of Parent commenced an analysis of the
Company based upon publicly available information, but this activity was halted
in April 1994 when Parent was in the midst of a strike and, subsequently, Parent
pursued and completed two other acquisitions in the second half of 1994.
At its meeting on July 6, 1994, the Company's Board authorized Mr. Scott
and representatives of DLJ to identify and contact the most likely potential
candidates for a possible purchase of or combination with the Company or one or
more of its subsidiaries. During the next few months, Mr. Scott contacted
several firms to assess their preliminary interest in a purchase or combination.
DLJ representatives also contacted one potential purchaser. This process
revealed some preliminary interest by potential strategic purchasers, but no
concrete proposals were received.
The strike and work stoppage at the Company's LTL competitors during the
second quarter of 1994 improved the operating results of the Company's LTL
carriers; however, performance declined during the latter part of 1994 and into
1995. The Company reported a consolidated net loss of $4.5 million for the first
quarter of 1995, and announced on June 8, 1995, that it anticipated a second
quarter consolidated net loss in a range of $11 million to $12.5 million. The
Company's management continued to implement operational changes, initiated an
examination of ways to restructure the Company's working capital financing to
provide greater liquidity, and intensified efforts to identify possible
strategic alternatives. In addition, the Company's management contacted several
additional potential purchasers and furnished nonpublic information to one
potential purchaser in addition to Parent.
On May 25, 1995, Mr. Scott and Mr. Young met in Charlotte, at Mr. Young's
request, and discussed generally the idea of the merger. At the meeting, Mr.
Young expressed interest in obtaining detailed nonpublic information regarding
the Company's operations in order to evaluate a possible acquisition.
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On June 8, 1995, Mr. Scott traveled to Fort Smith, Arkansas, headquarters
of Parent, to meet with Mr. Young. At that meeting, Mr. Scott and Mr. Young
discussed preliminarily the range of prices that Mr. Scott might recommend to
the Company's Board of Directors, but no agreement was reached. Mr. Scott and
Mr. Young agreed that the Company would furnish nonpublic information to Parent,
and Parent signed a confidentiality and standstill letter agreement, filed
herewith as Exhibit 7 and incorporated herein by reference.
During the periods of June 13 through June 15, and June 23 through June 27,
representatives of Parent and of Morgan Stanley & Co., Parent's investment
advisor, visited several of the Company's facilities, met with certain
representatives of the Company's management, and reviewed various documents and
detailed financial information regarding the Company's operations.
On June 26, Parent forwarded to the Company a proposed draft Merger
Agreement. The Company reviewed the draft agreement, and forwarded comments and
questions to Parent on June 29. The Company's general counsel, John B. Yorke,
other Company counsel, and representatives of its outside counsel had a
conference call on June 30 with Parent's general counsel, Richard F. Cooper, and
representatives of Parent's outside counsel to review the Company's comments and
discuss various issues in the draft. That same evening, Mr. Scott and Mr. Young
agreed to meet on July 5 at the Company's offices in Charlotte to discuss the
draft agreement and hold further conversations regarding a proposed purchase
price.
Messrs. Scott, Young, Cooper, Yorke and other management representatives of
the Company and Parent, and representatives of the Company's and Parent's
respective outside counsel, met on July 5 in Charlotte. Mr. Scott and Mr. Young
had further discussions regarding a purchase price that each of them would be
willing to recommend to their respective boards of directors, and discussed a
price of $11.00 per share. Messrs. Scott and Young agreed that Parent would hold
a meeting of its board of directors on July 7 and that the Company would call a
meeting for July 8 to consider a possible transaction.
On July 6, Parent sent to the Company a revised draft Merger Agreement. The
Company provided comments on the revised draft to the Parent on July 7. Parent's
board of directors approved the proposed Merger Agreement and the proposed
acquisition, at a price of $11.00 per share, at its meeting on July 7.
The Board of Directors of the Company met on Saturday, July 8, at the
Company's Charlotte offices, to review the proposed Merger Agreement.
Representatives of DLJ and the Company's outside counsel attended the meeting.
After reviewing the transaction with the Company's legal and financial advisors
and hearing a presentation by DLJ, the Board discussed and unanimously approved
the proposed Merger Agreement and all transactions contemplated thereby. With
respect to the Offer, the Board of Directors unanimously recommended that the
shareholders of the Company accept the Offer and tender all of their Shares
pursuant to the Offer.
Copies of the press releases of the Company and Parent announcing the
execution of the Merger Agreement are filed herewith as Exhibits 3 and 4 and are
incorporated herein by reference thereto. A copy of a letter to shareholders of
the Company, which accompanies this Schedule 14D-9, is filed herewith as Exhibit
5 and is incorporated herein by reference.
In reaching its conclusion and recommendation described above, the Board of
Directors considered the following factors:
1. the business, results of operations, and financial condition of the
Company;
2. the rapidly deteriorating performance of Carolina Freight Carriers;
3. alternatives to the Merger, including an analysis of the value that
might be achieved for the Company's shareholders through a shutdown and
liquidation of its unprofitable subsidiaries;
4. the Company's discussions with its working capital lenders and
other potential lenders;
5. the terms and conditions of the Merger Agreement;
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6. the opinion of DLJ to the effect that, as of the date of its
opinion and based upon and subject to certain matters stated therein, the
consideration to be received by the holders of Shares pursuant to the Offer
and the Merger was fair to such holders from a financial point of view.
(The full text of DLJ's written opinion, which sets forth the assumptions
made, matters considered and limitations on the review undertaken by DLJ,
is attached hereto as Exhibit 6 and is incorporated herein by reference
thereto. SHAREHOLDERS ARE URGED TO READ THE OPINION OF DLJ CAREFULLY IN ITS
ENTIRETY.);
7. the fact that the Offer is not subject to a due diligence condition
or a general financing condition, but is subject to receipt by Parent of
funding of its bank commitment letter, which is subject, among other
things, to a due diligence condition;
8. the fact that the Merger Agreement, which prohibits the Company,
its subsidiaries or its affiliates from initiating, soliciting or
encouraging any potential acquisition transaction, does permit the Company
(conditioned upon the execution of confidentiality agreements) to furnish
nonpublic information to, allow access by, and participate in discussions
and negotiations with any third party that has submitted an unsolicited
acquisition proposal to the Company, provided that the Board of Directors,
after consultation with outside counsel, determines that failure to do so
would likely constitute a breach of its fiduciary duties;
9. the fact that the Company had, during the past year, contacted
those firms that management and DLJ viewed as the most likely candidates
for an acquisition of, or combination with, all or part of the Company, and
that none of such firms other than Parent had submitted a concrete proposal
with respect to an acquisition transaction;
10. the concern that public disclosure of a sale process might have a
damaging effect on the Company's employee and customer relations;
11. the provisions of the Merger Agreement that require the Company to
pay the Parent a termination fee of $1.75 million and reimburse the
Purchaser for its out-of-pocket expenses of up to $500,000 under certain
circumstances;
12. the regulatory approvals required to consummate the Offer and
Merger and the likelihood of receiving all such approvals; and
13. the likely impact of the Merger on employees of the Company,
customers, suppliers, and the communities and markets in which the Company
operates.
The Board of Directors did not assign relative weights to the factors or
determine that any factor was of particular importance, and the Board of
Directors viewed its position and recommendations as being based on the totality
of the information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
DLJ has been retained by the Company to act as the Company's exclusive
financial advisor with respect to the Offer and the Merger. Pursuant to an
engagement letter with DLJ, the Company has agreed to pay DLJ for its services a
transaction fee equal to $1,800,000, less any quarterly or monthly fees paid
since their engagement began, and less fees paid in connection with the fairness
opinion. The Company has also agreed to reimburse DLJ for its out-of-pocket
expenses, including the fees and expenses of its counsel, and to indemnify DLJ
and certain related parties against certain liabilities, including liabilities
under the federal securities laws. In the ordinary course of business, DLJ and
its affiliates may actively trade the debt and equity securities of the Company
and the Purchaser for their own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained, or compensated any person to make solicitations
or recommendations to the Company's shareholders with respect to the Offer.
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ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) On June 2, 1995, pursuant to the employee option grant provision of the
1995 Nonqualified Stock Option Plan, approved by the shareholders on May 3,
1995, the Company granted options to purchase 480,000 Shares to certain
employees at an exercise price of $9.625 (the market price of the Shares on that
date). Of these options, the following were granted to executive officers of the
Company:
<TABLE>
<S> <C>
James Hertwig.............................................. 70,000
James Justiss.............................................. 5,000
Shawn W. Poole............................................. 30,000
Robert C. Rains............................................ 20,000
D.E. Randolph.............................................. 23,000
Lary R. Scott.............................................. 140,000
David D. Taggart........................................... 30,000
John B. Yorke.............................................. 32,000
</TABLE>
Except as disclosed in the preceding sentence, there have been no
transactions in Shares which were effected during the past 60 days by the
Company, or, to the best knowledge of the Company, any executive officer,
director, affiliate or subsidiary of the Company.
(b) Robert C. Rains and David D. Taggart, officers of subsidiaries of the
Company, do not presently intend to tender Shares to the Purchaser pursuant to
the Offer. With the exception noted in the preceding sentence, to the best
knowledge of the Company, (i) all of its executive officers, directors,
affiliates or subsidiaries presently intend to tender shares to the Purchaser
pursuant to the Offer and (ii) none of its executive officers, directors,
affiliates or subsidiaries presently intends to otherwise sell any Shares which
are owned beneficially or held of record by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as referred to in Item 3 (b) or Item 4 hereof, the Company is
not engaged in any other negotiation in response to the Offer which relates to
or would result in (i) an extraordinary transaction such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described above or in Item 3(b), there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Offer which relate or would result in one or more of the matters referred to
in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) NORTH CAROLINA TENDER OFFER DISCLOSURE ACT. The North Carolina Tender
Offer Disclosure Act (the "Tender Offer Disclosure Act") applies to tender
offers for equity securities of a North Carolina corporation. The Tender Offer
Disclosure Act requires the Purchaser to file a statement with the North
Carolina Secretary of State relating to the Offer and contains prohibitions
against deceptive practices in connection with making a tender offer. In Eure v.
Grand Metropolitan Limited, a North Carolina Superior Court held that the Tender
Offer Disclosure Act's 30-day notice period prior to the commencement of a
tender offer is unenforceable and preempted by the Exchange Act. The Purchaser
has informed the Company that it plans to file concurrently with the Commission
and the North Carolina Secretary of State a Tender Offer Statement on Schedule
14D-1, together with all exhibits thereto, upon commencement of the Offer.
(b) REQUIRED REGULATORY APPROVALS
General. The Company is not aware of any licenses or regulatory permits
that are material to the business of the Company and its subsidiaries, taken as
a whole, that might be adversely affected by the Purchaser's acquisition of
Shares as contemplated in the Offer or of any approval or other action by any
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Governmental Entity that would be required for the acquisition or ownership of
Shares by the Purchaser as contemplated in the Offer, except as otherwise
described in the Offer to Purchase. While, except as otherwise expressly
described below, the Purchaser does not presently intend to delay the acceptance
for payment of or payment for Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business or
that certain parts of the Company's business might not have to be disposed of if
such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, the Purchaser
could decline to accept for payment or pay for any Shares tendered.
The Voting Trusts. Six subsidiaries of the Company ("ICC Subsidiaries")
engage in the interstate transportation of property, an activity causing those
subsidiaries, and acquisition of control of those subsidiaries, to be subject to
the jurisdiction of the Interstate Commerce Commission ("ICC"). Provisions of
the Interstate Commerce Act require approval of, or the granting of an exemption
from approval by, the ICC for the acquisition of control of two or more carriers
subject to the jurisdiction of the ICC ("Carriers") by a person that is not a
Carrier and for the acquisition or control of a Carrier by a person that is not
a Carrier but that controls any number of Carriers. As a result, ICC exemption
or approval is required for Purchaser to acquire control of the Company's ICC
Subsidiaries. The exemption from or approval by the ICC of the acquisition by
Parent or Purchaser of the Company or its ICC Subsidiaries is not a condition of
the Offer.
To ensure that the Purchaser does not acquire and directly or indirectly
exercise control over the ICC Subsidiaries in violation of the requirements of
the Interstate Commerce Act, the Purchaser intends to cause the Company, and the
Company has agreed in the Merger Agreement, to deposit the shares of its ICC
Subsidiaries ("ICC Subsidiary Shares") in separate voting trusts (the "Voting
Trusts") substantially in accordance with the terms and conditions of a voting
trust agreement (the "Voting Trust Agreement") to be entered into with the
Trustee thereof, promptly upon Purchaser's acquisition of Shares pursuant to the
Offer. The Offer is conditioned upon the issuance by the staff of the ICC of an
informal, non-binding opinion, without the imposition of any conditions
reasonably unacceptable to the Purchaser, that the use of the Voting Trusts in
this transaction is consistent with the policies of the ICC against unauthorized
acquisitions of control of a regulated carrier. Parent and the Purchaser
requested the staff of the ICC on July 10 to issue such an opinion. Pursuant to
ICC regulations, the ICC staff has the power to issue such opinions. Generally,
the ICC staff has issued such opinions within one or two weeks of a request,
although there can be no assurance that Parent and the Purchaser will be able to
obtain an opinion this quickly.
Pursuant to the terms of the Voting Trust Agreement, it is expected that
the Trustee would hold the ICC Subsidiary Shares until (i) the effective date of
the ICC's approval or exemption from approval of Parent's and Purchaser's
acquisition of control of the ICC Subsidiaries, (ii) the ICC Subsidiary Shares
are sold to a third party or otherwise disposed of, or (iii) the Voting Trust is
otherwise terminated. The Voting Trust Agreement is expected to provide that the
Trustee will have the sole power to vote such ICC Subsidiary Shares. In
addition, it is expected that the Voting Trust Agreement will provide that the
Company or its successor in interest will be entitled to receive any cash
dividends paid by the ICC Subsidiaries.
Notice of Exemption. The ICC has provided by regulation that it will
exempt from the requirement for prior ICC approval all acquisitions of control
involving only motor carriers of property subject to the ICC's jurisdiction
unless it determines that such an exemption is not warranted because of issues
regarding competition, impacts on employees and the safety ratings of the
parties. The ICC regulations require parties to all such acquisitions of control
to file a notice of exemption with the ICC, and also provide that the exemption
from approval will automatically become effective 60 days after the ICC
publishes the notice of exemption in the ICC Register unless complaints
concerning the notice of exemption are timely filed. The regulations further
provide that the ICC will generally decide any complaints within 30 days after
receiving them; such decisions may deny the complaint and permit the exemption
to become effective or may prevent the exemption from becoming effective.
8
<PAGE> 10
Parent and Purchaser and Company filed with the ICC a notice of exemption
(the "Notice of Exemption") on July 10, 1995, to permit Parent and Purchaser to
acquire control of the Company's ICC Subsidiaries without formal ICC approval.
The ICC generally publishes such notices in the Federal Register three to four
weeks after they are filed, although there can be no assurance that the Notice
of Exemption will be published that quickly. Parent and Purchaser expect that
the Notice of Exemption will become effective 60 days after it is published.
Temporary Authority. Pending receipt of final and effective exemption from
or approval by the ICC, the Interstate Commerce Act authorizes the ICC to permit
Parent or Purchaser temporarily to operate through management the properties of
the ICC Subsidiaries if the ICC concludes that failure to grant such temporary
operating authority may result in injury to those properties or substantially
interfere with their future usefulness in providing adequate and continuous
service to the public. Parent and Purchaser have applied for such temporary
authority to permit Parent or Purchaser to operate the properties of the ICC
Subsidiaries pending the effectiveness of the Notice of Exemption. Purchaser's
obligations under the Offer are conditioned upon the ICC's granting of such
temporary authority.
(c) PURCHASER'S DESIGNATION OF PERSONS TO BE ELECTED TO THE COMPANY'S BOARD
OF DIRECTORS. The information statement attached hereto as Annex I is being
furnished in connection with the possible designation by the Purchaser, pursuant
to the Merger Agreement, of certain persons to be appointed to the Board of
Directors of the Company other than at a meeting of the Company's shareholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<C> <S> <C>
Exhibit 1 -- Agreement and Plan of Merger dated July 8, 1995, among Parent, the Purchaser
and the Company.
Exhibit 2 -- Form of Voting Trust Agreement to be entered into among Parent, the Purchaser,
the Company and the Trustee.
Exhibit 3 -- Press Release of the Company issued on July 10, 1995.
Exhibit 4 -- Press Release of Parent issued on July 10, 1995.
Exhibit 5* -- Letter to Shareholders of the Company dated July 14, 1995.
Exhibit 6* -- Opinion of Donaldson, Lufkin & Jenrette Securities Corporation dated July 8,
1995.
Exhibit 7 -- Confidentiality and Standstill Letter Agreement of Parent dated June 8, 1995.
Exhibit 8 -- Employment Agreement dated June 2, 1995, between the Company and Lary R.
Scott.
Exhibit 9 -- Form of Amendment to Severance Agreements dated as of July 8, 1995, between
the Company and Certain Executive Officers.
Exhibit 10 -- Excerpt from Proxy Statement distributed in connection with the Company's
annual meeting of shareholders on May 3, 1995.
</TABLE>
- ---------------
* Included in the materials sent to shareholders of the Company.
9
<PAGE> 11
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
WORLDWAY CORPORATION
By: /s/ JOHN B. YORKE
-----------------------------------
Name: John B. Yorke
Title: Vice President and General
Counsel
Date: July 14, 1995
10
<PAGE> 12
ANNEX I
WORLDWAY CORPORATION
400 TWO COLISEUM CENTER
2400 YORKMONT ROAD
CHARLOTTE, NORTH CAROLINA 28217
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about July 14, 1995 as
part of Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") of WorldWay Corporation (the "Company"). You are receiving this
Information Statement in connection with the possible election of persons
designated by the Purchaser to a majority of the seats on the Board of Directors
of the Company (the "Board"). You are urged to read this Information Statement
carefully. You are not, however, required to take any action. Capitalized terms
used and not otherwise defined herein shall have the meaning set forth in the
Schedule 14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on July
14, 1995. The Offer is scheduled to expire at 12:00 midnight on August 10, 1995,
New York City time, unless extended, at which time, upon the expiration of the
Offer, if all conditions of the Offer have been satisfied or waived, the
Purchaser has agreed with the Company that it will purchase all Shares validly
tendered pursuant to the Offer and not withdrawn. The consummation of the Offer
and the Merger pursuant to the terms of the Merger Agreement would result in a
change of control of the Company.
The information contained in this Information Statement concerning Parent
and the Purchaser has been furnished to the Company by Parent and the Purchaser,
and the Company assumes no responsibility for the accuracy or completeness of
such information.
BOARD OF DIRECTORS
GENERAL
The common stock, $0.50 par value per share (the "Company Common Stock"),
is the only class of voting stock of the Company outstanding. As of July 7,
1995, there were outstanding and entitled to vote 6,561,672 shares of Company
Common Stock, each of which is entitled to one vote. An additional 875,450
shares of Company Common Stock are issuable pursuant to outstanding options,
which options are immediately exercisable. For information regarding the
ownership of the Company Common Stock by holders of more than five percent of
the outstanding shares and by the management of the Company, see "Security
Ownership of Certain Beneficial Owners and Management."
The Company's Articles of Incorporation provide that its Board of Directors
shall be divided into three classes, such classes to be as nearly equal in
number as possible, and that each year the shareholders of its Common Stock
shall elect the members of one of the three classes to serve three-year terms of
office. The number of directors is currently fixed by the Articles of
Incorporation of the Company at a variable number, with a minimum of seven and a
maximum of nine. Currently, there are eight members of the Board of Directors.
RIGHT TO DESIGNATE DIRECTORS
The Company has agreed in the Merger Agreement that, promptly upon the
acceptance for payment of the number of Shares by the Purchaser pursuant to the
Offer as represents at least a majority of the outstanding Shares (on a fully
diluted basis), the Purchaser shall be entitled to designate such number of
I-1
<PAGE> 13
directors, rounded up to the next whole director, on the Board of Directors of
the Company as will give the Purchaser representation on the Board of Directors
equal to at least that number of directors that equals the product of the total
number of directors on the Board multiplied by the percentage that the aggregate
number of shares of Company Common Stock accepted for payment pursuant to the
Offer, bears to the number of shares of Company Common Stock then outstanding.
The Company and the Board of Directors have agreed at such time to take any and
all action needed to cause the Purchaser's designees to be appointed to the
Board of Directors (including to cause directors to resign).
The Company's obligations to appoint Parent's designees to the Board
pursuant to the Merger Agreement are subject to Section 14(f) of the Exchange
Act and Rule 14f-1 thereunder. The Company has agreed to promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under the Merger Agreement and to include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under such Section and Rule to fulfill such obligations.
PURCHASER'S DESIGNEES
Pursuant to the terms of the Merger Agreement, it is expected that the
Purchaser's designees will take office as directors of the Company (the
"Purchaser Designees") upon the Purchaser's acceptance for payment of any Shares
as represents at least a majority of the outstanding Shares (on a fully diluted
basis) in the Offer.
The Purchaser has advised the Company that it will choose the Purchaser
Designees from the directors and executive officers listed on Schedule I to the
Offer to Purchase, a copy of which is being mailed to the Company's shareholders
together with this Information Statement. The Purchaser has informed the Company
that each of the directors and executive officers listed in Schedule I to the
Offer to Purchase has consented to act as a director, if so designated. The
information on such Schedule I is incorporated herein by reference.
The Purchaser has advised the Company that none of the persons listed on
such Schedule I has during the last five years been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or was party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was, or is, subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws. The Purchaser has also advised the Company that none of the
persons listed in the table above is a director of, or holds any position with,
the Company, and that none of such persons beneficially owns any equity
securities, or rights to acquire any equity securities, of the Company or has
been involved in any transactions with the Company or any of its directors,
executive officers or affiliates which are required to be disclosed pursuant to
the rules and regulations of the Securities and Exchange Commission. The
election of the Purchaser's designees will be accomplished at a meeting or by
written consent of the Board.
BOARD OF DIRECTORS OF THE COMPANY
The following table sets forth with respect to each member of the Board of
Directors of the Company (i) his name, (ii) his age, (iii) all positions and
offices with the Company, (iv) his business experience, including principal
occupation, and (v) his directorships in other publicly held companies, if any.
Daniel A. Boggan, Jr., 49, Group Executive Director for Education Services, The
National Collegiate Athletic Association (education). Former Vice-Chancellor,
University of California, Berkeley, California, 1986-1994. Serves on board of
directors of The Clorox Company (household products), Chairman of the Board of
the East Oakland Youth Development Corporation.
<TABLE>
<S> <C> <C>
Member: Audit Committee First became a Director: 1995
</TABLE>
I-2
<PAGE> 14
J. M. Carstarphen, 62, President and Chairman of the Board, Stowe-Pharr Mills
(textiles and carpet). President, Belmont Land Investment Company and Strand
Development Corporation (both of which are real estate development firms).
Serves on boards of directors of R. L. Stowe Mills, Inc. (textiles), the
Community Foundation of Gaston County, Inc., and Wachovia Bank and Trust
Company, Southern Region (banking). Member of Liberty Mutual Advisory Board
(insurance).
<TABLE>
<S> <C> <C>
Member: Compensation Committee First became a Director: 1991
</TABLE>
Charles L. Grace, 60, President, Cummins Atlantic, Inc. (distributor of diesel
engines). Serves on boards of directors of First Union National Bank (North
Carolina board) (banking), Mercy Health Services (Mercy Hospital) (health
services) and North Carolina Trucking Association. Member of North Carolina
Board of Advisors of Liberty Mutual Insurance Company, Chairman of the Board of
Trustees of Belmont Abbey College.
<TABLE>
<S> <C> <C>
Member: Audit Committee First became a Director: 1991
Nominating Committee
</TABLE>
William M. R. Mapel, 63, Retired Senior Vice President/Chairman-Policy
Committee, North American Finance Group, Citibank, N.A., New York (1986-1988).
Previously Senior Vice President/Division Executive of Citibank (1969-1985).
Chairman of the Board of Mercantile & General Reinsurance Company of America
(insurance). Serves on boards of directors of Mercantile & General Life
Reassurance Company of America (insurance), Brundage, Story & Rose Investment
Trust, Galey & Lord, Inc. (textiles), Churchill Capital, Inc., NSC Corporation
(environmental services), and USLIFE Income Fund, Inc.
<TABLE>
<S> <C> <C>
Member: Audit Committee First became a Director: 1989
(Chairman)
</TABLE>
Dr. James G. Martin, 59, Chairman of the Research Development Board, James C.
Cannon Research Center, Charlotte-Mecklenburg Hospital Authority. Serves on
boards of directors of J.A. Jones, Inc. (construction), Duke Power Company
(electric utility), and Blue Cross/Blue Shield of North Carolina (insurance);
former Governor of the State of North Carolina (1985-1993), Member, United
States House of Representatives (1973-1985), former Associate Professor of
Chemistry, Davidson College.
<TABLE>
<S> <C> <C>
Member: Compensation Committee First Became a Director: 1993
</TABLE>
Paul F. Richardson, 66, President, Paul F. Richardson Associates, Inc.
(international maritime consulting firm) since 1977. Seventeen years with
Sea-Land Service, Inc., serving as President from 1970 to 1976 and Vice Chairman
from 1976 to 1977. Currently Vice President and Director of the U.S. Coast Guard
Foundation. Awarded the Meritorious Public Service Citation in 1981 by the
Secretary of the Navy for service on behalf of the United States Navy in the
fields of public relations and maritime education and cooperation. In 1993, Mr.
Richardson received the Connie Award from the Containerization and Intermodal
Institute in recognition of his leadership in the transportation industry and
many contributions to the advancement of international intermodal
transportation.
<TABLE>
<S> <C> <C>
Member: Compensation Committee First became a Director: 1986
(Chairman)
Nominating Committee
</TABLE>
Lary R. Scott, 58, Chairman of the Board and Chief Executive Officer of the
Company. Mr. Scott joined the Company in 1993 as Vice Chairman and Chief
Executive Officer. Mr. Scott was elected as Chairman of the Board in May, 1994.
For approximately two years prior to joining the Company, Mr. Scott served as a
transportation consultant. Prior to that time he was President and Chief
Executive Officer of Consolidated Freightways, Inc. Serves on boards of
directors of Mayflower Group, Inc. (transportation) and The Clorox Company
(household products).
<TABLE>
<S> <C> <C>
Member: Executive Policy Committee First became a Director: 1993
(Chairman)
</TABLE>
I-3
<PAGE> 15
Kenneth G. Younger, 69, Retired Chairman of the Board of the Company. Mr.
Younger joined the Company in 1977 and retired from the Company in 1990 as Chief
Executive Officer. Mr. Younger returned to the Company in 1993 as Chairman and
Chief Executive Officer, retired as Chief Executive Officer upon the election of
Mr. Scott as Chief Executive Officer, and continued to serve in the capacity of
Chairman until May 1994. Director of First Union Corporation (banking and
financial services), member of the Board of Trustees of Duke University.
<TABLE>
<S> <C> <C>
Member: Nominating Committee First became a Director: 1977
(Chairman)
</TABLE>
The classes in which the directors serve are as follows:
<TABLE>
<CAPTION>
CLASS I CLASS II CLASS III
- ------------------ -------------------- ----------------------
<S> <C> <C>
J. M. Carstarphen Dr. James G. Martin Daniel A. Boggan, Jr.
Charles L. Grace K. G. Younger William M. R. Mapel
Lary R. Scott Paul F. Richardson
</TABLE>
The term of office of each of the Class II directors expires at the 1996
Annual Meeting of Shareholders; the term of office of each of the Class I
directors expires at the 1997 Annual Meeting of Shareholders; and the term of
office of each of the Class III directors expires at the 1998 Annual Meeting of
Shareholders or in each case until their respective successors shall be duly
elected and qualified to serve.
The Company, Parent and the Purchaser have agreed pursuant to the Merger
Agreement that, following the election or appointment of Parent's designees and
prior to the Effective Time, any amendment of the Merger Agreement by the
Company will require the affirmative vote of a majority of directors of the
Company that have not been designated by the Purchaser or Parent.
Each of the directors has agreed to resign from the Board of Directors to
the extent that additional vacancies will be required to appoint the Purchaser's
designees.
BOARD MEETINGS -- COMMITTEES OF THE BOARD
The Board of Directors met eight (8) times in 1994. The Company has
standing Audit, Nominating, and Compensation Committees elected by the Board of
Directors. Committee membership is indicated in the preceding biographical
section on directors.
The Audit Committee of the Company met twice during 1994. Functions
performed by this committee consist generally of recommending the audit firm to
be employed as independent auditors for the Company and consulting with
independent auditors for the purpose of reviewing the scope of the audit, their
audit report, and the adequacy of internal controls.
The Nominating Committee functions consist of receiving and reviewing
nominations to the Board of Directors, recommending to the Board nominees to
fill Board vacancies, and recommending to the Board nominees for membership on
committees of the Board. It met one (1) time during 1994. The Nominating
Committee considers nominees recommended by shareholders.
The Compensation Committee met six (6) times during 1994. This committee
approves the compensation for the officers of the Company. Other functions
performed include the approval of compensation plans for consideration by the
Board of Directors and the granting of stock options under the Company's stock
option plans.
COMPENSATION OF DIRECTORS
Directors who are not employees are paid an annual retainer of $12,000 each
for their service on the Board of Directors. In addition, each such director
receives $450 plus travel expenses for every board and
I-4
<PAGE> 16
committee meeting attended, except for committee meetings held on the same day
of a board or other committee meeting, in which case the compensation rate is
$100 for each additional meeting. Directors who are employees of the Company
receive no additional compensation for board service except for being included
for coverage under the directors' fee continuation plan described below.
After three years of service with the Company for Directors joining the
Board prior to 1995, and after five years of service for Directors joining the
Board in 1995 or thereafter, members of the Board of Directors are covered by a
fee continuation plan which provides for the payment of $8,500 annually for a
period of ten years upon retirement as director at age 60. Reduced benefits are
available to retired directors at age 55. A director who dies before retirement
and who has at least five years of service with the Company will receive a
continuation of fees for a period of fifteen years. Amounts payable under this
plan are scheduled and vary based upon the age of the director. Benefits payable
to directors under this plan are subject to acceleration in the event a
director's service on the Board is involuntarily terminated following a change
in control of the Company. A change in control means one of a nature that would
require reporting under the Exchange Act by a person, as defined in the Exchange
Act, other than the Company, its subsidiaries, or an employee benefit plan
sponsored by the Company or one of its subsidiaries.
I-5
<PAGE> 17
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
HOLDERS OF MORE THAN FIVE PERCENT BENEFICIAL OWNERSHIP
The following are shareholders known to the Company to beneficially own (as
determined in accordance with Rule 13d-3 under the Exchange Act) more than five
percent of the Company's outstanding Common Stock as of July 12, 1995:
<TABLE>
<CAPTION>
NUMBER OF
NAME OF SHAREHOLDER SHARES HELD(1) PERCENTAGE
--------------------------------------------------------- -------------- ----------
<S> <C> <C>
David L. Babson & Co., Inc............................... 336,100(2) 5.12%
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Fisher Investments, Inc. ................................ 416,500(3) 6.35%
13100 Skyline Boulevard
Woodside, California 94062
The Prudential Insurance
Company of America..................................... 364,278(4) 5.5%
Prudential Plaza
Newark, New Jersey 07102-3777
Tweedy, Browne Company L.P............................... 439,689(5) 6.70%
52 Vanderbilt Avenue
New York, New York 10017
</TABLE>
- ---------------
(1) Information provided herein has been obtained from Schedules 13D or 13G, as
applicable, filed with the Securities and Exchange Commission.
(2) As set forth in Schedule 13G, David L. Babson & Co., Inc. has sole voting
power with respect to 264,700 shares, shared voting power with respect to
71,400 shares, and sole dispositive power with respect to all 336,100
shares.
(3) As set forth in Schedule 13G, Fisher Investments, Inc. has sole voting power
with respect to 416,500 shares, and sole dispositive power with respect to
all 416,500 shares.
(4) As set forth in Schedule 13G, Prudential Insurance Company of America has
sole voting power with respect to 4,400 shares, shared voting power with
respect to 357,100 shares, sole dispositive power with respect to 4,400
shares and shared dispositive power with respect to 357,100 shares.
(5) Includes shares beneficially held by Tweedy Browne Company, L.P. ("TBC"),
TBK Partners, L.P. ("TBK"), and Vanderbilt Partners, L.P. ("Vanderbilt"),
as reported on Schedule 13D. As set forth in Schedule 13D, of the shares
reported, TBC has sole voting power with respect to 370,644 shares, and
shared dispositive power with respect to 439,689 shares. Vanderbilt has
sole voting power with respect to 11,000 shares and sole dispositive power
with respect to 11,000 shares.
BENEFICIAL OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of Company Common Stock as of July 12, 1995, by each
director of the Company, by each of the executive officers listed in the Summary
Compensation Table ("Named Executive Officers"), and by all directors and
executive officers of the Company as a group. Unless otherwise noted in the
footnotes following the table, the persons as
I-6
<PAGE> 18
to whom the information is given had sole voting and investment power with
respect to the shares of Company Common Stock shown as beneficially owned.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME OF BENEFICIAL OWNER(1) COMMON STOCK OUTSTANDING SHARES
------------------------------------------------------ ------------ ------------------
<S> <C> <C>
Daniel A. Boggan, Jr.................................. 2,500(2) *
J. M. Carstarphen..................................... 3,000(3) *
Charles L. Grace...................................... 3,500(4) *
James R. Hertwig...................................... 89,900(5) 1.37
Palmer E. Huffstetler................................. -0- --
William M. R. Mapel................................... 3,500(6) *
Dr. James G. Martin................................... 2,700(7) *
Robert C. Rains....................................... 40,485(8) *
Edmond Randolph....................................... 42,600(9) *
Paul F. Richardson.................................... 3,500(10) *
Lary R. Scott......................................... 216,000(11) 3.3
David D. Taggart...................................... 54,975(12) *
K. G. Younger......................................... 45,948(13) *
All directors and executive officers (a total of
fifteen persons) as a group......................... 638,108(14) 9.7%
</TABLE>
- ---------------
* Less than 1%
(1) The nature of the beneficial ownership for all shares is sole voting and
investment power.
(2) Represents shares Mr. Boggan had the right to acquire within sixty days
under stock option plans of the Company.
(3) Includes 2,500 shares Mr. Carstarphen had the right to acquire within sixty
days under stock option plans of the Company.
(4) Includes 2,500 shares Mr. Grace had the right to acquire within sixty days
under stock option plans of the Company.
(5) Includes 88,000 shares Mr. Hertwig had the right to acquire within sixty
days under stock option plans of the Company.
(6) Includes 2,500 shares Mr. Mapel had the right to acquire within sixty days
under stock option plans of the Company.
(7) Includes 2,500 shares Dr. Martin had the right to acquire within sixty days
under stock option plans of the Company.
(8) Includes 39,480 shares Mr. Rains had the right to acquire within sixty days
under stock option plans of the Company.
(9) Includes 42,600 shares Mr. Randolph had the right to acquire within sixty
days under stock option plans of the Company.
(10) Includes 2,500 shares Mr. Richardson had the right to acquire within sixty
days under stock option plans of the Company.
(11) Includes 206,000 shares Mr. Scott had the right to acquire within sixty
days under stock option plans of the Company.
(12) Includes 54,720 shares Mr. Taggart had the right to acquire within sixty
days under stock option plans of the Company.
(13) Includes 2,500 shares Mr. Younger had the right to acquire within sixty
days under stock option plans of the Company.
(14) Includes 577,800 shares the executive officers and directors had the right
to acquire within sixty days under stock option plans of the Company.
I-7
<PAGE> 19
EXECUTIVE OFFICERS
Listed below are the current executive officers of the Company who do not
serve on the Board of Directors:
James R. Hertwig, 44, serves as President of Carolina Freight Carriers
Corporation. He joined the Company in January 1994 as Vice President and was
elected to his current position in October 1994. Prior to joining the Company he
was President and Chief Executive Officer of Conway Intermodal.
James A. Justiss, 57, serves as President of CaroTrans International, Inc.
Prior to that, he served with Carolina Freight Carriers Corporation as Vice
President -- International Division since 1982.
Shawn W. Poole, 36, serves as Vice President and Chief Financial Officer of
the Company. He joined the Company as Treasurer in January 1990 and was elected
to his present position in May 1994.
Robert C. Rains, 41, has served as President of The Complete Logistics
Company since 1988.
D. Edmond Randolph, 59, serves as President of Cardinal Freight Carriers,
Inc. He joined Cardinal in May 1991 as President. Prior to joining Cardinal, Mr.
Randolph was Division Manager for National Freight Incorporated.
David D. Taggart, 51, serves as President of G. I. Trucking Company. Mr.
Taggart joined G. I. Trucking as Vice President of Operations in November 1988.
He was elected to his present position in May 1991.
John B. Yorke, 40, serves as Vice President and General Counsel of the
Company. He joined Carolina Freight Carriers Corporation in 1987 as Assistant
General Counsel. He was elected Secretary and Assistant General Counsel of the
Company in 1990 and was elected to his present position in January 1993.
COMPENSATION OF OFFICERS
The table below sets forth the compensation paid by the Company to the
chief executive officer and the four additional most highly compensated
executive officers (other than the chief executive officer), for services
rendered in all capacities to the Company and its subsidiaries during the fiscal
year ended December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------- PAYOUTS
----------------------------------------- RESTRICTED SECURITIES -------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
POSITION(1) YEAR $ ($) ($) ($) (#) ($) ($)
- ----------------------------------- ----- -------- -------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lary R. Scott(2)................... 1994 $250,016 $129,796 $ 0 $ 0 45,000 $ 0 $ 19,653(7)
Chairman & CEO 1993 187,512 0 0 0 35,000 0 0
1992 -- -- -- -- -- -- --
James R. Hertwig(3)................ 1994 146,309 44,646 0 0 25,000 0 20,179(8)
President -- Carolina Freight 1993 -- -- -- -- -- -- --
Carriers(4) 1992 -- -- -- -- -- -- --
Palmer E. Huffstetler.............. 1994 227,683(6) 70,127 0 0 16,000 0 690,972(9)
President(5) 1993 180,362 0 0 0 27,000 0 8,955(10)
1992 141,669 0 0 0 0 0 7,804(10)
D. Edmond Randolph(2).............. 1994 110,400 313,105 0 0 19,000 0 0
President -- Cardinal Freight 1993 109,000 252,201 0 0 1,000 0 0
Carriers(4) 1992 -- -- -- -- -- -- --
David D. Taggart................... 1994 145,000 69,731 0 0 20,300 0 0
President -- G.I. Trucking(4) 1993 128,483 0 0 0 4,700 0 0
1992 122,061 0 0 0 0 0 0
</TABLE>
- ---------------
(1) Reflects the capacities in the Company held by such individuals as of
December 31, 1994.
(2) First became an executive officer of the Company in 1993.
(3) First became an executive officer of the Company in 1994.
I-8
<PAGE> 20
(4) A wholly owned subsidiary of the Company.
(5) Mr. Huffstetler retired as President of the Company effective December 31,
1994.
(6) Includes amounts paid for accrued unused vacation.
(7) Represents the present value of the premium relating to the benefit to be
received pursuant to the Company's split dollar life insurance plan.
(8) Represents the amount of interest ($179) that would have been payable at
market rates during 1994 on a loan provided by the Company without
interest, and amounts paid ($20,000) to Mr. Hertwig for consulting services
performed prior to his becoming an employee of the Company.
(9) Includes $18,682 representing the present value of the premium relating to
the benefit to be received pursuant to the Company's split dollar life
insurance plan. Also includes compensation paid pursuant to a retirement
agreement that was effective November 4, 1994, including $300,000 payable
in equal weekly installments of $1,923.08 through December 31, 1997; a
$15,000 cash payment; and $357,290.22 representing enhanced pension
benefits calculated as though Mr. Huffstetler were a participant in the
1992 retirement incentive plan. Does not include amounts paid or payable
under the deferred compensation plans, the directors' fee continuation
plan, or other employee benefit plans. The agreement provided that Mr.
Huffstetler would not compete with the company for a period of one year.
(10) Amounts reflect the differential between interest accrued at
higher-than-market rates under the Company's deferred compensation plans
and amount of interest that would have accrued (or been paid) at market
rates. The higher-than-market rates are only paid if the service
requirements in the plan are met.
OPTIONS
Shown below is further information on new grants of stock options pursuant
to the Company's stock option plans during the fiscal year ended December 31,
1994 to the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OF GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
GRANTED(1) FISCAL YEAR ($/SH) DATE ($)(2)
------------ ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Lary R. Scott......................... 45,000 15.5 $ 11.25 05-03-04 237,600
James R. Hertwig...................... 15,000 5.2 11.25 05-03-04 79,200
10,000 3.5 10.875 03-06-04 50,600
Palmer E. Huffstetler................. 16,000 5.5 11.25 05-03-04 84,480
D. Edmond Randolph.................... 19,000 6.6 11.25 05-03-04 100,320
David D. Taggart...................... 20,300 7.0 11.25 05-03-04 107,184
</TABLE>
- ---------------
(1) All grants of options were made on May 4, 1994, under the 1994 Nonqualified
Stock Option Plan ("1994 Plan") with the exception that an option to
purchase 10,000 shares at a base price of $10.875 was granted to Mr.
Hertwig on March 7, 1994 under the 1984 Incentive Stock Option Plan (the
"1984 Plan"). Such options have an exercise price equal to 100% of the fair
market value of the options on the date of grant. Options remain
outstanding for 10 years and become exercisable cumulatively in annual
installments so long as employment with the Company continues. Pursuant to
the terms of the 1984 Plan, during the first year an option is outstanding
it may not be exercised. Thereafter, the option shall be exercisable in
installments as follows: 30% of the number of shares after commencement of
the second year, 30% after the third year and 40% after the fourth year.
Options otherwise exercisable may be exercised within the following periods
of time when employment is terminated for the indicated reason: three
months following the optionee's termination of employment, except when
termination is for cause, and one year following the death of the optionee.
The nonvested portion of an employee's options shall be considered
forfeited upon termination of his or her employment with the Company for
whatever reason. Options
I-9
<PAGE> 21
granted under the 1994 Plan vest in 25% increments annually beginning one
year following the date of grant of the option. No option granted under the
1994 Plan may be exercised prior to two years from the date of grant of
such option. Upon termination of employment for any reason, any nonvested
portion of an option granted under the 1994 Plan is forfeited. In the event
an optionee's employment terminates by reason of death, retirement (as
defined in the 1994 Plan), permanent and total disability (as determined
generally pursuant to the long-term disability plan applicable to such
optionee), or under such other circumstances as may be determined by the
Compensation Committee, the vested portion of such optionee's options
granted under the 1994 Plan shall be exercisable for a period of one year
thereafter. In the event of termination of an optionee's employment for any
other reason, all of such optionee's options granted under the 1994 Plan
shall terminate, and shall no longer be exercisable, as of the date of
termination of employment. Vesting of such options may be accelerated under
certain circumstances involving a change of control of the Company. All
options were granted with an exercise price equal to the closing price on
the New York Stock Exchange -- Composite Transactions of the Company's
common stock on May 4, 1994, and on March 7, 1994 for such options granted
Mr. Hertwig under the 1984 Plan.
(2) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised, so that there is no assurance the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based on the
following assumptions: exercise price is 100% of the fair market value at
date of grant; exercise term is ten years; no discounts have been taken for
vesting or restrictions; the risk free rate is 7.14% (based on the 10-year
Treasury note yield as of the date the options were issued); the volatility
factor is .33 (based on the preceding 12 months); and the dividend yield is
1.78% (based on the preceding 12 months). At year end, the option price was
substantially above the then-current market price of the Company's common
stock.
The following table sets forth information regarding the number of
unexercised options held by the named executives at December 31, 1994. No
options were exercised by the named executives during 1994.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
SHARE ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---------------------------------- ---------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Lary R. Scott..................... 0 N/A 10,500/69,500 *
Palmer E. Huffstetler............. 0 N/A 40,552/26,448 *
James R. Hertwig.................. 0 N/A 0/25,000 *
D. Edmond Randolph................ 0 N/A 300/19,700 *
David D. Taggart.................. 0 N/A 4,210/20,790 *
</TABLE>
- ---------------
* The exercise prices for all options outstanding were higher than the market
value of the Company's Common Stock, as reported on the New York Stock
Exchange, at December 31, 1994.
EMPLOYMENT CONTRACTS
The Company entered into a contract of employment with Mr. Scott during
1993 that expires on March 21, 1998. The contract calls for annual compensation
of not less than $250,000. The contract provides for certain other benefits and
perquisites afforded all other officers of the Company, and in some cases,
I-10
<PAGE> 22
afforded all other employees of the Company. On June 2, 1995, Mr. Scott entered
into an employment agreement extending the term of his employment with the
Company.
The Company entered into a contract of employment with Mr. Hertwig during
1994 that terminates two (2) years after the Company gives notice of
termination. The contract calls for annual compensation of not less than
$135,000. The contract provides for certain other benefits and perquisites
afforded all other officers of the Company, and in some cases, afforded all
other employees of the Company.
The Company also entered into a contract of employment with Mr. Huffstetler
during 1993 which by its terms was to expire on March 21, 1997. The contract
called for annual compensation of not less than $182,000 as well as certain
other benefits and perquisites afforded all other officers of the Company and,
in some cases, afforded all other employees of the Company. Pursuant to mutual
agreement of Mr. Huffstetler and the Company, such contract was terminated upon
Mr. Huffstetler's retirement from the Company effective December 31, 1994.
Pursuant to the provisions of such contract, upon his retirement Mr. Huffstetler
became entitled to retirement benefits similar to those provided under the 1992
Retirement Incentive Program of Carolina Freight Carriers Corporation.
OFFICER SEVERANCE AGREEMENTS
The Company has entered into agreements with certain executives, including
Messrs. Scott and Hertwig that provide for continued compensation in the event
of their termination of employment following a change in control of the Company.
Under the agreements, a change in control means one of a nature that would
require reporting under the Act by a person, as defined in the Act, other than
the Company, its subsidiaries, or an employee benefit plan sponsored by the
Company or one of its subsidiaries. Following a change in control, if the
officer is terminated within 24 months for any reason other than for cause,
disability, retirement or death, or should the officer leave his employment for
good reason, as defined in the agreement, then the officer is entitled to
receive a payment in cash equal to 2.99 times his average W-2 earnings for the
five-year period which immediately precedes the year in which the termination
occurs. Each agreement expires December 31, 1995 but is automatically extended
from year to year unless the Company provides notice of its intent to terminate
at least ninety (90) days prior to January 1 of any succeeding year. The
severance agreements were amended in July 1995, to provide that the officers
will be entitled to receive the compensation described above if the officer's
employment is terminated for any reason (including resignation) during the
six-month period after the first anniversary of a change of control.
SUPPLEMENTAL BENEFIT PLAN
The Supplemental Benefit Plan provides for a salary continuation benefit in
the event the participating officer dies before such officer's 65th birthday; a
supplemental retirement benefit payable upon early retirement, late retirement,
or disability; and a postretirement benefit payable upon the death of the
participating officer. Amounts payable under this plan are scheduled and are
based upon individual participant's age and rate of compensation. The
supplemental retirement benefit becomes fully vested in a participating officer
upon his attainment of age 65, upon his attainment of age 55 provided he has ten
or more years of service with the Company, upon his becoming disabled, or upon
his completion of 15 years of service with the Company. (The vesting schedule is
eight (8) years for Mr. Scott and five (5) years for Mr. Randolph). The term for
payment of benefits varies for each participant depending upon the participant's
age and length of service with the Company. The normal retirement benefit,
generally, is equal to 12% of base salary. Officers relinquished individual
group life insurance benefits equal, generally, to one and one-half times their
base salary to participate in the executive benefit plan. For the named
executives the benefit at the normal retirement date, which is payable monthly
for a period of 15 years, is as follows: Lary R. Scott -- $2,500; James R.
Hertwig -- $1,350; Palmer E. Huffstetler -- $2,000; D. Edmond
Randolph -- $1,850; and David D. Taggart -- $1,450. Benefits payable to officers
of the Company under this plan are subject to accelerated payment in the event
of a change in control of the Company. A change in control means one of a nature
that would require reporting under the Act by a person, as defined in the Act,
other than the Company, its subsidiaries, or an employee benefit plan sponsored
by the Company or one of its subsidiaries. Life insurance has been purchased on
the lives of the participants, with the Company as owner and beneficiary, to
I-11
<PAGE> 23
indemnify the Company upon the death of the covered employees for the cost of
benefits paid. The costs of the plans are being amortized over the lives of the
participants. On an after-tax basis, it is anticipated that there will be no
cost to the Company resulting from these plans, except for the cost of money
invested in the plans, which is not expected to be significant throughout the
duration of the program.
EMPLOYEES' PENSION PLAN
This is a defined benefit plan in which all officers of the Company are
participants. This plan also covers noncontractual employees of Carolina Freight
Carriers and Red Arrow Freight Lines, Inc., and all employees of other
wholly-owned subsidiaries of the Company. In addition, certain contractual
employees of Red Arrow have a deferred-vested interest in the plan. Under this
plan, at normal retirement age the amount of straight life-time pension is an
amount equal to nine-tenths percent of the participant's average pay over the
five (5) consecutive years during the employee's term of service that produce
the highest average multiplied by his or her number of years of service (not to
exceed 35 years of service) plus an added amount based on the amount by which an
employee's remuneration exceeds the Social Security contribution and benefit
base. The table below sets forth estimated annual benefits payable upon
retirement at normal retirement age of 65 to persons in specified remuneration
and years of service classifications. Amounts presented in the pension table are
based upon straight-life annuity amounts, and remuneration, for purposes of the
plan, includes all earnings from the Company which are reportable on Form W-2
for federal income tax withholding purposes, and such amounts of compensation
deferred under the Company's Employee Savings and Protection Plan. Such amounts
are not subject to offset for Social Security or other amounts. Such earnings
for executive officers are those as reported in the Salary Column of the Summary
Compensation Table. The number of credited years of service under the Pension
Plan for the following individuals is as indicated in parentheses immediately
after their names: Mr. Scott (2), Mr. Randolph (4), Mr. Huffstetler (30), Mr.
Hertwig (1), and Mr. Taggart (6). The amounts shown are formula amounts but are
subject to certain limitations as provided in the plan as approved by the
Internal Revenue Service. The 1994 aggregate maximum annual pension which may be
paid under the plan and all other defined benefit plans of the Company taken
together is restricted to $118,800, adjusted annually for increases in the cost
of living, as required by the provisions of Section 415 of the Internal Revenue
Code of 1986, as amended ("Code"), which limits the maximum benefits payable
from the plans.
THE WORLDWAY CORPORATION RETIREMENT PLAN
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE ------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000............................... $ 20,880 $ 27,839 $ 34,799 $ 41,759 $ 48,719
125,000............................... 26,692 35,589 44,487 53,384 62,282
150,000............................... 32,505 43,339 54,174 65,009 75,844
175,000**............................. 38,317 51,089 63,862 76,634 89,407
200,000**............................. 44,130 58,839 73,549 88,259 102,969
225,000**............................. 49,942 66,589 83,237 99,884 116,532
250,000**............................. 55,755 74,339 92,924 111,509 130,094*
300,000**............................. 67,380 89,839 112,299 134,759* 157,219*
400,000**............................. 90,630 120,839* 151,049* 181,259* 211,469*
500,000**............................. 113,880 151,839* 189,799* 227,759* 265,719*
</TABLE>
- ---------------
* Exceeds 1994 maximum benefit of $118,800.
** Exceeds 1994 maximum salary of $150,000.
I-12
<PAGE> 24
COMPARISON OF FIVE YEAR TOTAL RETURN*
AMONG WORLDWAY CORPORATION,
S&P 500 INDEX AND DOW JONES TRANSPORTATION INDEX**
The following chart shows the cumulative total shareholder return,
including reinvestment of all dividends, on a $100 investment over the time
periods indicated beginning December 31, 1989.
<TABLE>
<CAPTION>
Dow Jones
Measurement Period WorldWay Transporta-
(Fiscal Year Covered) Corporation tion Group S&P 500
<S> <C> <C> <C>
1989 100 100 100
1990 71.994 86.149 96.885
1991 114.544 131.791 126.276
1992 86.615 145.229 135.883
1993 76.629 178.282 149.517
1994 57.84 150.14 151.54
</TABLE>
- ---------------
* Assumes $100 initially invested on December 31, 1989 and the reinvestment of
all dividends during the periods indicated for each of the Company Common
Stock, S&P 500 Index, and Dow Jones Transportation Index.
** Fiscal year ending December 31.
I-13
<PAGE> 25
COMMITTEE REPORT ON COMPENSATION OF EXECUTIVES
The Compensation Committee of the Board of Directors (the "Committee") is
charged with the duty of establishing the total compensation of the Chief
Executive Officer and certain other officers of the Company. The Committee is
composed of three directors, none of whom is a current employee of the Company.
The Board has established a policy that the Committee shall consider such items
as it may deem appropriate including, but not limited to, the following:
a. experience, years of service with the Company, educational
background, and special expertise of the particular officer;
b. recent and historical operating results of the Company;
c. competitive conditions within the motor carrier industry together
with general economic conditions which may influence operating results in
either a positive or negative manner;
d. competitive conditions in the industry which may affect the
Company's ability to attract and retain executives who possess the skills,
talents, and abilities to lead the business enterprise; and
e. such other items as the Committee members shall, in their sole
discretion, determine to be appropriate. Compensation may be granted by the
Committee, in its discretion, in the form of salary, bonuses and certain
perquisites. In addition, the Committee is authorized to make grants of
stock options to corporate officers and other key employees from stock
option plans that have been previously approved by the Board of Directors
and the Shareholders of the Company.
The total compensation for officers of subsidiary companies of the Company,
including Messrs. Hertwig, Randolph, and Taggart, is established by the Chief
Executive Officer of the Company in consultation with members of the board of
directors of each respective subsidiary.
COMPENSATION PHILOSOPHY
The Company's compensation policies are designed to attract and retain
competent management. The Board's goal is to provide competitive salaries to its
executive officers and to give them performance incentives to motivate superior
performance on behalf of the Company and its shareholders. The Company has
structured its compensation program such that the individual named executives
share the risk with the Company's shareholders. Less emphasis is placed on base
compensation and a corresponding greater emphasis is placed on incentive
compensation. The Company has generally used two types of incentive
compensation: annual bonuses linked to specific performance goals, payable in
cash, and long-term compensation in the form of stock options. The Committee
believes that linking long-term compensation to the value of the Company's
common stock is especially effective because it aligns the interests of
management with those of the Company's shareholders.
The Company's compensation program is designed to enhance stockholder value
by linking a large part of the executive's compensation directly to performance.
The objective is to provide base salary for executives at or below the 50th
percentile for executives at similar companies, while providing an opportunity
to achieve total compensation (including base salary, annual bonus and long-term
incentives) at the 50th percentile or above for exceptional performance. The
primary components of the compensation program are base salary, an annual cash
bonus driven by performance against pre-established financial objectives and
other strategic goals, and a long-term opportunity to participate in increased
stockholder value through grants of stock options at market price.
INDEPENDENT CONSULTANTS
In 1993, the Company employed Arthur Andersen & Co. as an independent
consultant to advise the Committee on compensation matters. Arthur Andersen
personnel provided data and expertise on the subjects of base salaries,
short-term incentive (bonus) plans and long-term incentive (stock option) plans.
I-14
<PAGE> 26
The consultants obtained a job description for certain of the executive
officers of the Company. Based on these descriptions, the consultants generated
information comparing these executives to persons holding similar positions at
comparable companies. This comparative group of companies was used to determine
the 50th percentile of compensation levels in the areas of base salary,
short-term incentive compensation, and long-term incentive compensation. This
group consisted of companies located throughout the United States, all of which
are involved in the surface transportation of freight and, in some cases, other
service areas similar to those provided by Company subsidiaries. Appropriate
adjustments were made to account for size differentials. This is not the same
group of companies that comprises the Dow Jones Transportation Index, which is
the group used for comparison on the performance chart shown on page I-13.
BASE SALARY
Base salaries were reviewed by the Committee using competitive data
provided by the compensation consultants that considers industry and national
trends. Individual salaries were adjusted based on this information and in
consideration of the duties and responsibilities of the individual position. The
Committee recognizes that job responsibilities vary from company to company and
that the particular duties of each of the Company's officers must be taken into
consideration when making industry comparisons.
The salary of Mr. Scott was established in the employment agreement entered
into with him in 1993. The salaries of the other named executive officers were
modestly increased during 1994. Based upon information furnished by the
compensation consultants, the Committee believes that these salaries are
generally competitive with those of executives in somewhat comparable positions
with other trucking companies.
ANNUAL BONUS
In 1994, Messrs. Scott, Huffstetler, and Hertwig were covered by a
short-term bonus plan covering all salaried personnel that set bonus amounts
based on operating earnings per share exclusive of changes in accounting
principles and nonrecurring charges. Bonuses are calculated as a percentage of
base salary. In 1995, Mr. Scott will participate in a similar plan. In 1995, Mr.
Hertwig will participate in a similar plan based on improvements in the
operating earnings at Carolina Freight Carriers Corporation.
In 1994, Mr. Randolph was covered by an incentive bonus plan covering all
salaried personnel at Cardinal Freight Carriers Corporation. Cardinal's earnings
before income taxes must exceed 4.5% of gross sales. For earnings above the
threshold, 25% were allocated to a bonus pool in which Mr. Randolph participates
at a set percentage. A similar bonus structure is in place for 1995, except that
the bonus pool is limited to 12% of earnings before income taxes and bonuses.
In 1994, Mr. Taggart was covered by an individual incentive bonus plan that
set bonus amounts based on G. I. Trucking Company's contributions to the
Company's operating earnings per share exclusive of changes in accounting
principles and nonrecurring charges. A similar bonus structure is in place for
1995.
LONG-TERM COMPENSATION
Stock Option Awards
The Committee believes that options motivate key employees to act in the
best interests of stockholders. Stock options, under the Company's various stock
option plans, are the only long-term incentive the CEO and other named executive
officers receive. In determining the number of options granted to executive
officers, the Compensation Committee considers the executive's level of
responsibility, and other more qualitative factors. The committee also considers
the number of options currently held by the executive. The decision to grant Mr.
Scott additional options in 1994 was based on his increased level of
responsibility and potential contribution to the Company.
ADDITIONAL BENEFITS
The Company provides a Supplemental Benefit Plan (described herein) for its
officers and certain other key employees which is designed to retain the
services of such persons on a long-term basis. Executive officers
I-15
<PAGE> 27
and all other nonunion employees also participate in either the WorldWay
Corporation Employees Pension Plan or a similar plan maintained by a subsidiary
company. Executive officers, along with all other employees, may participate in
either the WorldWay Corporation Employee Savings and Protection Plan (a 401(k)
plan) or in a similar plan offered by a subsidiary company. Executive officers,
along with all other eligible employees participate in group health, disability,
and life insurance plans.
COMPENSATION COMMITTEE
Paul F. Richardson, Chairman
J. M. Carstarphen
Dr. James G. Martin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Charles L. Grace, a member of the Company's Board of Directors and member
of the Compensation Committee during part of 1994, is the President of Cummins
Atlantic, Inc. In 1980, the Company made the decision to specify one engine for
use in all line tractors purchased in 1980 and thereafter. Cummins engines were
specified to the various tractor manufacturers such as Ford, Freightliner,
International, and White, from which the Company purchases tractors. Cummins
Atlantic, Inc. is the distributor for Cummins diesel engines, parts, and service
for the three-state area of North Carolina, South Carolina, and Virginia.
Cummins Atlantic, Inc. receives indirect sales compensation from Cummins Engine
Company for technical support of the Company's account. The Company also
regularly purchases Cummins engine parts from area dealers which have purchased
the parts from Cummins Atlantic, Inc. If problems occur during the warranty
period, Cummins Atlantic, Inc. performs the warranty work and is reimbursed for
such work from Cummins Engine Company. In addition the Company, from time to
time, uses the services of Cummins Atlantic, Inc. for repair work not covered by
warranty, and in 1994 the Company paid $161,254 to Cummins Atlantic, Inc. for
such work.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Company Common Stock and other equity
securities of the Company. Executive officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms which they file.
To the Company's knowledge, based solely on review of information furnished
to the Company, reports filed through the Company and representations that no
other reports were required, all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent beneficial owners
were complied with during 1994.
John B. Yorke
Vice President and General Counsel
July 14, 1995
I-16
<PAGE> 1
EXHIBIT 1
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Dated as of July 8, 1995
Among
Arkansas Best Corporation,
ABC Acquisition Corporation
And
WorldWay Corporation
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Company Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.3 Voting Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.4 Permanent and Temporary ICC Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.5 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.5 Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.1 Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.2 Representations and Warranties of Parent and Sub . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE V Covenants Relating to Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.3 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.4 Voting Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.5 Temporary Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.6 Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.1 Shareholder Meeting; Preparation of the Proxy Statement . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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<TABLE>
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<S> <C>
SECTION 6.2 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.3 Reasonable Efforts; Notification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.4 Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.5 Indemnification and Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.6 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.7 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.8 Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.9 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VII Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger. . . . . . . . . . . . . . . . . . 51
ARTICLE VIII Termination, Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.5 Procedure for Termination, Amendment, Extension or Waiver. . . . . . . . . . . . . . . . . . . 54
ARTICLE IX General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.1 Nonsurvival of Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.3 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.4 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.6 Entire Agreement; No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.7 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.9 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.10 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
EXHIBIT A Conditions of the Offer
EXHIBIT B Voting Trust Agreement
EXHIBIT C Plan of Merger of ABC Acquisition Corporation with and
into Worldway Corporation
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 8, 1995, among
Arkansas Best Corporation, a Delaware corporation ("Parent"), ABC Acquisition
Corporation, a North Carolina corporation ("Sub") and a wholly owned subsidiary
of Parent, and WorldWay Corporation, a North Carolina corporation (the
"Company").
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement and Plan of Merger,
including, without limitation, the Plan of Merger and all other exhibits
attached hereto (collectively, the "Agreement");
WHEREAS in furtherance of such acquisition, Parent will cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the issued and outstanding
shares of common stock, par value $.50 per share, of the Company (the "Company
Common Stock"), at a price per share of Company Common Stock of $11.00 net to
the seller in cash (such price, the "Offer Price"), upon the terms and subject
to the conditions set forth in this Agreement; and the Board of Directors of
the Company has approved the Offer and is recommending that the Company's
shareholders accept the Offer;
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the Offer and the merger of Sub into the Company, as
set forth below (the "Merger"), upon the terms and subject to the conditions
set forth in this Agreement, whereby each issued and outstanding share of
Company Common Stock, other than shares owned directly or indirectly by Parent
or by any subsidiary of the Company and other than Dissenting Shares (as
defined in Section 3.1(e)), will be converted into the right to receive the
price per share paid in the Offer;
WHEREAS, upon consummation of the Offer, the Company will
cause the shares of the Company's ICC-regulated subsidiaries (the "ICC
Subsidiaries") to be deposited in independent voting trusts (the "Voting
Trusts"), pending receipt of the exemption from or approval by the
<PAGE> 5
Interstate Commerce Commission (the "ICC") of the acquisition by Parent of the
Company; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I
The Offer
SECTION 1.1 The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable, but in no event later than five business
days after the public announcement of the Offer, Sub shall, and Parent shall
cause Sub to, commence the Offer. The obligation of Sub to, and of Parent to
cause Sub to, commence the Offer and accept for payment, and pay for, any and
all shares of Company Common Stock tendered pursuant to the Offer shall be
subject to the conditions set forth in Exhibit A (any of which may be waived in
whole or in part by Sub in its sole discretion) and to the terms and conditions
of this Agreement; provided, however, that Sub shall not, without the Company's
written consent, waive the Minimum Condition (as defined in Exhibit A). Sub
expressly reserves the right to modify the terms of the Offer, except that,
without the consent of the Company, Sub shall not (i) reduce the number of
shares of Company Common Stock which Sub is offering to purchase in the Offer,
(ii) reduce the Offer Price (other than as permitted by the terms of the
Offer), (iii) modify or add to the conditions set forth in Exhibit A, or (iv)
change the form of consideration payable in the Offer. Notwithstanding the
foregoing, Sub may, without the consent of the Company, (i) extend the Offer
beyond any scheduled expiration date if at any scheduled expiration date of the
Offer, any of the conditions to Sub's obligation to accept for payment, and pay
for, shares of Company Common Stock shall not be satisfied or waived, until
such time as such conditions are satisfied or waived and (ii)
2
<PAGE> 6
extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer.
(b) On the date of commencement of the Offer, Parent and
Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which shall contain an offer to purchase and a related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents included therein pursuant to which the Offer will be made, together
with any supplements or amendments thereto, the "Offer Documents"). Parent and
Sub agree that the Offer Documents shall comply as to form in all material
respects with the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations promulgated thereunder and, on the date
filed with the SEC and first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
Sub with respect to information supplied in writing by the Company for
inclusion or incorporation by reference in the Offer Documents. Each of
Parent, Sub and the Company agrees promptly to correct any information provided
by it for use in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and each of
Parent and Sub further agrees to take all steps necessary to amend or
supplement the Offer Documents and to cause the Offer Documents as so amended
or supplemented to be filed with the SEC and to be disseminated to the
Company's shareholders, in each case as and to the extent required by
applicable Federal securities laws. The Company and its counsel shall be given
a reasonable opportunity to review and comment upon the Offer Documents and all
amendments and supplements thereto prior to their filing with the SEC or
dissemination to shareholders of the Company. Parent and Sub agree to provide
the Company and its counsel any comments Parent, Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments and shall provide the Company and its
counsel an opportunity to participate, includ-
3
<PAGE> 7
ing by way of discussion with the SEC or its staff, in the response of Parent
and/or Sub to such comments.
(c) Parent shall provide or cause to be provided to Sub
on a timely basis the funds necessary to accept for payment, and pay for, any
shares of Company Common Stock that Sub accepts for payment, and becomes
obligated to pay for, pursuant to the Offer.
SECTION 1.2 Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents that the Board of Directors of the
Company, at a meeting duly called and held, duly and unanimously by vote of all
directors adopted resolutions approving this Agreement, the Offer and the
Merger determining that the terms of the Offer and the Merger are fair to, and
in the best interests of, the Company's shareholders and recommending that the
Company's shareholders approve and adopt this Agreement, and accept the Offer
and tender their shares pursuant to the Offer. The Company has been advised by
each of its directors and by each executive officer who as of the date hereof
is actually aware (to the knowledge of the Company) of the transactions
contemplated hereby that each such person either intends to tender pursuant to
the Offer all shares of Company Common Stock owned by such person or vote all
shares of Company Common Stock owned by such person in favor of the Merger.
(b) Not later than the date the Offer Documents are filed
with the SEC or as shortly thereafter as is practicable, the Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (such Schedule 14D-9, as amended from time to time, the
"Schedule 14D-9") containing the recommendation described in Section 1.2(a) and
shall mail the Schedule 14D-9 to the shareholders of the Company. The Schedule
14D-9 shall comply as to form in all material respects with the Exchange Act
and the rules and regulations promulgated thereunder and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information supplied in writing
4
<PAGE> 8
by Parent or Sub for inclusion or incorporation by reference in the Schedule
14D-9. Each of the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to the Company's
shareholders, in each case as and to the extent required by applicable Federal
securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment upon the Schedule 14D-9 and all amendments
and supplements thereto prior to their filing with the SEC or dissemination to
shareholders of the Company. The Company agrees to provide Parent and its
counsel with any comments the Company or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments and shall provide Parent and its counsel an opportunity to
participate, including by way of discussions with the SEC or its staff, in the
response of the Company to such comments.
(c) In connection with the Offer, the Company shall cause
its transfer agent to furnish Sub promptly with mailing labels containing the
names and addresses of the record holders of Company Common Stock as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of shareholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Company Common Stock,
and shall furnish to Sub such information and assistance (including updated
lists of shareholders, security position listings and computer files) as Parent
may reasonably request in communicating the Offer to the Company's
shareholders.
SECTION 1.3 Voting Trusts. Promptly upon the acquisition of
Company Common Stock pursuant to the Offer, the Company will cause the shares
of each ICC Subsidiary to be deposited in separate Voting Trusts. Each such
Voting Trust shall be substantially in accordance with the terms and conditions
of a voting trust agreement in the form of Exhibit B hereto (the "Voting Trust
Agreement").
5
<PAGE> 9
SECTION 1.4 Permanent and Temporary ICC Authority. Upon
execution of this Agreement or as soon thereafter as practical, Parent, Sub and
the Company shall file a Notice of Exemption with the ICC pursuant to 49 C.F.R.
Part 1186 to exempt this transaction from regulatory approval and shall file
with the ICC an application for temporary authority pursuant to 49 U.S.C. 11349
to authorize Parent or Sub to operate the properties of the Company pending
receipt of the exemption from or approval by the ICC. If the application for
temporary authority is granted, following the purchase of Company Common Stock
pursuant to the Offer, Parent or Sub shall have the full authority to manage
and operate the properties of the Company subject only to whatever restrictions
and conditions may be imposed by the ICC.
SECTION 1.5 Directors. (a) Promptly upon the acceptance for
payment of any shares of Company Common Stock by Sub pursuant to the Offer, Sub
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company as will give Sub,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board of Directors equal to at least that number of directors that equals
the product of the total number of directors on such Board (giving effect to
the directors elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of shares of Company Common Stock held by Sub,
including shares of Company Common Stock accepted for payment pursuant to the
Offer, bears to the number of shares of Company Common Stock then outstanding,
and the Company and its Board of Directors shall, at such time, take any and
all such action needed to cause Sub's designees to be appointed to the
Company's Board of Directors (including to cause directors to resign).
(b) The Company's obligations to appoint designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.5 and shall include in the Schedule 14D-9 mailed to
shareholders promptly after the commencement of the Offer such information with
respect to the Company and its officers
6
<PAGE> 10
and directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 1.5.
ARTICLE II
The Merger
SECTION 2.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the North
Carolina Business Corporation Act (the "NCBCA"), Sub shall be merged with and
into the Company at the Effective Time (as hereinafter defined). Following the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of the Company in
accordance with the NCBCA. At the election of Parent prior to the commencement
of the Offer, any direct or indirect wholly owned subsidiary (as defined in
Section 9.3) of Parent may be substituted for Sub as a constituent corporation
in the Merger. In such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing.
SECTION 2.2 Closing. The closing of the Merger will take
place at 10:00 a.m. on a date to be specified by the Parent or Sub, which may
be on, but shall be no later than the third business day after, the day on
which there shall have been satisfaction or waiver of the conditions set forth
in Article VII (the "Closing Date"), at the offices of Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, N.Y. 10022, unless another date or
place is agreed to in writing by the parties hereto.
SECTION 2.3 Effective Time. On the Closing Date, or as soon
as practicable thereafter, the parties shall file articles of merger or other
appropriate documents (in any such case, the "Articles of Merger") executed in
accordance with the relevant provisions of the NCBCA and shall make all other
filings or recordings required under the NCBCA. The Merger shall become
effective at such time as the Articles of Merger are duly filed with the North
Carolina Secretary of State, or at such other later time as Sub and the Company
shall agree
7
<PAGE> 11
and specify in the Articles of Merger (the time the Merger becomes effective
being the "Effective Time").
SECTION 2.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 55-11-06 of the NCBCA.
SECTION 2.5 Articles of Incorporation and Bylaws.(a) The
Articles of Incorporation, as amended, of the Company, as in effect immediately
prior to the Effective Time of the Merger, shall become the Articles of
Incorporation of the Surviving Corporation after the Effective Time, and
thereafter may be amended in accordance with its terms and as provided by law
and this Agreement.
(b) The Amended and Restated By-laws of the Company as in
effect on the Effective Time shall become the By-laws of the Surviving
Corporation.
SECTION 2.6 Directors. The directors of Sub immediately
prior to the Effective Time shall become the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 2.7 Officers. The officers of the Company
immediately prior to the Effective Time shall become the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.1 Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Company Common Stock or any shares of capital stock of Sub:
8
<PAGE> 12
(a) Capital Stock of Sub. Each share of the capital
stock of Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and become one fully paid and nonassessable share of
Common Stock, par value $.50 per share, of the Surviving Corporation.
(b) Cancellation of Certain Stock. Each share of Company
Common Stock that is owned by Parent or any subsidiary thereof or by any
subsidiary of the Company shall automatically be cancelled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares cancelled pursuant
to Section 3.1(b) and Dissenting Shares, as defined in Section 3.1(e), except
to the extent permitted under Section 3.1(e)) shall be converted into the right
to receive from the Surviving Corporation in cash, without interest, the price
paid for each share of Company Common Stock in the Offer (the "Merger
Consideration"). If the Merger Consideration for the Company Common Stock
shall be different from $11.00 per share, the parties hereto agree to execute
an amendment to this Agreement including an amended Plan of Merger reflecting
such different price. As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) Company Preferred Stock. Subject to exercise of
dissenters' rights under Article 13 of the NCBCA, all shares of preferred
stock, par value $1.00 per share, of the Company ("Company Preferred Stock"),
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and unaffected by the Merger.
(e) Shares of Dissenting Holders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding shares
of Company Common Stock that are issued and outstanding as of the Effective
Time
9
<PAGE> 13
and that are held by a shareholder who has exercised his right (to the extent
such right is available by law) to demand and to receive the fair value of such
shares (the "Dissenting Shares") under Article 13 of the NCBCA shall not be
converted into the right to receive the Merger Consideration unless and until
the holder shall have failed to perfect or shall have effectively withdrawn or
lost his right to dissent from the Merger under the NCBCA to receive such
consideration as may be determined to be due with respect to such Dissenting
Shares pursuant to and subject to the requirements of Article 13 of the NCBCA.
If any such holder shall have so failed to perfect or have effectively
withdrawn or lost such right, such holder's Company Common Stock shall
thereupon be deemed to have been converted into and to have become, as of the
Effective Time, the right to receive the Merger Consideration. The Company
shall give Parent (i) prompt notice of any notice or demands for appraisal or
payment for, shares of Company Common Stock or Company Preferred Stock received
by the Company and (ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to any such demands or notices. The
Company shall not, without the prior written consent of Parent, make any
payment with respect to, or settle, offer to settle or otherwise negotiate, any
such demands.
SECTION 3.2 Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall designate a bank or trust company
(reasonably acceptable to the Company) to act as paying agent in the Merger
(the "Paying Agent"), and, from time to time on, prior to or after the
Effective Time, Parent shall deposit, or cause the Surviving Corporation to
deposit, with the Paying Agent immediately available funds in amounts and at
the times necessary for the payment of the Merger Consideration upon surrender
of certificates representing Company Common Stock as part of the Merger
pursuant to Section 3.1, it being understood that any and all interest earned
on funds made available to the Paying Agent pursuant to this Agreement shall be
turned over to Parent.
(b) Exchange Procedure. As soon as reasonably
practicable after the Effective Time, the Surviving Corporation shall require
the Paying Agent to mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certifi-
10
<PAGE> 14
cates") whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 3.1, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by the Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash into which the shares of
Company Common Stock theretofore represented by such Certificate shall have
been converted pursuant to Section 3.1, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer records of the
Company, payment may be made to a person other than the person in whose name
the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such tax has been
paid or is not applicable. Until surrendered as contemplated by this Section
3.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
3.1. No interest will be paid or will accrue on the cash payable upon the
surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock.
All cash paid upon the surrender of Certificates in accordance with the terms
of this Article III shall be deemed to have been paid in full satisfaction of
all rights pertaining to the shares of Company Common Stock theretofore
represented by such Certificates, and, from and after the Effective Time, there
11
<PAGE> 15
shall be no further registration of transfers on the stock transfer books of
the Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be cancelled and exchanged as provided in this
Article III, except as otherwise provided by law.
(d) No Liability. None of Parent, Sub, the Company or
the Paying Agent shall be liable to any person in respect of any cash delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE IV
Representations and Warranties
SECTION 4.1 Representations and Warranties of the Company.
The Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of
the Company and each of its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of the Company
and its subsidiaries is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have a
material adverse effect on the Company. The Company has made available to
Parent complete and correct copies of the Articles of Incorporation, as
amended, and Amended and Restated By-laws of the Company, in each case as
amended to the date of this Agreement, and has delivered the certificates of
incorporation and by-laws or other organizational documents of its Significant
Subsidiaries, in each case as amended to the date of this Agreement. The
respective certificates of incorporation and by-laws or other organizational
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<PAGE> 16
documents of the Significant Subsidiaries of the Company do not contain any
provision limiting or otherwise restricting the ability of the Company to
control such subsidiaries. For purposes of this Agreement, a "Significant
Subsidiary" means any subsidiary of the Company that constitutes a significant
subsidiary within the meaning of Rule 1-02 of Regulation S-X of the SEC.
(b) Subsidiaries. The list of subsidiaries of the
Company filed by the Company with its most recent Report on Form 10-K is a true
and accurate list of all the subsidiaries of the Company which are required to
be set forth therein. All the outstanding shares of capital stock of each
Significant Subsidiary are owned by the Company or by another wholly owned
subsidiary of the Company, free and clear of all liens, except as set forth in
Schedule 4.1(b).
(c) Capital Structure. The authorized capital stock of
the Company consists of 20,000,000 shares of Company Common Stock, par value
$.50 per share, 2,000,000 shares of Company Preferred Stock and 25,000 shares
of preference stock, par value $100.000 per share ("Company Preference Stock").
At the close of business on July 7, 1995, (i) 6,561,672 shares of Company
Common Stock, 22,112 shares of Company Preferred Stock and no shares of
Company Preference Stock were issued and outstanding, (ii) 875,450 shares of
Company Common Stock were reserved for issuance upon exercise of outstanding
Stock Options (as defined in Section 6.4), and (iii) 1,052,505 shares of
Company Common Stock were reserved for issuance in respect of the Company's
6.25% Convertible Subordinated Debentures due 2011 (the "Debentures") issued
pursuant to the Indenture, dated as of April 15, 1986 between the Company and
First Union National Bank, as Trustee (the "Indenture"), $49,994,000 principal
amount of which are currently outstanding. Except as set forth above, as of
the date of this Agreement: (i) no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding;
(ii) there were no stock appreciation rights, restricted stock grant or
contingent stock grants and there are no other outstanding contractual rights
to which the Company is a party the value of which is based on the value of
shares of Company Common Stock; (iii) all outstanding shares of capital stock
of the Company are, and all shares which may be issued will be, when issued,
duly authorized,
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<PAGE> 17
validly issued, fully paid and nonassessable and not subject to preemptive
rights; and (iv) there are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of
the Company may vote. Except as set forth above, as of the date of this
Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its subsidiaries is a party or by which any of them
is bound obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or of any of its subsidiaries
or obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are not any outstanding
contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to approval of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of this
Agreement, to approval of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock. This Agreement has been duly
executed and delivered by the Company and, assuming this Agreement constitutes
the valid and binding obligation of Parent and Sub, constitutes the valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and injunctive relief may be subject to equitable
defenses
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<PAGE> 18
and to the discretion of the court before which any proceeding therefor may be
brought. Except as set forth in Schedule 4.1(d), the execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated by
this Agreement (including the changes in the composition of the Board of
Directors of the Company) and compliance with the provisions of this Agreement
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any lien upon any of the
properties or assets of the Company or any of its subsidiaries under, (i) the
Articles of Incorporation, as amended, or Amended and Restated By-laws of the
Company or the comparable charter or organizational documents of any of its
Significant Subsidiaries, (ii) any loan or credit agreement note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its Significant
Subsidiaries or their respective properties or assets (including all agreements
described pursuant to Section 4.1(u)) or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) or (iii), any such conflicts, violations, defaults, rights
or liens that individually or in the aggregate would not (x) impair in any
material respect the ability of the Company to perform its obligations under
this Agreement or (y) prevent or impede, in any material respect, the
consummation of any of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), is required
by the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (i) if required,
the filing of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (ii) the
filing with the SEC of (x) the Schedule 14D-9, (y) a proxy
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<PAGE> 19
statement relating to any required approval by the Company's shareholders of
this Agreement (as amended or supplemented from time to time, the "Proxy
Statement") and (z) such reports under Section 13(a) of the Exchange Act as may
be required in connection with this Agreement and the transactions contemplated
by this Agreement, (iii) the filing of the Articles of Merger with the North
Carolina Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(iv) compliance with any applicable requirements relating to approval, or
exemption from approval, of the Voting Trusts, the Offer and the Merger and the
application for temporary authority by the ICC, (v) as may be required by any
applicable state securities or "blue sky" laws, (vi) as may be required by the
New Jersey Industrial Site Recovery Act or similar state environmental laws and
(vii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, (x) impair, in any material respect, the
ability of the Company to perform its obligations under this Agreement or (y)
prevent or significantly delay the consummation of the transactions
contemplated by this Agreement.
(e) SEC Documents; Financial Statements. The Company has
filed all required reports, proxy statements, forms, and other documents with
the SEC since January 1, 1993 (the "SEC Documents"). As of their respective
dates, (i) the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and (ii) none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in
the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied
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<PAGE> 20
on a consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly present the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in Schedule 4.1(e) and except as set forth
in the SEC Documents filed and publicly available prior to the date of this
Agreement, and except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of the most
recent consolidated balance sheet included in the SEC Documents filed and
publicly available prior to the date of this Agreement, neither the Company nor
any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by generally
accepted accounting principles to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes thereto.
(f) Information Supplied. None of the information
supplied or to be supplied by the Company expressly for inclusion or
incorporation by reference in (i) the Offer Documents or (ii) the proxy
statement to be distributed to the Company's shareholders in connection with
the Merger (the "Proxy Statement"), will, and in the case of the Offer
Documents, at the time the Offer Documents are filed with the SEC and first
published, sent or given to the Company's shareholders, or, in the case of the
Proxy Statement, on the date the Proxy Statement is first mailed to the
Company's shareholders and at the time of the meeting of the Company's
shareholders held to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company shareholder meeting
which shall have become false or misleading. The Proxy Statement will comply
as to form in all material respects with the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
the Company with respect to statements made or incorporated
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<PAGE> 21
by reference therein based on information supplied by Parent or Sub for
inclusion or incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as set
forth in Schedule 4.1(g), since December 31, 1994, the Company and its
subsidiaries have conducted their respective businesses only in the ordinary
course, and there has not been (i) any material adverse change in the Company,
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (x) any granting by
the Company or any of its subsidiaries to any officer of the Company or any of
its subsidiaries of any increase in compensation, except in the ordinary course
of business consistent with prior practice, (y) any granting by the Company or
any of its subsidiaries to any such officer of any increase in severance or
termination pay, except as part of a standard employment package to any person
promoted or hired (but not including the five most senior officers), or (z)
except termination arrangements in the ordinary course of business consistent
with past practice with employees other than any executive officer of the
Company, any entry by the Company or any of its subsidiaries into any
employment, severance or termination agreement with any such officer, (v) any
damage, destruction or loss, whether or not covered by insurance, that has or
reasonably could be expected to have a material adverse effect on the Company
or (vi) any change in accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
(h) Litigation. Except as set forth in Schedule 4.1(h)
or to the extent reserved for as reflected on the Company's financial
statements for the year ended December 31, 1994 or otherwise fully covered by
insurance, there are (i) no suits, actions or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, (ii) no complaints, lawsuits or other proceedings pending or, to
the knowledge of the Company, threatened in any forum by
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<PAGE> 22
or on behalf of any present or former employee of the Company or any of its
subsidiaries, any applicant for employment or classes of the foregoing alleging
breach of any express or implied contract of employment, any law or regulation
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship,
and (iii) no judgments, decrees, injunctions or orders of any Governmental
Entity or arbitrator outstanding against the Company that, individually or in
the aggregate, could reasonably be expected to result in money damages in
excess of $100,000 (or in excess of $75,000 in the case of an arbitration) or
have a material adverse effect on the Company.
(i) Absence of Changes in Benefit Plans; SEC Disclosure.
Except as disclosed in Schedule 4.1(i), there has not been any adoption or
amendment by the Company or any of its subsidiaries or any ERISA Affiliate (as
defined in Section 4.1(j) hereof) of any Benefit Plan (as defined in Section
4.1(j) hereof) since December 31, 1994. Except as disclosed in Schedule
4.1(i), neither the Company nor any of its subsidiaries, nor any ERISA
Affiliate has any formal plan or commitment, whether legally binding or not, to
create any additional Benefit Plan or modify or change any existing Benefit
Plan that would affect any employee or terminated employee of the Company, a
subsidiary of the Company or any ERISA Affiliate. All employment, consulting,
severance, termination or indemnification agreements, arrangements or
understandings between the Company or any of its subsidiaries and any current
or former officer or director of the Company or any of its subsidiaries which
are required to be disclosed in the SEC Documents have been disclosed therein.
(j) Employee Benefits; ERISA. (i) Schedule 4.1(j)(i)
contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required
to be contributed to or by the Company, any of its subsidiaries or by any trade
or
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business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company or any subsidiary of the Company would be deemed a "single
employer" within the meaning of section 4001 of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA"), for the benefit of any employee or terminated employee of
the Company, its subsidiaries or any ERISA Affiliate, whether formal or
informal and whether legally binding or not (the "Benefit Plans"), except for
Benefit Plans whose aggregate annualized cost to the Company is not in excess
of $50,000. The Company has amended Sections 4 and 6 of the Carolina Freight
Corporation and Subsidiaries 1995 Non-Qualified Stock Option Plan so as not to
be required to issue options thereunder.
(ii) Except as set forth in Schedule 4.1(j), with respect to
each Benefit Plan, the Company has delivered if requested by Parent a true and
complete copy thereof (including all amendments thereto), as well as true and
complete copies of the annual reports, if required under ERISA, with respect
thereto for the last two completed plan years; the actuarial reports, if
required under ERISA, with respect thereto for the last two completed plan
years; the most recent report prepared with respect thereto in accordance with
Statement of Financial Accounting Standards No. 87, Employer's Accounting for
Pensions; the most recent Summary Plan Description, together with each Summary
of Material Modifications, if required under ERISA with respect thereto; if the
Benefit Plan is funded through a trust or any third party funding vehicle, the
trust or other funding agreement (including all amendments thereto) and the
latest financial statements thereof; and the most recent determination letter
received from the Internal Revenue Service with respect to each Benefit Plan
that is intended to be qualified under section 401 of the Internal Revenue Code
of 1986, as from time to time amended (the "Code").
(iii) Except as set forth in Schedule 4.1(j), no liability
under Title IV of ERISA has been incurred by the Company, its subsidiaries or
any ERISA Affiliate since the effective date of ERISA that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company, its subsidiaries or any ERISA Affiliate of incurring a liability under
such Title, other than liability for premiums due the Pension
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Benefit Guaranty Corporation ("PBGC") (which premiums have been paid when due).
The maximum aggregate potential liability for benefits relating to individuals
who were previously covered under the G.I. Trucking Company Employees
Retirement Plan and who were not fully vested when such plan was frozen is no
greater than $600,000.
(iv) The PBGC has not instituted proceedings to terminate any
Benefit Plan and no condition exists that presents a material risk that such
proceedings will be instituted.
(v) Except as set forth in Schedule 4.1(j), with respect to
each Benefit Plan which is subject to Title IV of ERISA, neither (a) the
present value of accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan nor (b) the "benefit
liabilities" (as defined in section 4001(a)(18) of ERISA) thereunder, exceeded,
as of its latest valuation date, the then current value of the assets of such
plan allocable to such accrued benefits.
(vi) Neither the Company, nor any subsidiary of the Company,
nor any ERISA Affiliate, nor any Benefit Plan, nor any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company, any subsidiary of the Company
or any ERISA Affiliate, any Benefit Plan, any such trust, or any trustee or
administrator thereof, or any party dealing with any Benefit Plan or any such
trust could be subject to either a civil penalty assessed pursuant to section
409 or 502(i) of ERISA or a tax imposed pursuant to section 4975 or 4976 of the
Code.
(vii) Contributions which the Company, any subsidiary of the
Company or an ERISA Affiliate are required to make with respect to each Benefit
Plan (for which contribution deductions are governed by section 404(a) of the
Code) for the plan years of such plans ending with or within the most recent
tax year of the Company, the subsidiary or ERISA Affiliate ended prior to the
date of this Agreement either (A) were made prior to the last day of such tax
year or (B) have been or will be made subsequent to such last day within the
time required by section 404(a)(6) of the Code in order to be deemed to
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have been made on the last day of such tax year; and all contribution amounts
properly accrued through the Closing Date with respect to the current plan year
of each Benefit Plan will be paid by the Company, a subsidiary of the Company
or ERISA Affiliate, as appropriate, on or prior to the Closing Date or will be
properly recorded on the Balance Sheet in accordance with Financial Accounting
Standards Board Statement No. 87; and no Benefit Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each Benefit Plan ended prior to
the date of this Agreement; and all contributions required to be made with
respect thereto (whether pursuant to the terms of any Benefit Plan or
otherwise) on or prior to the date of this Agreement have been timely made.
(viii) With respect to any Benefit Plan that is a
"multiemployer pension plan," as such term is defined in section 3(37) of
ERISA, covering employees of the Company, any subsidiary of the Company or any
ERISA Affiliate, (a) neither the Company nor any subsidiary of the Company nor
any ERISA Affiliate has, since July 1, 1989, made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively defined
in sections 4203 and 4205 of ERISA, (b) no event has occurred that presents a
material risk of a partial withdrawal, (c) neither the Company, nor any
subsidiary of the Company nor any ERISA Affiliate has any contingent liability
under section 4204 of ERISA, and (d) to the actual knowledge of the Company, no
such plan is in reorganization within the meaning of section 4241 of ERISA and
no circumstances exist that present a material risk that any such plan will go
into reorganization.
(ix) Each Benefit Plan has been operated and administered in
all material respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code, since July 1, 1989.
(x) Except as set forth in Schedule 4.1(j), each Benefit Plan
which is intended to be "qualified" within the meaning of section 401(a) of the
Code is so qualified and the trusts maintained thereunder are exempt from
taxation under section 501(a) of the Code.
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(xi) No Benefit Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees of the Company, its subsidiaries or any ERISA
Affiliate beyond their retirement or other termination of service (other than
(a) coverage mandated by applicable law, (b) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in section
3(2) of ERISA, (c) deferred compensation benefits accrued as liabilities on the
books of the Company or the ERISA Affiliates or (d) benefits the full cost of
which is borne by the current or former employee (or his beneficiary).
(xii) Except as disclosed in Schedule 4.1(j) or expressly
provided in this Agreement, the consummation of the transactions contemplated
by this Agreement will not (a) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, (b) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer, or (c) result in any prohibited transaction described in section 406
of ERISA or section 4975 of the Code for which an exemption is not available.
(xiii) Except as set forth in Schedule 4.1(j), there are no
pending, threatened or, to the knowledge of the Company or any ERISA Affiliate,
anticipated claims by or on behalf of any Benefit Plan, by any employee or
beneficiary covered under any such Benefit Plan, or otherwise involving any
such Benefit Plan (other than routine claims for benefits).
(xiv) No Benefit Plan of the Company or its subsidiaries or
other arrangement authorizes grants of either stock appreciation rights or
restricted stock of the Company and there are no outstanding stock appreciation
rights or restricted stock of the Company.
(xv) Each Benefit Plan that is not covered by ERISA
pursuant to Section 4(b)(4) of ERISA (hereinafter a "Foreign Benefit Plan") is
in compliance in all material respects with all requirements of law applicable
thereto and the respective requirements of the governing documents of such
plan. Neither the Company nor any subsidiary or ERISA Affiliate has incurred
any liability with
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respect to a Foreign Benefit Plan (other than for contributions not yet due)
that, when aggregated with other such liabilities, would result in a material
liability to the Company or any of its subsidiaries or ERISA Affiliates, which
liability has not been satisfied in full as of the date hereof. To the
knowledge of the Company, no condition exists and no event has occurred with
respect to any Foreign Benefit Plan that presents a risk that the Company or
any of its subsidiaries or ERISA Affiliates will incur a material liability
with respect to such plan.
(k) Taxes. (i) Each of the Company and each of its
subsidiaries has filed all Federal, and all material state, local and foreign
income tax returns and all other material tax returns and reports required to
be filed by it. To the knowledge of the Company, all such returns are complete
and correct in all material respects. To the knowledge of the Company, each of
the Company and each of its subsidiaries has paid (or the Company has paid on
its subsidiaries' behalf) all taxes shown as due on such returns and all
material taxes for which no return was required to be filed, and the most
recent financial statements contained in the SEC Documents reflect reserves in
accordance with generally accepted accounting principles for all taxes payable
by the Company and its subsidiaries for all taxable periods and portions
thereof through the date of such financial statements.
(ii) Except as set forth in Schedule 4.1(k), no deficiencies
for any taxes have been threatened, proposed, asserted or assessed against the
Company or any of its subsidiaries, which are not reserved for. The Federal
income tax returns of the Company and each of its subsidiaries consolidated in
such returns have been examined by and settled with the Internal Revenue
Service for all years through December 31, 1988 and all returns thereafter are
open and subject to examination.
(iii) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, payroll, franchise, property, sales,
excise and any and all other taxes, tariffs, duties, fees, assessments or
governmental charges of any nature whatsoever, including interest, additions
and penalties.
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(l) No Excess Parachute Payments. To the knowledge of
the Company, no amounts payable as a result of the transactions contemplated by
this Agreement under the Benefit Plans or any other plans or arrangements will
fail to be deductible for Federal income tax purposes by virtue of section 280G
of the Code.
(m) Compliance with Applicable Laws. Except as set forth
in Schedule 4.1(m), (i) to the knowledge of the Company, the Company and each
of its subsidiaries have in the past five (5) years complied and are presently
complying in all material respects with all applicable laws (whether statutory
or otherwise), rules, regulations, orders, ordinances, judgments or decrees of
all governmental authorities (federal, state, local or otherwise)
(collectively, "Laws"), including, but not limited to, the Federal Occupational
Safety and Health Act and all Laws relating to the safe conduct of business and
environmental protection and conservation, the Civil Rights Act of 1964 and
Executive Order 11246 concerning equal employment opportunity obligations of
federal contractors and any applicable health, sanitation, fire, safety, labor,
zoning and building laws and ordinances, and neither the Company nor any of its
subsidiaries has received notification of any asserted present or past failure
to so comply, except such non-compliance that has not and will not prevent the
Company from carrying on its business substantially as now conducted or might
reasonably be expected to result in the payment of more than $150,000 in the
aggregate.
(ii) To the knowledge of the Company, each of the Company and
its subsidiaries has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights, including all authorizations under
Environmental Laws and the Interstate Commerce Act ("Permits"), necessary for
it to own, lease or operate its properties and assets and to carry on its
business substantially as now conducted, there are no appeals nor any other
actions pending to revoke any such Permits, and there has occurred no material
default or violation under any such Permits. The Company has listed such
Permits under the Interstate Commerce Act, Environmental Laws and involving
intra-state authorization to do business as a motor carrier on Schedule
4.1(m)(ii).
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(iii) To the knowledge of the Company, each of the Company
and its subsidiaries is, and, within the preceding five years, has been, and
each of the Company's former subsidiaries, while a subsidiary of the Company,
was, within the preceding five years, in compliance in all material respects
with all applicable Environmental Laws, except such non-compliance that has not
and will not prevent the Company from carrying on its business substantially as
now conducted or might reasonably be expected to result in the payment of more
than $75,000 in the aggregate. To the knowledge of the Company, as of the date
of this Agreement, there are no circumstances or conditions that may prevent or
interfere with compliance by the Company or its subsidiaries in the future with
Environmental Laws (or Permits issued thereunder) in effect as of the date of
this Agreement, except such circumstances or conditions that have not and will
not prevent the Company from carrying on its business substantially as now
conducted or might reasonably be expected to result in the payment of more than
$75,000 in the aggregate.
(iv) Except as set forth on Schedule 4.1(m)(iv), neither the
Company nor any subsidiary of the Company has received any written claim,
demand, notice, complaint, court order, administrative order or request for
information from any Governmental Entity or private party, alleging violation
of, or asserting any noncompliance with or liability under or potential
liability under, any Environmental Laws, except for matters which are no longer
threatened or pending and for which the Company or its subsidiaries are not
subject to further requirements pursuant to an administrative or court order,
judgment, or a settlement agreement.
(v) To the knowledge of the Company, during the period of
ownership or operation by the Company and its subsidiaries of any of their
respective current or previously owned or leased properties, there have been no
Releases of Hazardous Material in, on, under or affecting such properties and
none of the Company or its subsidiaries have disposed of any Hazardous Material
or any other substance in a manner that has led, or could reasonably be
anticipated to lead to a Release except in each case for those which
individually or in the aggregate are not reasonably likely to have a cost,
after the date hereof, to the Company in excess of $75,000. Prior to the
period
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of ownership or operation by the Company and its subsidiaries of any of their
respective current or previously owned or leased properties, to the knowledge
of the Company, no Hazardous Material was generated, treated, stored, disposed
of, used, handled or manufactured at, or transported shipped or disposed of
from, such current or previously owned or leased properties, and there were no
Releases of Hazardous Material in, on, under or affecting any such property,
except in each case for those which individually or in the aggregate would not
be reasonably likely to have a cost, after the date hereof, to the Company in
excess of $75,000.
(vi) Schedule 4.1(m)(vi) identifies all environmental
audits, assessments or studies within the possession of the Company or any
subsidiary of the Company with respect to the facilities or real property
currently or previously owned, leased or operated by the Company or any
subsidiary of the Company, or to facilities or real property owned or leased by
former subsidiaries of the Company (when such companies were subsidiaries of
the Company), which were conducted within the last five years. The Company has
furnished to Parent complete and correct copies of all such audits, assessments
and studies.
(vii) Except for leases entered into in the ordinary course of
business, as to which no notice of a claim for indemnity or reimbursement has
been received by the Company, and except as set forth on Schedule 4.1(m)(vii),
the Company has no knowledge that either the Company or any of its subsidiaries
has entered into any agreement that may require it to pay to, reimburse,
guarantee, pledge, defend, indemnify, or hold harmless any person for or
against any Environmental Liabilities and Costs.
(viii) Neither the Company nor any of its subsidiaries has
transported "hazardous waste", as that term is defined in the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., analogous state
laws, or the regulations promulgated thereunder such that the Company or any of
its subsidiaries would be required to obtain a permit under said laws for such
transportation, except for the transportation of processed oil used by the
Company in the ordinary course of its business.
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(ix) Without limiting any of the foregoing, the Company
has listed, on Schedule 4.1(m)(ix), all of the underground storage tanks
currently owned or operated by the Company or any of its subsidiaries, or tanks
that were removed or closed in place since 1989. Said schedule shall include
(A) the size of each tank; (B) the type of material last stored in each such
tank; (C) whether such tank is currently in operation or has been removed or
closed in place. For certain of the tanks on Schedule 4.1(m)(ix) that are
currently in operation or existence, the Company has provided information
regarding whether each such tank has been upgraded to meet all currently
applicable technical and financial standards (including financial assurance)
promulgated pursuant to federal, state or local law, or standards that have
been promulgated but will not be applicable to such tanks until some date in
the future (describing the required actions needed to bring such tanks into
compliance with any such current or future standard).
(n) State Takeover Statutes; By-Law Provisions. The
Board of Directors of the Company has approved the Offer, the Merger and this
Agreement and the provisions of Article II, Sections 13 and 14 of the Company's
Amended and Restated By-Laws are sufficient to render inapplicable to the
Offer, the Merger and this Agreement and the other transactions contemplated by
this Agreement, the provisions of Section 55-9-01 et seq. of the NCBCA, and the
provisions of Section 55-9A-01 et seq. of the NCBCA.
(o) Voting Requirements. The affirmative vote of the
holders of a majority of all the shares of Company Common Stock entitled to
vote approving this Agreement is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve this Agreement and
the transactions contemplated by this Agreement.
(p) Brokers. No broker, investment banker, financial
advisor or other person, other than Donaldson Lufkin & Jenrette Securities
Corporation ("DLJ"), the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the
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Company. The Company has provided Parent true and correct copies of all
agreements between the Company and DLJ.
(q) Opinion of Financial Advisor. The Company has
received an opinion of Donaldson Lufkin & Jenrette, to the effect that, as of
the date of this Agreement, the consideration to be received in the Offer and
the Merger by the Company's shareholders is fair to the Company's shareholders
from a financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to
Parent.
(r) Trademarks, etc. The material patents, trademarks
(registered or unregistered), trade names, service marks and copyrights and
applications therefor owned, used or filed by or licensed to the Company and
its subsidiaries (collectively, "Intellectual Property Rights") are sufficient
to allow each of the Company and each of its Significant Subsidiaries to
conduct, and continue to conduct, its business as currently conducted in all
material respects. To the knowledge of the Company, each of the Company and
each of its Significant Subsidiaries owns or has sufficient unrestricted right
to use the Intellectual Property Rights in order to allow it to conduct, and
continue to conduct, its business as currently conducted in all material
respects, and the consummation of the transactions contemplated hereby will not
alter or impair such ability in any respect. To the knowledge of the Company,
neither the Company nor any of its Significant Subsidiaries has received any
written notice from any other person pertaining to or challenging the right of
the Company or any of its Significant Subsidiaries to use any of the
Intellectual Property Rights. To the knowledge of the Company, no claims are
pending by any person with respect to the ownership, validity, enforceability
or use of any such Intellectual Property Rights challenging or questioning the
validity or effectiveness of any of the foregoing. To the knowledge of the
Company, neither the Company nor any of its Significant Subsidiaries has made
any claim of a violation or infringement by others of its rights to or in
connection with the Intellectual Property Rights.
(s) Title to Properties. Each of the Company and each of
its Significant Subsidiaries has sufficiently
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good and valid title to, or an adequate leasehold interest in, its material
tangible properties and assets in order to allow it to conduct, and continue to
conduct, its business as currently conducted in all material respects. Except
as set forth in Schedule 4.1(s), such material tangible assets and properties
are sufficiently free of liens to allow each of the Company and each of its
subsidiaries to conduct, and continue to conduct, its business as currently
conducted in all material respects and, to the knowledge of the Company, the
consummation of the transactions contemplated by this Agreement will not alter
or impair such ability in any material respect. To the knowledge of the
Company, each of the Company and each of its subsidiaries enjoys peaceful and
undisturbed possession under all material leases, except for such breaches of
the right to peaceful and undisturbed possession that do not materially
interfere with the ability of the Company and its subsidiaries to conduct its
business as currently conducted. Schedule 4.1(s) sets forth a complete list of
all material real property and material interests in real property owned in fee
by the Company or one of its subsidiaries and sets forth all material real
property and interests in real property leased by the Company or one of its
subsidiaries as of the date hereof.
(t) Insurance. To the knowledge of the Company, the
Company and its Significant Subsidiaries have obtained and maintained in full
force and effect insurance with responsible and reputable insurance companies
or associations in such amounts, on such terms and covering such risks,
including fire and other risks insured against by extended coverage, as is
reasonably prudent, and each has maintained in full force and effect public
liability insurance, insurance against claims for personal injury or death or
property damage occurring in connection with any activities of the Company or
its Significant Subsidiaries or any properties owned, occupied or controlled by
the Company or its Significant Subsidiaries, in such amount as reasonably
deemed necessary by the Company or its Significant Subsidiaries.
(u) Contracts; Debt Instruments. Except as set forth in
Schedule 4.1(u), there are no (i) agreements of the Company or any of its
subsidiaries containing an unexpired covenant not to compete or similar
restriction applying to the Company or any of its subsidiaries, (ii) interest
rate, currency or commodity hedging, swap
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or similar derivative transactions to which the Company is a party or (iii)
other contracts or amendments thereto that would be required to be filed as an
exhibit to a Form 10-K filed by the Company with the SEC as of the date of this
Agreement. To the knowledge of the Company, each of the agreements listed in
Schedule 4.1(u) is a valid and binding obligation of the Company or its
subsidiary, as the case may be, and, to the Company's knowledge, of each other
party thereto, and each such agreement is in full force and effect and is
enforceable by the Company or its subsidiary in accordance with its terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought
and except to the extent any covenant not to compete contained therein may be
unenforceable. Except to the extent set forth in Schedule 4.1(u), to the
knowledge of the Company, there are no existing defaults (or circumstances or
events that, with the giving of notice or lapse of time or both would become
defaults) of the Company or any of its subsidiaries (or, to the knowledge of
the Company, any other party thereto) under any of the agreements set forth in
Schedule 4.1(u).
(v) Labor Relations. Except to the extent set forth in
Schedule 4.1(v), (i) to the knowledge of the Company, the Company and each of
its subsidiaries is, and has at all times been, in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation,
except where the failure to comply would not be reasonably likely to cause a
material adverse effect; (ii) there is no labor strike, dispute, slowdown,
stoppage or lockout actually pending, or to the knowledge of the Company
threatened against or affecting the Company or any of its subsidiaries, and
during the past three years there has not been any such action; (iii) no union
claims to represent the employees of the Company or any of its subsidiaries;
(iv) the Company or any of its subsidiaries is not a party to or bound by any
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collective bargaining or similar agreement with any labor organization, or work
rules or practices agreed to with any labor organization or employee
association applicable to employees of the Company or any of its subsidiaries;
(v) none of the employees of the Company or any of its subsidiaries is
represented by any labor organization and, to the knowledge of the Company,
there is no current union organizing activities among the employees of the
Company or any of its subsidiaries, nor does any question concerning
representation exist concerning such employees; (vi) there are no written
personnel policies, rules or procedures applicable to employees of the Company
or any of its subsidiaries; (vii) there is no unfair labor practice charge or
complaint against the Company or any of its subsidiaries pending or, to the
knowledge of the Company, threatened before the National Labor Relations Board
or any similar state or foreign agency; (viii) there is no grievance arising
out of any collective bargaining agreement or other grievance procedure against
the Company or any of its subsidiaries, except such grievances that have not
and will not prevent the Company from carrying on its business substantially as
now conducted or might reasonably be expected to result in the payment of more
than $75,000 in the aggregate; (ix) no charges with respect to or relating to
the Company or any of its subsidiaries are pending before the Equal Employment
Opportunity Commission or any other agency responsible for the prevention of
unlawful employment practices, except such charges that have not and will not
prevent the Company from carrying on its business substantially as now
conducted or might reasonably be expected to result in the payment of more than
$75,000 in the aggregate; (x) neither of the Company or any of its subsidiaries
has received notice of the intent of any federal, state, local or foreign
agency responsible for the enforcement of labor or employment laws to conduct
an investigation; and (xi) there are no employment contracts or severance
agreement with any employees of the Company or any of its subsidiaries, except
as set forth in Schedule 4.1(j).
(w) Compliance with WARN Act. Since the enactment of the
Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act"),
neither of the Company or any of its subsidiaries has effectuated (i) a "plant
closing" (as defined in the WARN Act) affecting any site of employment or one
or more facilities or
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operating units within any site of employment or facility of the Company or any
of its subsidiaries or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Company or any of its
subsidiaries; nor has the Company or any of its subsidiaries been affected by
any transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law, except as set
forth in Schedule 4.1(w) for the period since June 1, 1993 to the extent such
plant closings and mass layoffs were effectuated in compliance with the WARN
Act. None of the employees of the Company or any of its subsidiaries has
suffered an "employment loss" (as defined in the WARN Act) since June 1, 1993.
SECTION 4.2 Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which each is incorporated and
has the requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed (individually or in the aggregate)
would not have a material adverse effect on Parent.
(b) Authority; Noncontravention. Parent and Sub have the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Sub and the consummation by Parent and
Sub of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Parent and Sub, as
applicable. This Agreement has been duly executed and delivered by Parent and
Sub and, assuming this Agreement constitutes the valid and binding obligation
of the Company, constitutes a valid and binding obligation of each such party,
enforceable against each such party
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in accordance with its terms, except that (i) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii) the
remedy of specific performance and injunctive relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any lien upon any of
the properties or assets of Parent under, (i) the certificate of incorporation
or by-laws of Parent or Sub, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Sub or
their respective properties or assets, other than, in the case of clauses (ii)
or (iii), any such conflicts, violations, defaults, rights or liens that
individually or in the aggregate would not (x) impair in any material respect
the ability of Parent and Sub to perform their respective obligations under
this Agreement or (y) prevent or impede the consummation of any of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by Parent or Sub in connection with the execution and
delivery of this Agreement or the consummation by Parent or Sub, as the case
may be, of any of the transactions contemplated by this Agreement, except for
(i) if required, the filing of a premerger notification and report form under
the HSR Act, (ii) the filing with the SEC of (x) the Offer Documents and (y)
such reports under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (iii) the filing
of the Articles of Merger with the North Carolina Secretary of State and
appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business, (iv) compliance with any applicable
requirements relating to approval, or exemption from
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approval, of the Voting Trusts, the Offer and the Merger and the application
for temporary authority by the ICC, (v) as may be required by an applicable
state securities or "blue sky" laws, (vi) as may be required by the New Jersey
Industrial Site Recovery Act or similar state environmental laws and (vii) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not, individually
or in the aggregate, (x) impair, in any material respect, the ability of Parent
to perform its obligations under this Agreement or (y) prevent or significantly
delay the consummation of the transactions contemplated by this Agreement.
(c) Information Supplied. None of the information
supplied or to be supplied by Parent or Sub expressly for inclusion or
incorporation by reference in the Schedule 14D-9 or the Proxy Statement will,
in the case of the Schedule 14D-9, at the time the Schedule 14D-9 is filed with
the SEC and first published, sent or given to the Company's shareholders or, in
the case of the Proxy Statement, on the date the Proxy Statement is first
mailed to the Company's shareholders and at the time of the meeting of the
Company's shareholders held to vote on approval and adoption of this Agreement,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(d) Brokers. No broker, investment banker, financial
advisor or other person, other than Morgan Stanley & Co. Incorporated, the fees
and expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Sub.
(e) Financing. Parent has a bank commitment to provide
the financing for and pursuant to such commitment shall provide Sub with the
funds necessary to consummate the Offer and the Merger and the transactions
contemplated thereby in accordance with the terms hereof and thereof (the
"Financing Commitment"). A copy of the bank commitment letter has been made
available to the
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Company. Parent has accepted the Financing Commitment pursuant to its terms and
has paid all fees due thereunder as of the date of this Agreement.
(f) Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.1 (a) Conduct of Business. Until the acquisition
of the Shares pursuant to the Offer, except as specifically contemplated by
this Agreement or in accordance with the temporary authority granted by the ICC
to Parent or Sub, the Company shall and shall cause its subsidiaries to carry
on their respective businesses in the ordinary course and use all reasonable
efforts consistent with good business judgment to preserve intact their current
business organizations, keep available the services of their current officers
and key employees and preserve their relationships consistent with past
practice with desirable customers, suppliers, licensors, licensees,
distributors and others having business dealings with them to the end that
their goodwill and ongoing businesses shall be unimpaired in all material
respects at the Effective Time. Without limiting the generality of the
foregoing, and except as specifically contemplated by this Agreement, prior to
the Effective Time the Company shall not, and shall not permit any of its
subsidiaries to (without Parent's prior written consent, which consent may not
be unreasonably withheld):
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its capital
stock, other than the dividend on the Company Preferred Stock to be
paid in July 1995 and other than dividends and distributions by any
direct or indirect wholly owned subsidiary of the Company to its
parent, (B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution
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for shares of its capital stock or (C) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities (except for
the acquisition of shares from holders of stock options in full or
partial payment of the exercise price payable by such holder upon
exercise of stock options outstanding on the date of this Agreement);
(ii) issue, deliver, sell, pledge or otherwise
encumber or amend any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities (other than the issuance of Company Common
Stock upon the exercise of employee stock options outstanding on the
date of this Agreement in accordance with their present terms);
(iii) amend its Articles of Incorporation, as
amended, Amended and Restated By-laws or other comparable charter or
organizational documents;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or division thereof or (B) any assets, including real estate, except
(x) purchases of inventory, furnishings, equipment and fuel in the
ordinary course of business consistent with past practice or (y)
expenditures consistent with the Company's current capital budget
previously provided to Parent as set forth on Schedule 5.1(a)(iv);
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any lien or otherwise dispose of any of its
properties or assets, except obsolete equipment that is traded in or
sold, in each case pursuant to the Commitment Letter, dated April 22,
1994, between Carolina Freight Carriers Corporation and Midway Ford
Truck Center
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Inc. and the Truck Broker Agreement dated May 16, 1995 between
Carolina Freight Carriers Corporation and Boulevard Truck Sales and
Service.
(vi) except as set forth in Schedule 5.1(a)(vi)
other than ordinary course working capital borrowings consistent with
past practice incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of the Company or any of its subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing or make any loans, advances or capital contributions
to, or investments in, any other person (other than routine advances
after the date hereof to employees not to exceed $50,000 in the
aggregate and consistent with past practice);
(vii) make any material tax election or settle or
compromise any material tax liability;
(viii) pay, discharge, settle or satisfy any
material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction, in the ordinary course
of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in the most recent
consolidated financial statements (or the notes thereto) of the
Company included in the SEC Documents filed and publicly available
prior to the date of this Agreement or incurred in the ordinary course
of business consistent with past practice, or, except in the ordinary
course of business consistent with past practice, waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill
or similar agreement to which the Company or any of its subsidiaries
is a party;
(ix) except as required to comply with applicable
law, disclosed in Schedule 4.1(i) or expressly provided in this
Agreement, (A) adopt,
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enter into, terminate or amend any Benefit Plan or other arrangement
for the current or future benefit or welfare of any director, officer
or current or former employee, except to the extent necessary to
coordinate any such benefit plans with the terms of this Agreement,
(B) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee (except for normal
increases or bonuses in the ordinary course of business consistent
with past practice to employees other than directors, officers or
senior management personnel and that, in the aggregate, do not result
in a significant increase in benefits or compensation expense to the
Company and its subsidiaries relative to the level in effect prior to
such action (but in no event shall the aggregate amount of all such
increases exceed 3% of the aggregate annualized compensation expense
of the Company and its subsidiaries reported in the most recent
audited financial statements of the Company included in the SEC
Documents)), (C) pay any benefit not provided for under any Benefit
Plan, (D) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Benefit Plan (including the
grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the
removal of existing restrictions in any Benefit Plans or agreements or
awards made thereunder) or (E) take any action to fund or in any other
way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or Benefit Plan.
(x) make any new capital expenditure or
expenditures, other than capital expenditures not to exceed, in the
aggregate, the amounts provided for capital expenditures (x) in
respect of projects approved prior to the date of this Agreement and
(y) in the capital budget of the Company provided to Parent, except as
set forth in Section 5.1(a)(iv);
(xi) except in the ordinary course of business and
except as otherwise permitted by this Agreement, modify, amend or
terminate any contract or agreement set forth in the SEC Documents or
in Schedule 4.1(u) to which the Company or any subsid-
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iary is a party or waive, release or assign any material rights or
claims; or
(xii) authorize any of, or commit or agree to take
any of, the foregoing actions except as otherwise permitted by this
Agreement.
(b) Other Actions. The Company shall not, and shall not
permit any of its subsidiaries to, take any action that would result in (i) any
of its representations and warranties set forth in this Agreement that are
qualified as to materiality becoming untrue, (ii) any of such representations
and warranties that are not so qualified becoming untrue in any material
respect or (iii) any of the conditions to the Offer set forth in Exhibit A not
being satisfied (subject to the Company's right to take action specifically
permitted by Section 5.2).
SECTION 5.2 No Solicitation. (a) The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize (and shall
use its best efforts not to permit) any officer, director or employee of, or
any investment banker, attorney or other advisor or representative of, the
Company or any of its subsidiaries to, (i) solicit or initiate, or knowingly
encourage the submission of, any takeover proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to knowingly facilitate the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
takeover proposal; provided, however, that, prior to the acceptance for payment
of shares of Company Common Stock pursuant to the Offer, if in the opinion of
the Board of Directors, after consultation with outside legal counsel to the
Company, such failure to act would likely be inconsistent with its fiduciary
duties to the Company's shareholders under applicable law, the Company may, in
response to an unsolicited takeover proposal, and subject to compliance with
Section 5.2(c), (A) furnish information with respect to the Company to any
person pursuant to a confidentiality agreement and (B) participate in
negotiations regarding such takeover proposal. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in the
preceding sentence by any director or executive officer of the Company or any
of its subsid-
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iaries, whether or not such person is purporting to act on behalf of the
Company or any of its subsidiaries or otherwise, shall be deemed to be a breach
of this Section 5.2(a) by the Company. For purposes of this Agreement,
"takeover proposal" means any proposal or offer from any person relating to any
direct or indirect acquisition or purchase of all or a substantial part of the
assets of the Company or any of its subsidiaries or of over 15% of any class of
equity securities of the Company or any of its subsidiaries or any tender offer
or exchange offer that if consummated would result in any person beneficially
owning shares of any class of equity securities of the Company or any of its
subsidiaries, or any merger, consolidation, business combination, sale of
substantially all of the assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of its subsidiaries other than
the transactions contemplated by this Agreement, or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or the Merger or which would reasonably
be expected to dilute materially the benefits to Parent of the transactions
contemplated hereby.
(b) Except as set forth in this Section 5.2(b), neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or Sub, the approval or recommendation by the Board of Directors or any
such committee of the Offer, this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any takeover proposal or (iii)
enter into any agreement with respect to any takeover proposal.
Notwithstanding the foregoing, in the event prior to the time of acceptance for
payment of shares of Company Common Stock in the Offer if in the opinion of the
Board of Directors, after consultation with outside legal counsel to the
Company, failure to do so would likely be inconsistent with its fiduciary
duties to the Company's shareholders under applicable law, the Board of
Directors may (subject to the terms of this and the following sentences)
withdraw or modify its approval or recommendation of the Offer, this Agreement
or the Merger, approve or recommend a competitive proposal, or enter into an
agreement with respect to a competitive proposal, in each case at any time
after midnight on the next business day following Parent's receipt of written
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notice (a "Notice of Competitive Proposal") advising Parent that the Board of
Directors has received a competitive proposal, specifying the material terms
and conditions of such competitive proposal and identifying the person making
such competitive proposal; provided that the Company shall not enter into an
agreement with respect to a competitive proposal unless the Company shall have
furnished Parent with a Notice of Competitive Proposal within the time frame
provided in the immediately preceding clause in advance of any date that it
intends to enter into such agreement. In addition, if the Company proposes to
enter into an agreement with respect to any takeover proposal, it shall
concurrently with entering into such agreement pay, or cause to be paid, to
Parent the Expenses (as defined in Section 6.6(b)) and the Termination Fee (as
defined in Section 6.6(b)). For purposes of this Agreement, a "competitive
proposal" means any bona fide takeover proposal to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
50% of the shares of Company Common Stock then outstanding or all or a
substantial part of the assets of the Company and otherwise on terms which the
Company's Board of Directors reasonably determined in good faith (after
consultation with its financial advisors) are more favorable to all of the
Company's shareholders from a financial point of view than the Offer and the
Merger (taking into account any improvements to the Offer and the Merger
proposed in writing by Parent).
(c) In addition to the obligations of the Company set
forth in paragraph (b) (i) the Company shall advise Parent of any request for
information or of any takeover proposal, or any proposal with respect to any
takeover proposal, the material terms and conditions of such request or
takeover proposal, and the identity of the person making any such takeover
proposal or inquiry, and (ii) the Company will keep Parent fully informed of
the status and details (including amendments or proposed amendments) of any
such request, takeover proposal or inquiry.
SECTION 5.3 Approvals. Parent and the Company shall, and
each shall cause each of its subsidiaries to, take all such actions as are
necessary to (i) cooperate with one another to prepare and present to the ICC,
relevant labor unions and appropriate change of operations
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committees under any existing collective bargaining agreements to which the
Company is a party as soon as practicable all filings and other presentations
in connection with seeking any ICC, relevant labor unions or change of
operations committees approval, exemption or other authorization necessary to
consummate the transactions contemplated by this Agreement, including without
limitation all information regarding the Company pertinent to the application
for temporary authority, (ii) prosecute such filings and other presentations
with diligence, (iii) diligently oppose any objections to, appeals or petitions
to reconsider or to reopen any such ICC, relevant labor unions or change of
operations committees approval or exemptions by persons not party to this
Agreement, and (iv) take all such further action, including appeal of any
adverse decision, as reasonably may be necessary to obtain a final order or
orders of the ICC, or approval of the relevant labor unions or appropriate
change of operations committees, in each case approving such transactions
consistent with this Agreement.
SECTION 5.4 Voting Trusts. Promptly upon the acquisition of
Company Common Stock pursuant to the Offer, the Company shall cause the shares
of the ICC Subsidiaries to be deposited in the Voting Trusts.
SECTION 5.5 Temporary Authority. In the event the ICC grants
Parent or Sub temporary authority pursuant to 49 U.S.C. 11349, the Company
agrees, following the purchase of Company Common Stock pursuant to the Offer,
to allow Parent and Sub to manage and operate the properties of the Company
consistent with such temporary authority and shall not interfere with such
temporary authority.
SECTION 5.6 Supplemental Indenture. In connection with the
Merger, the Company shall execute a supplemental indenture, provide such
notices and take any such other action as may be required by the Indenture.
ARTICLE VI
Additional Agreements
SECTION 6.1 Shareholder Meeting; Preparation of the Proxy
Statement. (a) The Company will, as soon as
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practicable following the commencement of the Offer, duly call, give notice of,
convene and hold a meeting of the holders of the Company Common Stock (the
"Shareholders Meeting") for the purpose of approving this Agreement and the
transactions contemplated by this Agreement. Subject to the provisions of
Section 5.2(b), the Company will, through its Board of Directors, recommend to
its shareholders approval of this Agreement, the Merger and the other
transactions contemplated by this Agreement. At the Shareholders Meeting,
Parent shall cause all of the shares of Company Common Stock then actually or
beneficially owned by Parent, Sub or any of their subsidiaries, or as to which
Parent, Sub or any of their subsidiaries has voting rights by proxy or
otherwise to be voted in favor of the Merger.
(b) The Company will, at Parent's request, as soon as
practicable prepare and file a preliminary Proxy Statement with the SEC and the
Company and Parent will cooperate in responding to any comments of the SEC or
its staff and the Company will cause the Proxy Statement to be mailed to the
Company's shareholders as promptly as practicable after responding to all such
comments to the satisfaction of the staff. The Company will notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement or the Merger. If at any time prior to the Shareholders
Meeting there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company will promptly prepare and if
relating to Parent, Parent will also promptly notify and cooperate with the
Company in preparing, and the Company will mail to its shareholders such an
amendment or supplement. The Company will not file or mail any Proxy
Statement, or any amendment or supplement thereto, to which Parent reasonably
objects.
SECTION 6.2 Access to Information; Confidentiality. As
permitted by law, the Company shall afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisers and other representatives,
reasonable access during normal business hours
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during the period prior to the Effective Time to all the properties, books,
contracts, commitments and records of the Company and its subsidiaries and,
during such period, the Company shall furnish promptly to Parent (a) a copy of
each report, schedule, registration statement and other document filed by it or
its subsidiaries during such period pursuant to the requirements of Federal or
state securities laws and (b) all other information concerning its or its
subsidiaries, business, properties and personnel as Parent may reasonably
request. Except as otherwise agreed to by the Company, unless and until Parent
and Sub shall have purchased at least a majority of the outstanding shares of
Company Common Stock pursuant to the Offer, Parent will be bound by the terms
of a confidentiality agreement with the Company dated June 8, 1995.
SECTION 6.3 Reasonable Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer and
the Merger, and the other transactions contemplated by this Agreement,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed, (iv) the
consummation of the transactions contemplated by the Financing Commitment and
(v) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement. In connection with and without limiting
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the foregoing, the Company and its Board of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement or
any of the other transactions contemplated by this Agreement and (ii) if any
state takeover statute or similar statute or regulation becomes applicable to
the Offer, the Merger or this Agreement or any other transaction contemplated
by this Agreement, take all action necessary to ensure that the Offer, the
Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Offer, the Merger, this Agreement and the other transactions contemplated
by this Agreement.
(b) The Company shall give prompt notice to Parent of (i)
any representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect
(including in the case of representations or warranties by the Company, the
Company or Parent receiving knowledge of any fact, event or circumstance which
may cause any representation qualified as to the knowledge of the Company to be
or become untrue or inaccurate in any respect) or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement. The Company acknowledges that
if after the date of this Agreement the Company receives knowledge of any fact,
event or circumstance that would cause any representation or warranty that is
conditioned as to the knowledge of the Company to be or become untrue or
inaccurate in any respect, the receipt of such knowledge shall constitute a
breach of the representation or warranty that is so conditioned as of the date
of such receipt.
SECTION 6.4 Stock Option Plans. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company
(or, if appropriate, any committee administering the Stock Option Plans (as
defined below)) shall adopt such resolutions or use its
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best efforts to take such other actions as are required to provide that each
outstanding stock option to purchase shares of Company Common Stock (a "Stock
Option") heretofore granted under any stock option or stock purchase plan,
program or arrangement or other option agreement or contingent stock grant plan
of the Company or its subsidiaries (collectively, the "Stock Option Plans")
shall be accelerated so as to be fully exercisable prior to the consummation of
the Offer, and the Company shall use its best efforts to assure that any such
Stock Options outstanding immediately prior to the consummation of the Offer
shall be cancelled immediately prior to the consummation of the Offer in
exchange for an amount in cash, payable at the time of such cancellation, equal
to the product of (y) the number of shares of Company Common Stock subject to
such Stock Option immediately prior to the consummation of the Offer and (z)
the excess of the price per share to be paid in the Offer over the per share
exercise price of such Stock Option. Any Stock Option not cancelled in
accordance with this paragraph (a) immediately prior to the consummation of the
Offer, shall be cancelled at the Effective Time in exchange for an amount in
cash, payable at the Effective Time, equal to the amount which would have been
paid had such Stock Option been cancelled immediately prior to the consummation
of the Offer. A listing of all outstanding Stock Options as of July 7, 1995,
showing what portions of such Stock Options are exercisable as of such date,
the dates upon which such Stock Options expire, and the exercise price of such
Stock Options, is set forth in Schedule 6.4.
(b) All Stock Option Plans shall terminate as of the
Effective Time and the provisions in any other Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be deleted as of the
Effective Time, and the Company shall use its best efforts to ensure that
following the Effective Time no holder of a Stock Option or any participant in
any Stock Option Plan shall have any right thereunder to acquire any capital
stock of the Company, Parent or the Surviving Corporation, except as provided
in Section 6.4(a).
SECTION 6.5 Indemnification and Insurance. (a) Parent and the
Surviving Corporation agree that the
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indemnification obligations set forth in the Company's Articles of
Incorporation, as amended, the Amended and Restated By-laws on the date of this
Agreement and the indemnification obligations set forth on Schedule 6.5(a)
hereto shall survive the Merger and shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company
(the "Indemnified Parties").
(b) For six years from the Effective Time, the Surviving
Corporation shall either (x) maintain in effect the Company's current
directors' and officers' liability insurance covering those persons who are
covered on the date of this Agreement by the Company's directors' and officers'
liability insurance policy (a copy of which has been made available to Parent);
provided, however, that in no event shall the Surviving Corporation be required
to expend in any one year an amount in excess of 200% of the annual premiums
currently paid by the Company for such insurance which the Company represents
to be $105,000 for the twelve-month period ended May 12, 1996; and, provided,
further, that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall be obligated to obtain a policy with
the greatest coverage available for a cost not exceeding such amount or (y)
cause the Parent's directors' and officers' liability insurance then in effect
to cover those persons who are covered on the date of this Agreement by the
Company's directors' and officers' liability insurance policy with respect to
those matters covered by the Company's directors' and officers' liability
policy (such coverage to be not less favorable than the coverage provided under
such policy to the Parent's directors and officers). Notwithstanding the
foregoing, on and after the date two years from the Effective Time, Parent, at
its option, may agree in writing to guarantee or assume the indemnification
obligations set forth in Section 6.5(a) in lieu of maintaining the insurance
described in clauses (x) or (y) above.
(c) For two years from the Effective Time, the Surviving
Corporation shall maintain in effect the Company's current or similar
professional liability insurance with respect to Company employee attorneys so
long as
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premium amounts do not exceed $8,000 per year; provided, however, that if the
annual premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greater coverage
available for a cost not exceeding such amount.
(d) In the event the Company or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or
merges into any other person or shall not be the continuing or surviving
corporation or entity in such consolidation or merger or (ii) transfers all or
substantially all its properties and assets to any person, then, and in each
case, proper provision shall be made so that the successors and assigns of the
Company or the Surviving Corporation, as the case may be, honor the
indemnification obligations set forth in this Section 6.5.
(e) The obligations of the Company, the Surviving
Corporation, and Parent under this Section 6.5 shall not be terminated or
modified in such a manner as to adversely affect any director or officer to
whom this Section 6.5 applies without the consent of such affected director or
officer (it being expressly agreed that the directors and officers to whom this
Section 6.5 applies shall be third-party beneficiaries of this Section 6.5).
SECTION 6.6 Fees and Expenses. (a) Except as provided below,
all fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) The Company shall pay, or cause to be paid, in same
day funds to Parent the sum of (x) all of Parent's reasonably documented
out-of-pocket expenses in an amount up to but not to exceed $500,000 (the
"Expenses") and (y) $1,750,000 (the "Termination Fee") upon demand if (i)
Parent or Sub terminates this Agreement under Section 8.1(e), (ii) the Company
terminates this Agreement pursuant to Section 8.1(f) or (iii) prior to any
termination of this Agreement, a takeover proposal shall have been made and
within nine months of the termination of this Agreement a transaction
constituting a takeover proposal is consummated or the Company enters into an
agreement with respect to, or approves or recom-
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mends a takeover proposal (whether or not related to a takeover proposal made
prior to any termination of this Agreement); provided, however, that in the
case of (iii) above in this paragraph (b) if such transaction has a value to
the shareholders of the Company equivalent to or less favorable than the
proposed Offer and the Merger, then the Company shall pay to Parent the
Expenses (but not the Termination Fee) and, provided, further, that no payment
shall be made if this Agreement has been terminated pursuant to Section 8.1(g)
hereof. In addition, if prior to any termination of this Agreement, any person
or group purchases or otherwise acquires, directly or indirectly, beneficial
ownership of 30% or more of the outstanding voting securities of the Company,
all of Parent's Expenses shall promptly be paid by the Company to Parent and,
additionally, if at any time prior to 12 months following the termination of
this Agreement any such person or group consummates a transaction that would
otherwise constitute a takeover proposal, there shall be paid to Parent
immediately prior to the consummation of such transaction the Termination Fee
(provided that no such payment shall be made if this Agreement has been
terminated pursuant to Section 8.1(g) hereof). The amount of Expenses so
payable shall be the amount set forth in an estimate delivered by Parent,
subject to upward or downward adjustment (not to be in excess of the amount set
forth in clause (x) above) upon delivery of reasonable documentation therefor.
In no event shall the Company be required to pay more than one Termination Fee
pursuant to this Section 6.6.
SECTION 6.7 Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Offer and the Merger, and shall
not issue any such press release or make any such public statement prior to
such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with any national
securities exchange or national securities quotation system. The parties agree
that the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by the
parties. Provided that such consultation shall have
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occurred, nothing in this Agreement shall prohibit accurate disclosure by the
Company that is required in any SEC Document, proxy statement or other filing
or otherwise under applicable law or for the transactions contemplated hereby
or any takeover proposal.
SECTION 6.8 Title Policies. The Company agrees that, prior
to the consummation of the Offer, it will use its reasonable efforts to cause
such officers of the Company and its Significant Subsidiaries, as Parent's or
Sub's title insurer may reasonably require, to execute such reasonable and
customary affidavits as shall permit such title insurer to issue an endorsement
to its title insurance policies insuring title to the real properties owned or
leased by the Company or any of its Significant Subsidiaries to the effect that
the title insurer will not claim as a defense under any such policy failure of
insured to disclose to the title insurer prior to the date of the relevant
policy any defects, liens, encumbrances or adverse claims not shown by public
records and known to the insured (but not known to Parent or Sub) prior to the
Effective Time.
SECTION 6.9 Transfer Taxes. All liability for transfer or
other similar taxes arising out of or related to the Offer and the Merger or
the consummation of any other transaction contemplated by this Agreement, and
due to the property owned by the Company or any of its subsidiaries or
affiliates ("Transfer Taxes") shall be borne by the Company, and the Company
shall file or cause to be filed all returns relating to such Transfer Taxes
which are due, and, to the extent appropriate or required by law, the
shareholders of the Company shall cooperate with respect to the filing of such
returns.
ARTICLE VII
Conditions Precedent
SECTION 7.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
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(a) Shareholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of the holders of a majority of
all shares of Company Common Stock entitled to be cast in accordance with
applicable law and the Company's Articles of Incorporation, as amended;
provided that Parent and Sub shall vote all their shares of Company Common
Stock in favor of the Merger.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary
or permanent injunction or other order enacted, entered, promulgated, enforced
or issued by any Governmental Entity or other legal restraint or prohibition
preventing the consummation of the Merger or the transactions contemplated
thereby shall be in effect; provided, however, that, in the case of a decree,
injunction or other order, each of the parties shall have used reasonable
efforts to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any decree, injunction or other order that may
be entered.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of
matters presented in connection with the Merger by the shareholders of the
Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if (i) as a result of
the failure, occurrence or existence of any of the conditions set forth in
Exhibit A to this Agreement the Offer shall have terminated or expired in
accordance with its terms without Sub having accepted for payment any shares of
Company Common Stock pursuant to the Offer or (ii) Sub shall not have accepted
for payment any shares of Company Common Stock pursuant to the Offer by October
31, 1995; provided, however, that the right to terminate this Agreement
pursuant to this Section 8.1(b)
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shall not be available to either party if its failure to perform any of its
obligations under this Agreement results in the failure, occurrence or
existence of any such condition;
(c) by either Parent or the Company if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, shares of Company Common Stock pursuant to the
Offer or the Merger and such order, decree or ruling or other action shall have
become final and nonappealable;
(d) by Parent or Sub prior to the purchase of shares of
Company Common Stock pursuant to the Offer in the event of a breach by the
Company of any representation, warranty, covenant or other agreement contained
in this Agreement which (A) would give rise to the failure of a condition set
forth in paragraph (e) or (f) of Exhibit A and (B) cannot be or has not been
cured within 20 days after the giving of written notice to the Company;
(e) by Parent or Sub if either Parent or Sub is entitled
to terminate the Offer as a result of the occurrence of any event set forth in
paragraph (d) of Exhibit A to this Agreement;
(f) by the Company in connection with entering into a
definitive agreement in accordance with Section 5.2(b), provided it has
complied with all provisions thereof, including the notice provisions therein,
and that it makes simultaneous payment of the Expenses and the Termination Fee;
or
(g) by the Company, if Sub or Parent shall have breached
in any material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which failure to
perform is incapable of being cured or has not been cured within 20 days after
the giving of written notice to Parent or Sub, as applicable, except, in any
case, such failures which are not reasonably likely to affect adversely
Parent's or Sub's ability to complete the Offer or the Merger.
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SECTION 8.2 Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 8.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Sub or the Company,
other than the provisions of Section 4.1(p), Section 4.2(d), the last sentence
of Section 6.2, Section 6.6, this Section 8.2 and Article IX and except to the
extent that such termination results from the wilful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 8.3 Amendment. This Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the shareholders of the Company; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by such shareholders without the further
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 8.4 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.3, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
SECTION 8.5 Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 8.1, an
amendment of this Agreement pursuant to Section 8.3 or an extension or waiver
pursuant to Section 8.4 shall, in order to be effective, require in the case of
Parent, Sub or the Company, action by its Board of Directors or the duly
authorized designee
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of its Board of Directors; provided, however, that in the event that Sub's
designees are appointed or elected to the Board of Directors of the Company as
provided in Section 1.5, after the acceptance for payment of shares of Company
Common Stock pursuant to the Offer and prior to the Effective Time, except as
otherwise contemplated by this Agreement the affirmative vote of a majority of
the directors of the Company that were not designated by Parent or Sub shall be
required by the Company to amend this Agreement by the Company.
ARTICLE IX
General Provisions
SECTION 9.1 Nonsurvival of Representations. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or, in the case of
the Company, shall survive the acceptance for payment of, and payment for,
shares of Company Common Stock by Sub pursuant to the Offer. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time of the Merger.
SECTION 9.2 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
Arkansas Best Corporation
3801 Old Greenwood Road
Fort Smith, Arkansas 72903
Facsimile: 501-785-6124
Attention: Richard F. Cooper, Esq.
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with copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Facsimile: (212) 735-2000
Attention: Peter A. Atkins, Esq.
(b) if to the Company, to
WorldWay Corporation
400 Two Coliseum Center
2400 Yorkmount Road
Charlotte, North Carolina 28217
Facsimile: 704-329-0749
Attention: John B. Yorke, Esq.
with copies to:
Robinson, Bradshaw & Hinson
1900 Independence Center
101 North Tryon Street
Charlotte, North Carolina 28246
Facsimile: 704-378-4000
Attention: Robin L. Hinson, Esq.
SECTION 9.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "competitive proposal" has the meaning assigned
thereto in Section 5.2(b);
(c) "Environmental Laws" means all foreign, federal,
state and local laws, regulations, rules and ordinances relating to pollution
or protection of the environment, including, without limitation, laws relating
to Releases or threatened Releases of Hazardous Materials
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into the indoor or outdoor environment (including, without limitation, ambient
air, surface water, groundwater, land, surface and subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, Release, transport or handling of Hazardous Materials, and
all laws and regulations with regard to recordkeeping, notification, disclosure
and reporting requirements respecting Hazardous Materials, and all laws
relating to endangered or threatened species of fish, wildlife and plants and
the management or use of natural resources;
(d) "Environmental Liabilities and Costs" means all
liabilities, obligations, responsibilities, obligations to conduct cleanup,
losses, damages, deficiencies, punitive damages, consequential damages, treble
damages, costs and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees and
costs of investigations and feasibility studies and responding to government
requests for information or documents), fines, penalties, restitution and
monetary sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future, resulting from any claim or demand, by any
person or entity, whether based in contract, tort, implied or express warranty,
strict liability, joint and several liability, criminal or civil statute,
including any Environmental Law, or arising from environmental, health or
safety conditions, or the Release or threatened Release of Hazardous Materials
into the environment;
(e) "Hazardous Materials" means all substances defined as
hazardous substances in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. Section 300.5, or substances defined as hazardous
substances, hazardous materials, toxic substances, hazardous wastes, pollutants
or contaminants, under any Environmental Law, or substances regulated under any
Environmental Law, including, but not limited to, petroleum (including crude
oil or any fraction thereof), asbestos, and polychlorinated biphenyls;
(f) "indebtedness" means, with respect to any person,
without duplication, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind, (B) all obligations of such
person
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evidenced by bonds, debentures, notes or similar instruments, (C) all
obligations of such person upon which interest charges are customarily paid
(other than trade payables incurred in the ordinary course of business), (D)
all obligations of such person under conditional sale or other title retention
agreements relating to property purchased by such person, (E) all obligations
of such person issued or assumed as the deferred purchase price of property or
services (excluding obligations of such person to creditors for raw materials,
inventory, services and supplies incurred in the ordinary course of such
person's business), (F) all lease obligations of such person capitalized on the
books and records of such person, (G) all obligations of others secured by any
lien on property or assets owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all obligations of such
person under interest rate, or currency or commodity hedging, swap or similar
derivative transactions (valued at the termination value thereof), (I) all
letters of credit issued for the account of such person (excluding letters of
credit issued for the benefit of suppliers or lessors to support accounts
payable to suppliers incurred in the ordinary course of business) and (J) all
guarantees and arrangements having the economic effect of a guarantee of such
person of any indebtedness of any other person;
(g) "lien" means any conditional sale agreement, default
of title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge or claim of any nature whatsoever of, on, or with respect to any asset,
property or property interest; provided, however, that the term "lien" shall
not include (i) liens for water and sewer charges and current taxes not yet due
and payable or being contested in good faith, (ii) mechanics', carriers',
workers', repairers', materialmens', warehousemens' and other similar liens
arising or incurred in the ordinary course of business or (iii) all liens
approved in writing by the other party hereto;
(h) "material adverse change" or "material adverse
effect" means, when used in connection with the Company or Parent, any change
or effect (or any development that, insofar as can reasonably be foreseen, is
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<PAGE> 62
likely to result in any change or effect) that is materially adverse to the
business, properties, assets, financial condition or results of operations of
such party and its subsidiaries taken as a whole or on the ability of the
Company or Parent to perform its obligations hereunder;
(i) "Person" means an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity;
(j) "Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement of Hazardous
Materials through or in the air, soil, surface water, groundwater or property;
(k) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person; and
(l) "takeover proposal", has the meaning assigned thereto
in Section 5.2(a).
SECTION 9.4 Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
SECTION 9.5 Counterparts. This Agreement may be executed in
one or more counterparts, all of which
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shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties.
SECTION 9.6 Entire Agreement; No Third-Party Beneficiaries.
This Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and is not intended to confer
upon any person other than the parties any rights or remedies hereunder.
SECTION 9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAW, EXCEPT TO THE EXTENT THE
NCBCA SHALL BE HELD TO GOVERN THE TERMS OF THE MERGER.
SECTION 9.8 Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 9.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of
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<PAGE> 64
any Federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal or state court sitting in the State
of Delaware.
SECTION 9.10 Schedules. For purposes of this Agreement,
"Schedules" shall mean the Schedules contained in the Confidential Disclosure
Schedule, dated the date hereof, delivered in connection with this Agreement.
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<PAGE> 65
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
Arkansas Best Corporation
by /s/ Robert A. Young III
Name: Robert A. Young III
Title: President-Chief
Executive Officer
ABC Acquisition Corporation
by /s/ Robert A. Young III
Name: Robert A. Young III
Title: President-Chief
Executive Officer
WorldWay Corporation
by /s/ John B. Yorke
Name: John B. Yorke
Title: Vice President and
General Counsel
<PAGE> 66
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange
Act (relating to Sub's obligation to pay for or return tendered shares of
Company Common Stock after the termination or withdrawal of the Offer), to pay
for any shares of Company Common Stock tendered pursuant to the Offer unless,
(i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of shares of Company Common Stock which
would constitute a majority of the outstanding shares (determined on a fully
diluted basis) of Company Common Stock (the "Minimum Condition"), (ii) any
waiting period under the HSR Act applicable to the purchase of shares of
Company Common Stock pursuant to the Offer shall have expired or been
terminated, (iii) Parent or Sub shall have received an informal, non-binding
opinion of the staff of the ICC pursuant to 49 CFR Part 1013, without imposing
any conditions reasonably unacceptable to Parent, that the Voting Trusts
effectively insulate the settlor from any violations of the ICC's policy
against unauthorized acquisitions of control of a regulated carrier and (iv)
the ICC shall have granted Parent or Sub temporary authority pursuant to 49
U.S.C. Section 11349 to operate the properties of the Company pending receipt
of the exemption from or approval by the ICC without imposing any conditions
reasonably unacceptable to Parent or Sub. Furthermore, notwithstanding any
other term of the Offer or this Agreement, Sub shall not be required to accept
for payment or, subject as aforesaid, to pay for any shares of Company Common
Stock not theretofore accepted for payment or paid for, and may terminate the
Offer if, at any time on or after the date of this Agreement and before the
acceptance of such shares for payment or the payment therefor, any of the
following conditions exists (other than as a result of any action or inaction
of Parent or any of its subsidiaries which constitutes a breach of this
Agreement):
(a) there shall be instituted or pending any suit, action
or proceeding (in the case of a suit, action or proceeding by a person other
than a Governmental
<PAGE> 67
Entity, such suit, action or proceeding having a substantial likelihood of
success or, in the case of a suit, action or proceeding by a Governmental
Entity, such suit, action or proceeding having a reasonable likelihood of
success), (i) challenging the acquisition by Parent or Sub of any shares of
Company Common Stock under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger, or seeking to obtain from
the Company, Parent or Sub any damages that are material in relation to the
Company and its subsidiaries taken as whole, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any of
their respective subsidiaries of a material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, or to compel the Company or Parent to dispose
of or hold separate any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose material limitations on
the ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock accepted for payment pursuant
to the Offer including, without limitation, the right to vote such Company
Common Stock on all matters properly presented to the shareholders of the
Company or (iv) seeking to prohibit Parent or any of its subsidiaries from
effectively controlling in any material respect the business or operations of
the Company and its subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation,
judgment, order or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, or any other action shall be taken by
any Governmental Entity or court that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) through
(iv) of paragraph (a) above;
(c) there shall have occurred any material adverse change
(or any development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any material adverse change) in the business, properties,
assets, financial condition or results of
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operations of the Company and its subsidiaries, taken as a whole;
(d) (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent or Sub its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any takeover proposal, (ii) the Company
shall have entered into any agreement with respect to any competitive proposal
in accordance with Section 5.2(b) of this Agreement or (iii) the Board of
Directors of the Company or any committee thereof shall have resolved to take
any of the foregoing actions;
(e) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality shall
not be true and correct and any such representations and warranties that are
not so qualified shall not be true and correct in any material respect, in each
case at the date of this Agreement and at the scheduled expiration of the
Offer;
(f) the Company shall have failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
under this Agreement;
(g) there shall have occurred and be continuing (i) any
general suspension of trading in, or limitation on prices for, securities on
the New York Stock Exchange, (ii) a decline in either the Dow Jones Average of
Industrial Stocks or Standard & Poor's 500 Index by an amount of at least 20%
measured from the close of business on the trading day next preceding the date
of this Agreement, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) any
material limitation (whether or not mandatory) by any Governmental Entity on,
or other event that materially impairs, the extension of credit by banks or
other lending institutions or (v) in case of any of the foregoing existing on
the date of this Agreement, material acceleration or worsening thereof;
(h) Parent shall not have received sufficient funds
pursuant to the Financing Commitment (or any alternate financing commitment
obtained by Parent) to consum-
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mate the Offer and the Merger and the transactions contemplated thereby,
provided that such failure to receive funds shall not have resulted from the
failure of Parent to use its reasonable efforts to consummate the transactions
contemplated by the Financing Commitment;
(i) immediately prior to the acceptance for payment of
any shares of Company Common Stock by Sub, a sufficient number of directors
shall have not resigned from the Company's Board of Directors to enable Sub to
designate directors to the Company's Board of Directors in accordance with
Section 1.5 of this Agreement;
(j) any person, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent, Sub or their affiliates or
any group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 30% of the outstanding shares of Company Common Stock through
the acquisition of shares of Company Common Stock, the formation of a group or
otherwise; or
(k) the Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of Sub and
Parent and may, subject to the terms of the Agreement, be waived by Sub and
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and
from time to time.
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EXHIBIT B
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT, dated as of ______, 1995, by and among
[ ] Corporation ("Parent"), [ ] Corporation, a Delaware
Corporation and a wholly-owned subsidiary of Parent ("Acquisition") and ______,
an attorney admitted to practice law in the state of _____________________
(the "Trustee").
W I T N E S S E T H:
WHEREAS, Parent is a non-carrier holding company which owns and
controls several subsidiary corporations engaged in motor carrier
transportation of property for hire or in brokerage of such transportation and
possessing certificates, licenses, and permits issued by the Interstate
Commerce Commission ("ICC") authorizing them to provide such transportation and
brokerage services;
WHEREAS, [ ] ("[ ]"), a [ ]
corporation, is engaged in motor carrier transportation of property for hire or
in brokerage of such transportation and which holds certificates, licenses, and
permits issued by the ICC authorizing such transportation and brokerage
services, and is a wholly-owned subsidiary of [ ]
Corporation, ("[ ]");
WHEREAS, Parent, Acquisition and [ ] have executed an
Agreement and Plan of Merger ("Merger Agreement") pursuant to which Acquisition
will acquire [ ] and its subsidiary
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corporations including, with ICC approval or exemption from approval, [ ];
WHEREAS, pursuant to the Merger Agreement, Acquisition has commenced a
tender offer ("Offer") to purchase all the issued and outstanding shares of
common stock of [ ] ("[ ] Common Stock") upon the terms and
subject to the conditions set forth in the Merger Agreement, and under such
conditions shares acquired pursuant to the Offer will constitute at least a
majority of the outstanding shares of [ ] Common Stock;
WHEREAS, Parent, Acquisition, and [ ] have filed a Notice of
Exemption pursuant to 49 C.F.R. Part 1186 ("Notice of Exemption") to permit
Parent and Acquisition to acquire control of [ ]'s ICC subsidiaries
[including [ ]] and have also applied for temporary authority pursuant
to 49 U.S.C. Section 11349 to permit Parent to operate through management the
properties of the ICC Subsidiaries [including [ ] pending the effectiveness
of the exemption;
WHEREAS, Acquisition wishes and intends, immediately upon acquiring
shares of [ ] Common Stock, pursuant to the Offer to cause [ ]
to deposit all of the issued and outstanding shares of common stock of
[ ] ("Shares") in an independent, irrevocable voting trust, pursuant to the
ICC's rules, in order to avoid any allegation or assertion that Parent or
Acquisition is controlling [ ] in violation of the provisions of the
Interstate Commerce Act prior to the receipt of any required ICC approval or
exemption;
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WHEREAS, [ ] has also agreed in the Merger Agreement to cause
the Shares to be deposited in an independent, irrevocable voting trust;
WHEREAS, the Trustee is willing to act as voting trustee pursuant to
the terms of this Voting Trust Agreement and the rules of the Commission; and
WHEREAS, neither the Trustee nor any member of [his] law firm is an
officer or board member of or has any direct or indirect business arrangements
or dealings with Parent, Acquisition, [ ] or of their affiliates,
NOW THEREFORE, the Parties hereto agree as follows:
APPOINTMENT AND ASSIGNMENT
1. Parent and Acquisition hereby appoint ________ as Trustee
hereunder, and _____________ hereby accepts said appointment and agrees to act
as Trustee hereunder all as provided more fully herein.
2. Parent and Acquisition agree that, immediately upon
Acquisition's acquisition of a majority of the outstanding shares of [ ]'s
Common Stock, Acquisition shall cause [ ] to transfer and deliver to
the Trustee all of its Shares, which shares shall be duly endorsed or
accompanied by proper instruments duly executed for transfer. Such Shares shall
be exchanged for one or more Trust Certificates substantially in the form
attached hereto as Exhibit A, with the blanks therein appropriately filled (the
"Trust Certificates").
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3. This Voting Trust Agreement shall be irrevocable and shall
terminate only in accordance with the provisions of Section 10 hereof.
4. The Trustee shall be entitled and it shall be [his] duty to
exercise any and all voting rights in respect of the Shares either in person or
by proxy, unless otherwise directed by the ICC or a court of competent
jurisdiction, Except as otherwise provided in this Agreement, the Trustee shall
not exercise the voting powers of the Shares in any way so as to create any
dependence or intercorporate relationship between Parent, Acquisition, or their
affiliates, on the one hand, and of [ ], on the other hand. The term
"affiliate" or "affiliates" wherever used in this Voting Trust Agreement shall
have the meaning specified in 49 U.S.C. Section 11343(c), as amended. The
Trustee shall use [his] best judgment to elect suitable directors of [ ]
and in exercising the voting rights and performing [his] duties provided for in
this Voting Trust Agreement. Notwithstanding the foregoing provisions of this
Paragraph 4, however, the registered holder of any Trust Certificate may at any
time -- but only with the prior approval of the ICC -- instruct the Trustee in
writing to vote the shares of [ ] represented by such Trust Certificate
in any manner, in which case the Trustee shall vote such shares in accordance
with such instructions.
5. During the term of this Voting Trust Agreement the Trustee
shall not dispose of or in any way encumber the shares of
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[ ] except as specifically provided herein or as directed by the ICC or a
court of competent jurisdiction.
6. The Trustee may take or approve any action as may be necessary
to cause [ ] to guarantee indebtedness of Parent of Acquisition incurred
in connection with or as a consequence of the acquisition of [ ] and its
subsidiaries and to pledge, assign, hypothecate, bargain, sell, convey,
mortgage, and grant a security interest in or a general lien upon all or any
part of the property and assets of [ ] as security therefor.
7. In the event the ICC grants the application for temporary
authority pursuant to 49 U.S.C. Section 11349 to permit Parent or Acquisition
to operate through management the properties of [ ] pending the
effectiveness of any approval or exemption from approval by the ICC of
permanent authority to control [ ], Parent or Acquisition shall have the
right to operate [ ] through management upon such grant subject to any
conditions the ICC may impose, and Trustee shall exercise [his] voting rights
and duties hereunder consistently with such temporary authority of Parent or
Acquisition and shall not interfere with such temporary authority.
8. All Trust Certificates shall be transferrable on the books of
the Trustee by the registered holder upon the surrender thereof properly
assigned, in accordance with rules from time to time established for the
purpose by the Trustee. Until so transferred, the Trustee may treat the
registered holder as owner for all purposes. Each transferee of a Trust
Certificate issued
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hereunder shall, by [his] acceptance thereof, assent to and become a party to
this Voting Trust Agreement, and shall assume all attendant rights and
obligations.
9. Pending the termination of this Voting Trust as hereinafter
provided, the Trustee shall, immediately following the receipt of each cash
dividend or cash distribution as may be declared and paid upon the Shares, pay
the same over to or as directed the holder of Trust Certificates hereunder as
then known to the Trustee. The Trustee shall receive and hold dividends and
distributions other than cash upon the same terms and conditions as the Shares
and shall issue Trust Certificates representing an new or additional securities
that may be paid as dividends upon the Shares or distributed to the registered
holders of Trust Certificates in proportion to their respective interests.
10. (a) This Voting Trust is accepted by the Trustee subject
to the right hereby reserved in Acquisition at any time to cause the sale or
any other disposition of the whole or any part of the Shares, whether or not an
event described in subparagraph (b) below has occurred. The Trustee shall take
all actions reasonably requested by Acquisition (including, without limitation,
exercising all voting rights in respect of the Shares in favor of any proposal
or action necessary or desirable to effect, or consistent with the effectuation
of any proposal) with respect to any proposed sale or other disposition of the
whole or any part of the Shares by Acquisition. The Trustee shall at any time
upon the receipt of a direction from Acquisition, signed by
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its President or one of its Vice Presidents and under its corporate seal
designating the person or entity to whom Acquisition has directly or indirectly
sold or otherwise disposed of the whole or any part of the Shares and certifying
that such person or entity is not an affiliate of Acquisition and has all
necessary regulatory authority, if any, to purchase the Shares (upon which
certification the Trustee shall be entitled to rely) immediately transfer to
the person or entity therein named all of the Trustee's rights, title, and
interest in such amount of the Shares as may be set forth in said direction.
If the foregoing direction shall specify all of the Shares, then following
transfer of the Trustee's right, title, and interest therein, and in the event
of a sale thereof, upon delivery to or upon the order of Acquisition of the
proceeds of such sale, this Voting Trust shall cease and come to an end. If
the foregoing direction is as to only a part of the Shares, then this Voting
Trust shall cease as to said part upon such transfer, and receipt of proceeds in
the event of sale, but shall remain in full force and effect as to the
remaining part of the Shares, provided, however, that upon the receipt by
Trustee of a written opinion of counsel for Acquisition, a copy of which is
submitted to the ICC, stating that the transfer of voting rights in all the
remaining Shares to Acquisition would not give the Parent or Acquisition control
of the company within the meaning of 49 U.S.C. Section 11343, this Voting Trust
shall cease and come to an end and all Shares and other property then held by
the Trustee shall be distributed to or upon
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the order of Acquisition or the holder or holders of Trust Certificates. In
the event of a sale of Shares by Acquisition, the Trustee shall, to the extent
the consideration therefor is payable to or controllable by the Trustee,
promptly pay, or cause to be paid, upon the order of Acquisition the net
proceeds of such sale to the registered holders of the Trust Certificates in
proportion to their respective interests. It is the intention of this
paragraph that no violations of 49 U.S.C. Section 11343 will result from a
termination of this Voting Trust.
(b) In the event that (i) an exemption from the ICC
requirements for prior approval pursuant to 49 U.S.C. Section 11343 shall
become effective as to [ ]; or (ii) the ICC by final order shall approve
the acquisition of control of [ ] by Acquisition, the Parent or any of its
affiliates; or, (iii) in the event that Title 49 of the United States Code, or
other controlling law, is amended to allow Acquisition, the Parent or their
affiliates to acquire control of [ ] without obtaining ICC or other
governmental approval, upon delivery of an opinion of independent counsel
selected by the Trustee that no order or exemption of the ICC or other
governmental authority is required, or exemption, then the Trustee shall
transfer to or upon the order of Acquisition, the Parent or the holder or
holders of Trust Certificates hereunder as then known to the Trustee, its
rights, title, and interest in and to all of the Shares then held by it in
accordance with the terms, conditions and agreements of this Voting Trust
Agreement and not theretofore transferred by it
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as provided in subparagraph (a) hereof, and upon any such transfer or merger
this Voting Trust shall cease and come to an end.
(c) In the event that the ICC should issue an order denying, or
approving subject to conditions unacceptable to the Parent, any Notice of
Exemption or any application or petition by Acquisition, the Parent or their
affiliates to acquire or otherwise exercise control over [ ],
and such order becomes final after judicial review or failure to appeal,
Acquisition shall use its best efforts to sell the Shares or all of the assets
of [ ] to one or more eligible purchasers, to sell or distribute the
Shares in one Offering or Distribution, or otherwise to dispose of the shares,
during a period of two years after such order becomes final after judicial
review or failure to appeal. At all times, the Trustee shall continue to
perform [his] duties under this Voting Trust Agreement and, should Acquisition
be unsuccessful in [its] efforts to sell or distribute the Shares or all of the
assets of [ ], the Trustee shall as soon as practicable sell the Shares
for cash to one or more eligible purchasers in such manner and for such price
as the Trustee in [his] discretion shall deem reasonable after consultation
with Acquisition. (An "eligible purchaser" hereunder shall be a person or
entity that is not affiliated with the Parent and which has all necessary
regulatory authority, if any is needed, to purchase the Shares.) Acquisition
agrees to cooperate with the Trustee in effecting such disposition and the
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Trustee agrees to act in accordance with any direction made by Acquisition as
to any specific terms or method of disposition, to the extent not inconsistent
with the requirements of the terms of any ICC or court order. The proceeds of
the sale shall be distributed as ordered by Acquisition or, on a pro rata
basis, to the holder or holders of the Trust Certificates hereunder as then
known to the Trustee. The Trustee may, in its reasonable discretion, require
the surrender to [him] of the Trust Certificates hereunder before paying to its
holder his share of the proceeds.
(d) Unless sooner terminated pursuant to any other
provision herein contained, this Voting Trust Agreement shall terminate on
_______________, 2004, and may be extended by the parties hereto, so long as no
violation of 49 U.S.C. Section 11343 will result from such termination or
extension. All Shares and any other property held by the Trustee hereunder upon
such termination shall be distributed to or upon the order of Acquisition or
the holder or holders of Trust Certificates hereunder as then known to the
Trustee. The Trustee may, in [his] reasonable discretion, require the surrender
to [him] of the Trust Certificates hereunder before the release or transfer of
the stock interests evidenced thereby.
(e) The Trustee shall promptly inform the ICC of any
transfer or disposition of Shares pursuant to this Paragraph 10.
(f) The Trustee shall, upon direction by Acquisition,
take all actions that are necessary, appropriate or desirable to
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cause a registration statement if required for the Shares under the Securities
Act of 1933, as amended, and/or an information statement for the Shares under
the Securities Exchange Act of 1934, as amended, and, in either case, a
registration statement or information statement under any other applicable
securities laws, to be filed and to become effective in accordance with the
terms set forth in the Merger Agreement. To the extent that registration is
required under the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, or any other applicable securities laws in respect of
any distribution of Shares as contemplated herein, Acquisition or the Parent
shall reimburse the Trustee for any reasonable expenses incurred by [him] and
indemnify and hold the Trustee harmless from and against any loss, liability,
cost or expense related thereto or arising therefrom.
(g) Except as provided in this Paragraph 10, or in
Paragraph 6, the Trustee shall not dispose of, or in any way encumber, the
Shares.
11. Neither the Trustee nor any member of [his] law firm serves as
(i) an officer or member of their respective boards of directors in common with
Acquisition, the Parent, or any affiliate of either, or (ii) have any direct or
indirect business arrangements or dealings, financial or otherwise, with
Acquisition, the Parent or any affiliate of either, other than dealings
pertaining to establishment and carrying out of this voting trust. Mere
investment in the stock or securities of
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Acquisition or Parent or any affiliate of either by the Trustee or member of
[his] law firm, short of obtaining a controlling interest, will not be
considered a proscribed business arrangement or dealing, but in no event shall
any such investment by the Trustee or member of [his] law firm in voting
securities of Acquisition, the Parent or their affiliates exceed 5 percent of
the outstanding voting securities of Parent or their affiliates and in no event
shall the Trustee or member of [his] law firm hold a proportion of such voting
securities so substantial as to permit the Trustee or member of [his] law firm
in any way to control or direct the affairs of Acquisition, the Parent or their
affiliates.
12. The duties and responsibilities of the Trustee shall be limited
to those expressly set forth in this Voting Trust Agreement. The Trustee shall
be fully protected by acting in reliance upon any notice, advice, direction or
other document or signature believed by the Trustee to be genuine. The Trustee
shall not be responsible for the sufficiency or accuracy of the form,
execution, validity or genuineness of the Shares, or of an other documents, or
of any endorsement thereon; or for any lack of endorsement thereon, or for any
description therein, nor shall the Trustee be responsible for or liable in any
respect on account of the identity, authority or rights of the persons
executing or delivering or purporting to execute or deliver any such Shares or
other document or endorsement or this Voting Trust Agreement, except for the
execution and delivery of this Voting
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<PAGE> 82
Trust Agreement by this Trustee. Acquisition and the Parent agree that they
will at all times jointly and severally protect, indemnify and save harmless
the Trustee from any loss, damages, liability, cost or expense of any kind or
character whatsoever in connection with this Voting Trust except those, if any,
resulting from the gross negligence or willful misconduct of the Trustee, and
will at all times themselves undertake, assume full responsibility for, and pay
on a current basis, but at least quarterly, all cost and expense of any suit or
litigation of any character, whether or not involving a third party, including
any proceedings before the ICC, with respect to the Shares or this Voting Trust
Agreement, and if the Trustee shall be made a party thereto, or be the subject
of an investigation or proceeding (whether formal or informal), Acquisition or
the Parent will pay all costs, damages and expenses, including reasonable
counsel fees, to which the Trustee may be subject by reason thereof; provided,
however, that Acquisition and the Parent shall not be responsible for the cost
and expense of any suit that the Trustee shall settle without first obtaining
the Parent's written consent. The indemnification obligations of Acquisition
and the Parent shall survive any termination of this Voting Trust Agreement or
the removal, resignation or other replacement of the Trustee. The Trustee may
consult with counsel selected by [him] and the opinion of such counsel shall be
full and complete authorization and protection in respect of any action taken
or
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<PAGE> 83
omitted or suffered by the Trustee hereunder in good faith and in accordance
with such opinion.
13. To the extent requested to do so by Acquisition or any
registered holder of a Trust Certificate, the Trustee shall furnish to the
party making such request full information with respect to (i) all property
theretofore delivered to it as Trustee, (ii) all property then held by it as
Trustee, and (iii) all action theretofore taken by it as Trustee.
14. The Trustee, or any trustee hereafter appointed, may at any
time resign by giving sixty days' written notice of resignation to the Parent
and the ICC. The Parent shall, at least fifteen days prior to the effective
date of such notice, appoint a successor trustee which shall satisfy the
requirements of Paragraph 11 hereof. If no successor trustee shall have been
appointed and shall have accepted appointment at least fifteen days prior to
the effective date of such notice of resignation, the resigning Trustee may
petition any authority or court of competent jurisdiction for the appointment
of a successor trustee. Upon written assumption by the successor trustee of
the Trustee's powers and duties hereunder, a copy of the assumption shall be
delivered by the Trustee to the Parent and the ICC and all registered holders
of Trust Certificates shall be notified of such assumption, whereupon the
Trustee shall be discharged of [his] powers and duties hereunder and the
successor trustee shall become vested herewith. In the event of any material
violation by the Trustee of the terms and conditions of this Voting Trust
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<PAGE> 84
Agreement, the Trustee shall become disqualified from acting as trustee
hereunder as soon as a successor trustee shall have been selected in the manner
provided by this paragraph.
15. This Voting Trust Agreement may from time to time be modified
or amended by agreement executed by the Trustee, Acquisition, the Parent and
all registered holders of the Trust Certificates under one or more of the
following circumstances: (i) pursuant to an order of the ICC, (ii) with the
prior approval of the ICC, (iii) in order to comply with any order of the ICC
or (iv) upon receipt of an opinion of counsel satisfactory to the Trustee and
the holders of Trust Certificates that an order of the ICC approving such
modification or amendment is not required and that the amendment is consistent
with the ICC's regulations regarding voting trusts.
16. The provisions of this Voting Trust Agreement and of the
rights and obligations of the parties hereunder shall be governed by the laws
of the State of Delaware, except that to the extent any provision hereof may be
found inconsistent with the Interstate Commerce Act or regulations promulgated
thereunder by the ICC, such Act and regulations shall control and such
provision hereof shall be given effect only to the extent permitted by such Act
and regulations. In the event that the ICC shall, at any time hereafter by
final order, find that compliance with law requires any other or different
action by the Trustee than is provided herein, the Trustee shall act in
accordance with
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<PAGE> 85
such final order instead of the provisions of this Voting Trust Agreement.
17. This Voting Trust Agreement is executed in duplicate, each of
which shall constitute an original, and one of which shall be retained by the
Parent and the other shall be held by the Trustee.
18. A copy of this Voting Trust Agreement and any amendments or
modifications thereto shall be filed with the ICC by Acquisition.
19. This Voting Trust Agreement shall be binding upon the
successors and assigns to the parties hereto, including without limitation
successors to Acquisition and Parent by merger, consolidation or otherwise.
20. As used in this Voting Trust Agreement, the terms "Interstate
Commerce Commission" and "ICC" shall refer to the Interstate Commerce
commission and any successor agency to which the regulatory functions pertinent
to this Voting Trust Agreement may be transferred.
21. (a) Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall mailed by U.S.
mail, certified mail, return receipt requested o by Federal Express, Express
Mail, or similar overnight delivery or courier service or delivered (in person
or by telecopy) against receipt to the party to whom it is to be given at the
address of such party set forth below (or to such other address
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<PAGE> 86
as the party shall have given notice of) with a copy to each of the other
parties hereto:
To the Trustee:
To the Parent:
To Acquisition:
(b) Unless otherwise specifically provided herein, any
notice to or communication with the holders of the Trust Certificates hereunder
shall be deemed to be sufficiently given or made if enclosed in postpaid
envelopes (regular and not registered mail) addressed to such holders at their
respective addresses appearing on the Trustee's transfer books, and deposited
in any post office or post office box. The addresses of the holders of Trust
Certificates, as shown on the Trustee's transfer books, shall in all cases be
deemed to be the address of Trust Certificate holders for all purposes under
this Voting Trust Agreement, without regard to what other or different
addresses the Trustee may have for any Trust Certificate holder on any other
books or records of the Trustee. Every notice so given of mailing shall be the
date such notice is deemed given for all purposes.
22. Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Voting Trust Agreement, each
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<PAGE> 87
non-breaching party would be irreparably and immediately harmed and could not
be made whole by monetary damages. It is accordingly agreed that the parties
hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any other
remedy to which they may be entitled at law or in equity, to compel specific
performance of this Voting Trust Agreement in any action instituted in any
state or federal court sitting in Wilmington, Delaware. Each party hereto
consents to personal jurisdiction in any such action brought in any state or
federal court sitting in Wilmington, Delaware,
IN WITNESS WHEREOF, [ ] Corporation and [ ]
Corporation have caused this Voting Trust Agreement to be executed by their
Treasurers and their corporate seals to be affixed, attested by their
Secretaries, and has caused this Voting Trust Agreement to be executed by one
of its duly authorized corporate officers and its corporate seal to be affixed,
attested to by its Corporate Secretary or one of its Assistant Corporate
Secretaries, the day and year first above written.
Attest: [ ] CORPORATION
_________________________ By_______________________________
Secretary Treasurer
Attest: [ ] CORPORATION
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<PAGE> 88
__________________________ By_______________________________
Secretary Treasurer
Attest: ________________________________
__________________________ By_______________________________
Voting Trustee
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<PAGE> 89
EXHIBIT A
No. ______________
Shares
VOTING TRUST CERTIFICATE
for
COMMON STOCK,
____ PAR VALUE
of
________________________
INCORPORATED UNDER THE LAWS OF THE STATE OF __________________
THIS IS TO CERTIFY that ___________________ will be entitled, on the
surrender of this Certificate, to receive on the termination of the Voting Trust
Agreement hereinafter referred to, or otherwise as provided in Paragraph 8 of
said Voting Trust Agreement, a certificate or certificates for __________ share
of the Common Stock, $1 par value, of ___________________, a _______________
corporation (the "Company"). This certificate is issued pursuant to, and the
rights of the holder hereof are subject to and limited by, the terms of a
Voting Trust Agreement, dated as of ________________, 1995, executed by [ ]
Corporation, a Delaware Corporation, [ ] corporation, a Delaware
Corporation, and _______________, as Voting Trustee, a copy of which Voting
Trust Agreement is on file in the registered office of said corporation at
________________, and open to inspection of any stockholder of the Company and
the holder hereof. The Voting Trust Agreement, unless earlier terminated (or
extended) pursuant to the terms thereof, will terminate on ________________,
2004, so long as no violation of 49 U.S.C. Section 11343 will result from such
termination.
The holder of this Certificate shall be entitled to the benefits of
said Voting Trust Agreement, including the right to receive payment equal to the
cash dividends, if any, paid by the Company with respect to the number of shares
represented by this Certificate.
<PAGE> 90
This Certificate shall be transferable only on the books of the
undersigned Voting Trustee or any successor, to be kept by said Trustee or
successor, on surrender hereof by the registered holder in person or by attorney
duly authorized in accordance with the provisions of said Voting Trust
Agreement, and until so transferred, the Voting Trustee may treat the
registered holder as the owner of this Voting Trust Certificate for all
purposes whatsoever, unaffected by any notice to the contrary.
By accepting this Certificate, the holder hereof assents to all the
revisions of, and becomes a party to, said Voting Trust Agreement.
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate to
be signed.
Dated:
By_____________________________
Voting Trustee
<PAGE> 91
EXHIBIT C
PLAN OF MERGER
OF
ABC ACQUISITION CORPORATION
WITH AND INTO
WORLDWAY CORPORATION
1. Corporations Proposing to Merge and Surviving
Corporation. ABC Acquisition Corporation, a North Carolina corporation
("Sub"), shall be merged (the "Merger") with and into WorldWay Corporation, a
North Carolina corporation (the "Company"), pursuant to an Agreement and Plan
of Merger dated as of July 8, 1995, by and among Arkansas Best Corporation, a
Delaware corporation ("Parent"), ABC Acquisition Corporation and the Company
(the "Agreement"). The effective time for the Merger (the "Effective Time")
shall be at 11:59 p.m. on the date articles of merger with respect to the
Merger are filed by the Secretary of State of North Carolina as evidenced by
the Secretary of State's date and time endorsement thereon. The Company shall
continue as the surviving corporation (the "Surviving Corporation") following
the Merger and the separate corporate existence of Sub shall cease.
2. Effects of the Merger. The Merger shall have the
effects set forth in Section 55-11-06 of the North Carolina Business
Corporation Act (the "NCBCA").
3. Articles of Incorporation and Bylaws. The Articles
of Incorporation, as amended, and the Amended and Restated Bylaws of the
Company, as constituted immediately prior to the Effective Time shall be the
Articles of Incorporation, as amended, and the Amended and Restated Bylaws of
the Surviving Corporation.
4. Officers and Directors. The directors of Sub
immediately prior to the Effective Time shall become the directors of the
Surviving Corporation until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be. The officers of the Company immediately prior to the Effective Time
shall become the officers of the Surviving Corporation, until the earlier of
their
<PAGE> 92
resignation or removal or until their respective successors are duly elected
and qualified, as the case may be.
5. Conversion of Shares. (a) Each share of the capital
stock of Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and become one fully paid and nonassessable share of
common stock, par value $.50 per share, of the Surviving Corporation.
(b) Each issued and outstanding share of common stock of
the Company (other than shares held by the Parent or any subsidiary thereof or
by a subsidiary of the Company and other than Dissenting Shares as defined in
and except to the extent permitted under Section 7 below) at the Effective Time
shall be converted into the right to receive from the Surviving Corporation in
cash, without interest, $11.00 per share of common stock in the Offer (the
"Merger Consideration"). As of the Effective Time, all such shares of common
stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of common stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, without
interest. Each share of common stock that is owned by the Parent or any
subsidiary thereof of by any subsidiary of the Company shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor. Each share of preferred stock of the Company
issued and outstanding at the Effective Time shall remain issued and
outstanding and unaffected by the Merger.
6. Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate a
bank or trust company to act as paying agent in the Merger (the "Paying
Agent"), and, from time to time on, prior to or after the Effective Time,
Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent immediately available funds in amounts and at
the times necessary for the payment of the Merger Consideration (as defined in
the Agreement) upon surrender of certificates representing common stock of the
Company as part of the Merger it being understood that any and all interest
earned on
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<PAGE> 93
funds made available to the Paying Agent pursuant to the Agreement shall be
turned over to Parent.
(b) As soon as reasonably practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of common stock of the Company (the "Certificates") whose
shares were converted into the right to receive the Merger Consideration
pursuant to the Agreement, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Paying Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by the Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash into which the shares of
common stock of the Company theretofore represented by such Certificate shall
have been converted pursuant to the Agreement, and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of common stock of the Company which is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 6, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the shares of common stock of the
Company theretofore represented by such Certificate shall have been converted
pursuant to the Agreement. No
3
<PAGE> 94
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate.
7. Dissenting Shares.
(a) Notwithstanding anything to the contrary contained in
this Plan of Merger, shares of the Company's common stock that are issued and
outstanding immediately prior to the Effective Time and that are held by a
shareholder who has exercised his right (to the extent such right is available
by law) to demand and to receive payment of the fair value of such shares (the
"Dissenting Shares") under Article 13 of the NCBCA shall not be converted into
the right to receive the Merger Consideration, unless and until such holder
shall have failed to perfect or shall have effectively withdrawn or lost such
right to dissent under the NCBCA, as the case may be but such shares shall, at
the Effective Time, be cancelled and shall become the right to perfect demand
for and to receive such consideration as may be determined to be due with
respect to such Dissenting Shares pursuant to and subject to the requirements
of Article 13 of the NCBCA. If any such holder shall have so failed to
perfect or shall have effectively withdrawn or lost such right, such holder's
shares of the Company's common stock shall thereupon be deemed to have been
converted into and to have become, as of the Effective Time, the right to
receive the Merger Consideration. If the holder of any Dissenting Shares shall
become entitled to receive payment for such shares under Article 13 of the
NCBCA, such payment shall be made by the Surviving Corporation.
(b) All holders of Preferred Stock who comply with
certain notice requirements and other procedures will have the right to dissent
and to be paid cash for the "fair value" of their shares to the extent
permitted under Article 13 of the NCBCA.
8. Termination. Prior to the Effective Time, this Plan
of Merger shall terminate and be abandoned upon a termination of the Agreement,
notwithstanding approval of this Plan of Merger by the shareholders of the
Company.
9. Conditions to Merger. The respective obligation of
each party to effect the Merger is subject to the satisfaction or waiver of the
following conditions:
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<PAGE> 95
(i) this Plan of Merger shall have been approved
and adopted by the affirmative vote of the holders of a majority of all shares
of common stock of the Company entitled to be cast in accordance with
applicable law and the Company's Articles of Incorporation, as amended; and
(ii) No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent injunction
or other order enacted, entered, promulgated, enforced or issued by any
governmental entity or other legal restraint or prohibition preventing the
consummation of the Merger or the transactions contemplated thereby shall be in
effect; provided, however, that, in the case of a decree, injunction or other
order, each of the parties shall have used reasonable efforts to prevent the
entry of any such injunction or other order and to appeal as promptly as
possible any decree, injunction or other order that may be entered.
10. Amendment. At any time before the Effective Time,
this Plan of Merger may be amended, provided that no such amendment made
subsequent to the submission of this Plan of Merger to the shareholders of the
Company shall be effective without the further approval of such shareholders.
5
<PAGE> 1
EXHIBIT 2
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT, dated as of ______, 1995, by and among
[ ] Corporation ("Parent"), [ ] Corporation, a Delaware Corporation and a
wholly-owned subsidiary of Parent ("Acquisition") and ___________, an attorney
admitted to practice law in the state of ____________ (the "Trustee") .
W I T N E S E T H:
WHEREAS, Parent is a non-carrier holding company which owns and
controls several subsidiary corporations engaged in motor carrier
transportation of property for hire or in brokerage of such transportation and
possessing certificates, licenses, and permits issued by the Interstate
Commerce Commission ("ICC") authorizing them to provide such transportation and
brokerage services;
WHEREAS, [ ] ("[ ]"), a [ ] corporation, is engaged in motor
carrier transportation of property for hire or in brokerage of such
transportation and which holds certificates, licenses, and permits issued by
the ICC authorizing such transportation and brokerage services, and is a
wholly-owned subsidiary of [ ] Corporation, ("[ ]");
WHEREAS, Parent, Acquisition and [ ] have executed an Agreement and
Plan of Merger ("Merger Agreement") pursuant to which Acquisition will acquire
[ ] and its subsidiary
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<PAGE> 2
corporations including, with ICC approval or exemption from approval, [ ];
WHEREAS, pursuant to the Merger Agreement, Acquisition has commenced a
tender offer ("Offer") to purchase all the issued and outstanding shares of
common stock of [ ] ("[ ] Common Stock") upon the terms and subject to the
conditions set forth in the Merger Agreement, and under such conditions shares
acquired pursuant to the Offer will constitute at least a majority of the
outstanding shares of [ ] Common Stock;
WHEREAS, Parent, Acquisition, and [ ] have filed a Notice of
Exemption pursuant to 49 C.F.R. Part 1186 ("Notice of Exemption") to permit
Parent and Acquisition to acquire control of [ ]'s ICC subsidiaries
[including [ ]] and have also applied for temporary authority pursuant
to 49 U.S.C. Section 11349 to permit Parent to operate through management the
properties of the ICC Subsidiaries [including [ ] pending the
effectiveness of the exemption;
WHEREAS, Acquisition wishes and intends, immediately upon acquiring
shares of [ ] Common Stock, pursuant to the Offer to cause [ ] to
deposit all of the issued and outstanding shares of common stock of [ ]
("Shares") in an independent, irrevocable voting trust, pursuant to the ICC's
rules, in order to avoid any allegation or assertion that Parent or Acquisition
is controlling [ ] in violation of the provisions of the Interstate Commerce
Act prior to the receipt of any required ICC approval or exemption;
- 2 -
<PAGE> 3
WHEREAS, [ ] has also agreed in the Merger Agreement to cause
the Shares to be deposited in an independent, irrevocable voting trust;
WHEREAS, the Trustee is willing to act as voting trustee pursuant to
the terms of this Voting Trust Agreement and the rules of the Commission; and
WHEREAS, neither the Trustee nor any member of [his] law firm is an
officer or board member of or has any direct or indirect business arrangements
or dealings with Parent, Acquisition, [ ] or of their affiliates,
NOW THEREFORE, the Parties hereto agree as follows:
APPOINTMENT AND ASSIGNMENT
1. Parent and Acquisition hereby appoint ___________ as Trustee
hereunder, and ___________ hereby accepts said appointment and agrees to act
as Trustee hereunder all as provided more fully herein.
2. Parent and Acquisition agree that, immediately upon
Acquisition's acquisition of a majority of the outstanding shares of
[ ]'s Common Stock, Acquisition shall cause [ ] to transfer and
deliver to the Trustee all of its Shares, which shares shall be duly endorsed or
accompanied by proper instruments duly executed for transfer. Such Shares shall
be exchanged for one or more Trust Certificates substantially in the form
attached hereto as Exhibit A, with the blanks therein appropriately filled
(the "Trust Certificates").
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<PAGE> 4
3. This Voting Trust Agreement shall be irrevocable and shall
terminate only in accordance with the Provisions of Section 10 hereof.
4. The Trustee shall be entitled and it shall be [his] duty to
exercise any and all voting rights in respect of the Shares either in person or
by proxy, unless otherwise directed by the ICC or a court of competent
jurisdiction. Except as otherwise provided in this Agreement, the Trustee shall
not exercise the voting powers of the Shares in any way so as to create any
dependence or intercorporate relationship between Parent, Acquisition, or their
affiliates, on the one hand, and of [ ], on the other hand. The term
"affiliate" or "affiliates" wherever used in this Voting Trust Agreement shall
have the meaning specified in 49 U.S.C. Section 11343(c), as amended. The
Trustee shall use [his] best judgment to elect suitable directors of [ ]
and in exercising the voting rights and performing [his] duties provided for in
this Voting Trust Agreement. Notwithstanding the foregoing provisions of this
Paragraph 4, however, the registered holder of any Trust Certificate may at any
time -- but only with the prior approval of. the ICC -- instruct the Trustee in
writing to vote the shares of [ ] represented by such Trust Certificate in
any manner, in which case the Trustee shall vote such shares in accordance with
such instructions.
5. During the term of this Voting Trust Agreement the Trustee
shall not dispose of or in any way encumber the shares of
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<PAGE> 5
[ ] except as specifically provided herein or as directed by the ICC or
a court of competent jurisdiction.
6. The Trustee may take or approve any action as may be necessary
to cause [ ] to guarantee indebtedness of Parent or Acquisition incurred in
connection with or as a consequence of the acquisition of [ ] and its
subsidiaries and to pledge, assign, hypothecate, bargain, sell, convey,
mortgage, and grant a security interest in or a general lien upon all or any
part of the property and assets of [ ] as security therefor.
7. In the event the ICC grants the application for temporary
authority pursuant to 49 U.S.C. Section 11349 to permit Parent or
Acquisition to operate through management the properties of [ ] pending the
effectiveness of any approval or exemption from approval by the ICC of
permanent authority to control [ ], Parent or Acquisition shall have the
right to operate [ ] through management upon such grant subject to any
conditions the ICC may impose, and Trustee shall exercise [his] voting rights
and duties hereunder consistently with such temporary authority of Parent or
Acquisition and shall not interfere with such temporary authority.
8. All Trust Certificates shall be transferable on the books of
the Trustee by the registered holder upon the surrender thereof properly
assigned, in accordance with rules from time to time established for the
purpose by the Trustee. Until so transferred, the Trustee may treat the
registered holder as owner for all purposes. Each transferee of a Trust
Certificate issued
- 5 -
<PAGE> 6
hereunder shall, by [his] acceptance thereof, assent to and become a party to
this Voting Trust Agreement, and shall assume all attendant rights and
obligations.
9. Pending the termination of this Voting Trust as hereinafter
provided, the Trustee shall, immediately following the receipt of each cash
dividend or cash distribution as may be declared and paid upon the Shares, pay
the same over to or as directed the holder of Trust Certificates hereunder as
then known to the Trustee. The Trustee shall receive and hold dividends and
distributions other than cash upon the same terms and conditions as the Shares
and shall issue Trust Certificates representing any new or additional
securities that may be paid as dividends upon the Shares or distributed to the
registered holders of Trust Certificates in proportion to their respective
interests.
10. (a) This Voting Trust is accepted by the Trustee subject
to the right hereby reserved in Acquisition at any time to cause the sale or
any other disposition of the whole or any part of the Shares, whether or not an
event described in subparagraph (b) below has occurred. The Trustee shall take
all actions reasonably requested by Acquisition (including, without limitation,
exercising all voting rights in respect of the Shares in favor of any proposal
or action necessary or desirable to effect, or consistent with the effectuation
of any proposal) with respect to any proposed sale or other disposition of the
whole or any part of the Shares by Acquisition. The Trustee shall at any time
upon the receipt of a direction from Acquisition, signed by
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<PAGE> 7
its President or one of its Vice Presidents and under its corporate seal
designating the person or entity to whom Acquisition has directly or indirectly
sold or otherwise disposed of the whole or any part of the Shares and
certifying that such person or entity is not an affiliate of Acquisition and
has all necessary regulatory authority, if any, to Purchase the Shares (upon
which certification the Trustee shall be entitled to rely), immediately
transfer to the person or entity therein named all of the Trustee's rights,
title, and interest in such amount of the Shares as may be set forth in said
direction. If the foregoing direction shall specify all of the Shares, then
following transfer of the Trustee's right, title, and interest therein, and in
the event of a sale thereof, upon delivery to or upon the order of Acquisition
of the proceeds of such sale, this Voting Trust shall cease and come to an end.
If the foregoing direction is as to only a part of the Shares, then this Voting
Trust shall cease as to said part upon such transfer, and receipt of proceeds
in the event of sale, but shall remain in full force and effect the remaining
part of the Shares, provided, however, that upon the receipt by Trustee of a
written opinion of counsel for Acquisition, a copy of which is submitted to the
ICC, stating that the transfer of voting rights in all the remaining Shares to
Acquisition would not give the Parent or Acquisition control of the Company
within the meaning of 49 U.S.C. Section 11343, this Voting Trust shall cease
and come to an end and all Shares and other property then held by the Trustee
shall be distributed to or upon
- 7 -
<PAGE> 8
the order of Acquisition or the holder or holders of Trust Certificates. In the
event of a sale of Shares by Acquisition, the Trustee shall, to the extent the
consideration therefor is payable to or controllable by the Trustee, promptly
pay, or cause to be paid, upon the order of Acquisition the net proceeds of
such sale to the registered holders of the Trust Certificates in proportion to
their respective interests. It is the intention of this paragraph that no
violations of 49 U.S.C. Section 11343 will result from a termination of this
Voting Trust.
(b) In the event that (i) an exemption from the ICC
requirements for prior approval pursuant to 49 U.S.C. Section 11343 shall
become effective as to [ ]; or (ii) the ICC by final order shall
approve the acquisition of control of [ ] by Acquisition, the Parent or
any of its affiliates; or, (iii) in the event that Title 49 of the United
States Code, or other controlling law, is amended to allow Acquisition, the
Parent or their affiliates to acquire control of [ ] without obtaining
ICC or other governmental approval, upon delivery of an opinion of independent
counsel selected by the Trustee that no order or exemption of the ICC or other
governmental authority is required, or exemption, then the Trustee shall
transfer to or upon the order of Acquisition, the Parent or the holder or
holders of Trust Certificates hereunder as then known to the Trustee, its
rights, title, and interest in and to all of the Shares then held in accordance
with the terms, conditions and agreements of this Voting Trust Agreement and
not theretofore transferred by it
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<PAGE> 9
As provided in subparagraph (a) hereof, and upon any such transfer or merger
this Voting Trust shall cease and come to an end.
(c) In the event that the ICC should issue an order
denying, or approving subject to conditions unacceptable to the Parent, any
Notice of Exemption or any application or Petition by Acquisition, the Parent
or their affiliates to acquire or otherwise exercise control over [ ], and
such order becomes final after judicial review or failure to appeal,
Acquisition shall use its best efforts to sell the Shares or all of the assets
of [ ] to one or more eligible purchasers, to sell or distribute the Shares in
one Offering or Distribution, or otherwise to dispose of the Shares, during a
period of two years after such order becomes final after judicial review or
failure to appeal. At all times, the Trustee shall continue to perform [his]
duties under this Voting Trust Agreement and, should Acquisition be
unsuccessful in [its] efforts to sell or distribute the Shares or all of the
assets of [ ], the Trustee shall as soon as Practicable sell the Shares for
cash to one or more eligible purchasers in such manner and for such price as
the Trustee in [his] discretion shall deem reasonable after consultation with
Acquisition. (An "eligible purchaser" hereunder shall be a person or entity
that is not affiliated with the Parent and which has all necessary regulatory
authority, if any is needed, to purchase the Shares.) Acquisition agrees to
cooperate with the Trustee in effecting such disposition and the
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<PAGE> 10
Trustee agrees to act in accordance with any direction made by Acquisition as
to any specific terms or method of disposition, to the extent not inconsistent
with the requirements of the terms of any ICC or court order. The proceeds of
the sale shall be distributed as ordered by Acquisition or on a pro rata basis,
to the holder or holders of the Trust Certificates hereunder as then known to
the Trustee. The Trustee may, in its reasonable discretion, require the
surrender to [him] of the Trust Certificates hereunder before paying to its
holder his share of the proceeds.
(d) Unless sooner terminated pursuant to any other
provision herein contained, this Voting Trust Agreement shall terminate on
___________, 2004, and may be extended by the parties hereto, so long
as no violation of 49 U.S.C. Section 11343 will result from such termination or
extension. All Shares and any other property held by the Trustee hereunder upon
such termination shall be distributed to or upon the order of Acquisition or
the holder or holders of Trust Certificates hereunder as then known to the
Trustee. The Trustee may, in [his] reasonable discretion, require the surrender
to [him] of the Trust Certificates hereunder before the release or transfer of
the stock interests evidenced thereby.
(e) The Trustee shall promptly inform the ICC of any
transfer or disposition of Shares pursuant to this Paragraph 10.
(f) The Trustee shall, upon direction by Acquisition,
take all actions that are necessary, appropriate or desirable to
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<PAGE> 11
cause a registration statement if required for the Shares under the Securities
Act of 1933, as amended, and/or an information statement for the Shares under
the Securities Exchange Act of 1934, as amended, and, in either case, a
registration statement or information statement under any other applicable
securities laws, to be filed and to become effective in accordance with the
terms set forth in the Merger Agreement. To the extent that registration is
required under the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, or any other applicable securities laws in respect of
any distribution of Shares as contemplated herein, Acquisition or the Parent
shall reimburse the Trustee for any reasonable expenses incurred by [him] and
indemnify and hold the Trustee harmless from and against any loss, liability,
cost or expense related thereto or arising therefrom.
(g) Except as provided in this Paragraph 10, or in
Paragraph 6, the Trustee shall not dispose of, or in any way encumber, the
Shares.
11. Neither the Trustee nor any member of [his] law firm serves as
(i) an officer or member of their respective boards of directors in common with
Acquisition, the Parent, or any affiliate of either, or (ii) have any direct or
indirect business arrangements or dealings, financial or otherwise, with
Acquisition, the Parent or any affiliate of either, other than dealings
pertaining to establishment and carrying out of this voting trust. Mere
investment in the stock or securities of
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<PAGE> 12
Acquisition or Parent or any affiliate of either by the Trustee or member of
[his] law firm, short of obtaining a controlling interest, will not be
considered a proscribed business arrangement or dealing, but in no event shall
any such investment by the Trustee or member of [his] law firm in voting
securities of Acquisition, the Parent or their affiliates exceed 5 percent of
the outstanding voting securities of Parent or their affiliates and in no event
shall the Trustee or member of [his] law firm hold a proportion of such voting
securities so substantial as to permit the Trustee or member of [his] law firm
in any way to control or direct the affairs of Acquisition, the Parent or their
affiliates.
12. The duties and responsibilities of the Trustee shall be
limited to those expressly set forth in this Voting Trust Agreement. The
Trustee shall be fully protected by acting in reliance upon any notice, advice,
direction or other document or signature believed by the Trustee to be
genuine. The Trustee shall not be responsible for the sufficiency or accuracy
of the form, execution, validity or genuineness of the Shares, or of any other
documents, or of any endorsement thereon, or for any lack of endorsement
thereon, or for any description therein, nor shall the Trustee be responsible
for or liable in any respect on account of the identity, authority or rights of
the persons executing or delivering or purporting to execute or deliver any
such Shares or other document or endorsement or this Voting Trust Agreement,
except for the execution and delivery of this Voting
- 12 -
<PAGE> 13
Trust Agreement by this Trustee. Acquisition and the Parent agree that they
will at all times jointly and severally protect, indemnify and save harmless
the Trustee from any loss, damages, liability, cost or expense of any kind or
character whatsoever in connection with this Voting Trust except those, if any,
resulting from the gross negligence or willful misconduct of the Trustee, and
will at all times themselves undertake, assume full responsibility for, and pay
on a current basis, but at least quarterly, all cost and expense of any suit or
litigation of any character, whether or not involving a third party, including
any proceedings before the ICC, with respect to the Shares or this Voting Trust
Agreement, and if the Trustee shall be made a party thereto, or be the subject
of an investigation or proceeding (whether formal or informal), Acquisition or
the Parent will pay all costs, damages and expenses, including reasonable
counsel fees, to which the Trustee may be subject by reason thereof; provided,
however, that Acquisition and the Parent shall not be responsible for the cost
and expense of any suit that the Trustee shall settle without first obtaining
the Parent's written consent. The indemnification obligations of Acquisition
and the Parent shall survive any termination of this Voting Trust Agreement or
the removal, resignation or other replacement of the Trustee. The Trustee may
consult with counsel selected by [him] and the opinion of such counsel shall be
full and complete authorization and protection in respect of any action taken
or
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<PAGE> 14
omitted or suffered by the Trustee hereunder in good faith and in accordance
with such opinion.
13. To the extent requested to do so by Acquisition or any
registered holder of a Trust Certificate, the Trustee shall furnish to the
party making such request full information with respect to (i) all property
theretofore delivered to it as Trustee, (ii) all property then held by it as
Trustee, and (iii) all action theretofore taken by it as Trustee.
14. The Trustee, or any trustee hereafter appointed, may at any
time resign by giving sixty days' written notice of resignation to the Parent
and the ICC. The Parent shall, at least fifteen days prior to the effective
date of such notice, appoint a successor trustee which shall satisfy the
requirements of Paragraph 11 hereof. If no successor trustee shall have been
appointed and shall have accepted appointment at least fifteen days prior to
the effective date of such notice of resignation, the resigning Trustee may
petition any authority or court of competent jurisdiction for the appointment
of a successor trustee. Upon written assumption by the successor trustee of the
Trustee's powers and duties hereunder, a copy of the assumption shall be
delivered by the Trustee to the Parent and the ICC and all registered holders
of Trust Certificates shall be notified of such assumption, whereupon the
Trustee shall be discharged of [his] powers and duties hereunder and the
successor trustee shall become vested herewith. In the event of any material
violation by the Trustee of the terms and conditions of this Voting Trust
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<PAGE> 15
Agreement, the Trustee shall become disqualified from acting as trustee
hereunder as soon as a successor trustee shall have been selected in the manner
provided by this paragraph.
15. This Voting Trust Agreement may from time to time be modified
or amended by agreement executed by the Trustee, Acquisition, the Parent and
all registered holders of the Trust Certificates under one or more of the
following circumstances: (i) pursuant to an order of the ICC, (ii) with the
prior approval of the ICC, (iii) in order to comply with any order of the ICC
or (iv) upon receipt of an opinion of counsel satisfactory to the Trustee and
the holders of Trust Certificates that an order of the ICC approving such
modification or amendment is not required and that the amendment is consistent
with the ICC's regulations regarding voting trusts.
16. The provisions of this Voting Trust Agreement and of the
rights and obligations of the parties hereunder shall be governed by the laws
of the State of Delaware, except that to the extent any provision hereof may be
found inconsistent with the Interstate Commerce Act or regulations promulgated
thereunder by the ICC, such Act and regulations shall control and such
provision hereof shall be given effect only to the extent permitted by such Act
and regulations. In the event that the ICC shall, at any time hereafter by
final order, find that compliance with law requires any other or different
action by the Trustee than is provided herein, the Trustee shall act in
accordance with
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<PAGE> 16
such final order instead of the provisions of this Voting Trust Agreement.
17. This Voting Trust Agreement is executed in duplicate, each of
which shall constitute an original, and one of which shall be retained by the
Parent and the other shall be held by the Trustee.
18. A copy of this Voting Trust Agreement and any amendments or
modifications thereto shall be filed with the ICC by Acquisition.
19. This Voting Trust Agreement shall be binding upon the
successors and assigns to the parties hereto, including without limitation
successors to Acquisition and Parent by merger, consolidation or otherwise.
20. As used in this Voting Trust Agreement, the terms "Interstate
Commerce Commission, and "ICC" shall refer to the Interstate Commerce
Commission and any successor agency to which the regulatory functions pertinent
to this voting Trust Agreement may be transferred.
21. (a) Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by U.S.
mail, certified mail, return receipt requested or by Federal Express, Express
Mail, or similar overnight delivery or courier service or delivered (in person
or by telecopy) against receipt to the party to whom it is to be given at the
address of such party set forth below (or to such other address
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<PAGE> 17
as the party shall have given notice of) with a copy to each of the other
parties hereto:
To the Trustee:
To the Parent:
To Acquisition:
(b) Unless otherwise specifically provided herein, any
notice to or communication with the holders of the Trust Certificates hereunder
shall be deemed to be sufficiently given or made if enclosed in postpaid
envelopes (regular and not registered mail) addressed to such holders at their
respective addresses appearing on the Trustee's transfer books, and deposited
in any post office or post office box. The addresses of the holders of Trust
Certificates, as shown on the Trustee's transfer books, shall in all cases be
deemed to be the addresses of Trust Certificate holders for all purposes under
this Voting Trust Agreement, without regard to what other or different
addresses the Trustee may have for any Trust Certificate holder on any other
books or records of the Trustee. Every notice so given of mailing shall be the
date such notice is deemed given for all purposes.
22. Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Voting Trust Agreement, each
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<PAGE> 18
non-breaching party would be irreparably and immediately harmed and could not
be made whole by monetary damages. It is accordingly agreed that the parties
hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any other
remedy to which they may be entitled at law or in equity, to compel specific
performance of this Voting Trust Agreement in any action instituted in any
state or federal court sitting in Wilmington, Delaware. Each party hereto
consents to personal jurisdiction in any such action brought in any state or
federal court sitting in Wilmington, Delaware.
IN WITNESS WHEREOF, [ ] Corporation and [ ] Corporation have
caused this Voting Trust Agreement to be executed by their Treasurers and their
corporate seals to be affixed, attested by their Secretaries, and has caused
this Voting Trust Agreement to be executed by one of its duly authorized
corporate officers and its corporate seal to be affixed, attested to by its
Corporate Secretary or one of its Assistant Corporate Secretaries, the day and
year first above written.
Attest: [ ] CORPORATION
__________________________ By___________________________
Secretary Treasurer
Attest: [ ] CORPORATION
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<PAGE> 19
___________________________ By____________________________
Secretary Treasurer
Attest: ____________________________
___________________________ By____________________________
Voting Trustee
- 19 -
<PAGE> 20
EXHIBIT A
No.________ ___________
Shares
VOTING TRUST CERTIFICATE
for
COMMON STOCK,
______ PAR VALUE
of
_________________________
INCORPORATED UNDER THE LAWS OF THE STATE OF ___________
THIS IS TO CERTIFY that _________ will be entitled, on the surrender
of this Certificate, to receive on the termination of the Voting Trust
Agreement hereinafter referred to, or otherwise as provided in Paragraph 8 of
said Voting Trust Agreement, a certificate or certificates for _________ share
of the Common Stock, $1 par value, of ________ , a ______________ corporation
(the "Company"). This Certificate is issued pursuant to, and the rights of the
holder hereof are subject to and limited by, the terms of a Voting Trust
Agreement, dated as of ___________, 1995, executed by [ ] Corporation, a
Delaware Corporation, [ ] corporation, a Delaware Corporation, and
___________ , as Voting Trustee, a copy of which Voting Trust Agreement is on
file in the registered office of said corporation at ______________, and open
to inspection of any stockholder of the Company and the holder hereof. The
Voting Trust Agreement, unless earlier terminated (or extended) pursuant to the
terms thereof, will terminate on ___________, 2004, so long as no violation of
49 U.S.C. Section 11343 will result from such termination.
The holder of this Certificate shall be entitled to the benefits of
said Voting Trust Agreement, including the right to receive payment equal to
the cash dividends, if any, paid by the Company with respect to the number of
shares represented by this Certificate.
<PAGE> 21
This Certificate shall be transferable only on the books of the
undersigned Voting Trustee or any successor, to be kept by said Trustee or
successor, on surrender hereof by the registered holder in person or by
attorney duly authorized in accordance with the provisions of said Voting Trust
Agreement, and until so transferred, the Voting Trustee may treat the
registered holder as the owner of this Voting Trust Certificate for all
purposes whatsoever, unaffected by any notice to the contrary.
By accepting this Certificate, the holder hereof assents to all the
provisions of, and becomes a party to, said Voting Trust Agreement.
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate to
be signed.
Dated:
By____________________________
Voting Trustee
<PAGE> 1
EXHIBIT 8
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 2nd day of June, 1995, by and between
WORLDWAY CORPORATION, a North Carolina corporation whose principal address is
400 Two Coliseum Centre, 2400 Yorkmont Road, Post Office Box 31308, Charlotte,
North Carolina (hereinafter "WorldWay"), and LARY R. SCOTT (hereinafter
"Scott").
1. Employment. WorldWay hereby continues the employment of Scott, and
Scott hereby accepts continued employment upon the terms and conditions
hereinafter set forth.
2. Term. The term of this agreement shall begin on the 2nd day of June,
1995, and shall continue in effect thereafter until such time as one party shall
give to the other written notice of its intention to cancel the agreement. Such
notice must be given at least three (3) years in advance of the date on which
the agreement shall be cancelled.
3. Compensation. For all services rendered by Scott under the terms of
this Agreement, WorldWay shall pay to Scott a base salary of not less than
$250,000.00 per year, payable in bi-weekly installments.
In addition, WorldWay shall provide to Scott for his personal and business
use a current model Lincoln Town car.
On or after the date of this Agreement, WorldWay shall grant to Scott an
option to purchase 140,000 shares of the common stock of WorldWay at the closing
price for the stock on the New York Stock Exchange on the date of the grant.
WorldWay will provide you a membership in a country club of your choice in
the Charlotte area pursuant to the terms of the applicable company policy.
WorldWay shall continue in effect an agreement entitled "Senior Executive
Benefit Plan Agreement" with Scott, in its current form. Should there be any
conflict between the terms of the Senior Executive Benefit Plan Agreement and
this Agreement, the terms of the Senior Executive Benefit Plan Agreement shall
apply in regard to the benefits provided therein.
WorldWay shall provide, pursuant to the terms of the ValuePlus Split Dollar
Life Insurance Plan of Carolina Freight Corporation, to Scott's estate (or other
designee) a death benefit in an amount not less than one million two hundred
fifty thousand ($1,250,000) dollars.
Scott shall be eligible to participate in other benefit plans that are
offered to all employees of WorldWay, with his participation being governed by
the terms of the particular plan.
Scott shall participate in the 1995 Carolina Freight Corporation Short-Term
Bonus Plan for Salaried Personnel, as approved by the Compensation Committee of
the Board of Directors of WorldWay (the "Committee"). Scott shall also be
eligible to participate in such similar plans as may be adopted by the Committee
in future years at a level that is at least 110% of the highest bonus paid to
any other officer of WorldWay pursuant to such plan.
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<PAGE> 2
4. Extent of Services. Scott shall devote his entire time, attention, and
energies to the business of WorldWay, and shall not, during the term of this
Agreement, be engaged in any other business activity whether or not such
activity is pursued for gain, profit or other pecuniary advantage; but this
shall not be construed as preventing Scott from investing his assets in such
form or manner as will not require any services on the part of Scott in the
operation of the affairs of the companies in which such investments are made or
from serving on the boards of directors of other public or private companies or
from rendering service to one or more government agencies.
5. Working Facilities. Scott shall be furnished with a private office and
with such equipment and assistance as is suitable to his position and adequate
for the performance of his duties.
6. Disclosure of Information. Scott recognizes and acknowledges that the
list of WorldWay's customers, as it may exist from time to time, is a valuable,
special and unique asset of WorldWay's business. Scott will not, during or after
the term of this employment, disclose the list of WorldWay's customers or any
part thereof to any person, firm, corporation or association, or other entity
for any reason or purpose whatsoever. In the event of a breach or threatened
breach by Scott of the provisions of this paragraph, WorldWay shall be entitled
to an injunction restraining Scott from disclosing, in whole or in part, the
list of WorldWay's customers, or from rendering any services to such person,
firm, corporation, association, or other entity to whom such list, in whole or
in part, has been disclosed or is threatened to be disclosed. Nothing herein
shall be construed as prohibiting WorldWay from pursuing any other remedies
available to it for such breach or threatened breach, including the recovery of
damages from Scott.
7. Expenses. Scott is authorized to incur reasonable expenses, as
necessary, in the conduct of his business with WorldWay, including expenses for
entertainment, travel, and similar items. WorldWay will reimburse Scott for all
such reasonable expenses upon the presentation by Scott, from time to time, of
itemized account of such expenditures, all in accordance with the established
policy and procedures of WorldWay.
8. Vacations. Scott shall be entitled to three (3) weeks of vacation in
each year of this Agreement.
9. Termination of Agreement. Notwithstanding anything herein contained to
the contrary, WorldWay may terminate this agreement immediately should Scott
refuse to carry out the terms of this Agreement or to carry out and execute any
and all reasonable duties assigned to him that are similar nature to the duties
being performed by Scott at the execution of this Agreement.
10. Restrictive Covenant. During the term of this agreement and for so
long as payments shall continue from WorldWay to Scott as part of the notice
period called for in paragraph 2 hereof, and for a period of six (6) months
thereafter, Scott will not compete with WorldWay, or with a subsidiary of
WorldWay, and shall not own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership, management,
operation, or control of any business similar to the type of business conducted
by WorldWay or its subsidiaries at the time of termination of this Agreement. In
the event of an actual or threatened breach by Scott of the provisions of this
paragraph, WorldWay shall be entitled to an injunction restraining Scott from
owning, managing, operating, controlling, being employed by, participating in,
or being in any way so connected with any business similar to any type of
business conducted by WorldWay or its subsidiaries at the time of this
Agreement. Nothing herein stated shall be construed as prohibiting WorldWay from
pursuing any other remedies at law or
2 of 3
<PAGE> 3
otherwise available to it for such breach or threatened breach, including the
recovery of damages from Scott.
11. Arbitration. Any controversy or claim arising out of, or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in the
City of Charlotte, North Carolina, in accordance with the rules then promulgated
by the American Arbitration Association, and judgment upon the award rendered
may be entered in any court having jurisdiction thereof.
12. Governing Law. This Agreement shall be governed by and construed under
the laws of the State of North Carolina.
13. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered mail,
return receipt requested to his residence in the case of Scott, or if to
WorldWay, to the address shown in the first paragraph of this Agreement, marked
to the attention of the General Counsel.
14. Entire Agreement. This instrument contains the entire Agreement of the
parties and may not be changed orally, but only by an Agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
15. Assignment. The rights and obligations of WorldWay under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of WorldWay.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WORLDWAY CORPORATION
(Corporate Seal)
By: JOHN B. YORKE
-------------------------------------
John B. Yorke
Vice President
Attest:
ROBERT S. MCLEAN
- ---------------------------------------
Robert S. Mclean
Secretary
LARY R. SCOTT
---------------------------------------(SEAL)
Lary R. Scott
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<PAGE> 1
EXHIBIT 9
WORLDWAY CORPORATION
2400 YORKMONT ROAD, SUITE 400
CHARLOTTE, NORTH CAROLINA 28217
July 8, 1995
[Executive]
[Title]
WorldWay Corporation
2400 Yorkmont Road, Suite 400
Charlotte, North Carolina 28217
Dear [Executive]:
WorldWay Corporation, a North Carolina corporation (formerly Carolina
Freight Corporation, and hereinafter referred to as the "Company") proposes to
enter into an Agreement and Plan of Merger, dated as of July 8, 1995 (the
"Merger Agreement"), with Arkansas Best Corporation, a Delaware corporation
("Arkansas Best") and ABC Acquisition Corporation, a North Carolina corporation
and a wholly owned subsidiary of Arkansas Best, providing for the acquisition of
the Company by Arkansas Best on the terms and subject to the conditions set
forth therein. The Board of Directors of the Company has determined that, in
light of the transactions contemplated by the Merger Agreement, it is essential
to the best interests of the Company and its shareholders to ensure a stable
management structure during the critical transition period after the proposed
acquisition. Accordingly, the Board has determined that certain amendments are
necessary to the letter agreement dated March 7, 1994, between the Company and
you (the "Severance Letter"), which sets forth certain severance benefits which
the Company agrees will be provided to you upon the termination of your
employment after a "change in control" under certain circumstances.
Therefore, in order to induce you to remain in the employ of the Company
during the transition period after a change of control, the Severance Letter is
hereby amended as set forth below.
1. Section 4 of the Severance Letter is deleted in its entirety and replaced
with the following:
4. Termination Following Change in Control. If any of the events
described in Section 3 hereof constituting a change in control of the
Company shall have occurred, you shall be entitled to the benefits provided
in paragraph (iii) and (iv) of Section 5 hereof upon the occurrence of the
following:
I. the termination of your employment by you for any reason (whether or
not for Good Reason), including because of your Retirement, during the
six-month period commencing on the first anniversary of and ending on
the date eighteen (18) months after the occurrence of a change of
control; or
II. subject to clause (I) above, the termination of your employment within
twenty-four (24) months after the occurrence of a change of control,
unless such termination is (a) because of your death or Retirement, (b)
by the Company for Cause or Disability or (c) by you other than for
Good Reason (as all such capitalized terms are herein after defined).
<PAGE> 2
2. The first paragraph of Section 5(iii) of the Severance Letter is deleted in
its entirety and replaced with the following:
(iii) Subject to Section 8 hereof, if your employment by the Company shall
be terminated under the circumstances and during the time periods set forth
in clauses (I) or (II) of Section 4 above, then, by no later than the fifth
day following the Date of Termination (except as otherwise provided), you
shall be entitled, without regard to any contrary provisions of any Plan,
to the benefits as provided below:
3. The first sentence of Section 5(iv) is amended by adding after the words
"Good Reason" in the third line thereof the following:
"(except termination of your employment under the circumstances set forth
in clause (I) of Section 4 above)"
Except as specifically amended hereby, the Severance Letter shall remain
unchanged and in full force and effect and is hereby ratified and confirmed. If
this letter correctly sets forth our agreement on the amendments to the
Severance Letter, kindly sign below and return to the Secretary of the Company
this letter, which will then constitute our agreement on the foregoing
amendments.
Sincerely,
WORLDWAY CORPORATION
By:
------------------------------------
Title:
------------------------------------
Agreed to as of the date set forth
above:
- ------------------------------------
[Executive]
<PAGE> 1
EXHIBIT 10
SUMMARY OF THE 1995 NONQUALIFIED STOCK OPTION PLAN
(EXCERPT FROM PROXY STATEMENT DISTRIBUTED IN CONNECTION WITH THE
COMPANY'S ANNUAL MEETING OF SHAREHOLDERS ON MAY 3, 1995 -- "SHAREHOLDER
PROPOSALS -- ITEM 2")
The Plan will be administered by the Compensation Committee. The number of
shares to be reserved for issuance under the Plan is 500,000 and may not be
increased without shareholder approval, except for adjustment to protect against
dilution in the event of changes in the capitalization of the Company. All
options granted pursuant to the Plan will be nonqualified options. The option
price of the shares for each option granted under the Plan will be not less than
the fair market value of the Common Stock at the time the option is granted. For
purposes of the Plan, fair market value shall be the closing price of the Common
Stock on the date of grant. The term of options granted shall not exceed ten
years, and the options are not transferable except by will or through the laws
of inheritance. Options shall be exercised during an optionee's lifetime only by
such optionee. The Plan provides that on the business day following each Annual
Meeting, each Director who is neither an officer nor an employee of the Company
or its subsidiaries (an "Independent Director") shall be granted an option to
acquire 2,500 shares of the Company's Common Stock (the "Independent Director
Provision"). Options granted under the Independent Director Provision shall be
exercisable immediately and up until and including the business day immediately
proceeding the tenth anniversary of the date on which the option is granted. In
the event the Independent Director ceases to be a Director of the Company for
any reason, the option granted will terminate one year after the Director ceases
to be a Director of the Company. The Plan further provides that each officer of
the Company or its subsidiaries and each Division Manager of Carolina Freight
Carriers Corporation who purchases shares of Company's Common Stock (other than
purchases from the Company pursuant to the exercise of options or similar
rights) will be entitled to receive from the Company an option to purchase the
same number of shares up to a limit of 5,000 per calendar year (the "Matching
Provision"). An option granted under the Matching Provision becomes vested one
year following the date of the grant of the option. If prior to such vesting
date, the grantee of an option under the Matching Provision ceases to own a
portion of the shares resulting in the options under the Matching Provision,
then a corresponding portion of such option granted shall terminate and be
forfeited. In the event the employment of the option grantee terminates for any
reason, the option granted under the Matching Provision shall be exercisable by
the grantee or his or her successor in interest only during the one year period
immediately following the date of termination of employment.
In addition, the Plan provides that the Compensation Committee may select
option recipients and the amount and other terms of options to be granted under
the Plan from time to time in accordance with the provisions of the Plan (the
"Compensation Committee Provision"). Options granted under the Compensation
Committee Provision shall vest in 25% increments annually beginning the date
that is one year following the date of grant of the option. No option granted
under the Compensation Committee Provision may be exercised prior to two years
from the date of grant of such option, and no such option shall be exercisable
more than ten years from the date of grant. Upon termination of employment for
any reason, any nonvested portion of an option granted under the Compensation
Committee Provision shall be forfeited.
Under the Compensation Committee Provision, in the event an optionee's
employment terminates by reason of death, retirement (as defined in the Plan),
permanent and total disability (as determined generally pursuant to the
long-term disability plan applicable to such optionee), or under such other
circumstances as may be determined by the Compensation Committee, the vested
portion of such optionee's options shall be exercisable for a period of one year
thereafter. Under the Compensation Committee Provision, in the event of
termination of an optionee's employment for any other reason, all of such
optionee's options shall terminate, and shall no longer be exercisable, as of
the date of termination of employment.
The Plan provides that upon certain mergers or other reorganizations to
which the Company or any subsidiary is a party that involves an exchange or
conversion or other adjustment of the Common Stock, each optionee shall be
entitled upon the exercise of his options to receive the number and class of
securities or other
<PAGE> 2
property to which such optionee would have been entitled in the reorganization
if such optionee had exercised his option prior to such reorganization.
The Plan also provides that options granted thereunder will become
immediately exercisable in full (subject to any appropriate adjustments in the
number of shares subject to the option and the option price), regardless of
their terms, upon the occurrence of certain events relating to a change in
control of the Company. Such events include (i) the adoption of a plan of merger
or consolidation of the Company with any other corporation as result of which
the holders of the voting capital stock of the Company as a group would receive
less than 50% of the voting capital stock of the surviving or resulting
corporation, (ii) the approval by the Board of Directors of the Company of an
agreement providing for the sale or transfer (other than as security for
obligations of the Company) of substantially all the assets of the Company, or
(iii) in the absence of a prior expression of approval by the Board of Directors
of the Company, the acquisition of more than 20% of the Company's voting capital
stock by any person within the meaning of Section 13(d)(3) of the Act. Such
options shall remain exercisable for the remaining term of such option.
Payment in full of the option price for options exercised by an optionee
must be made at the time of exercise of the option. The option price may be paid
(i) in cash or by certified check, (ii) by a broker-dealer to whom the optionee
has submitted an exercise notice, (iii) by delivery of shares of Common Stock
already owned by, and in the possession of, the optionee, (iv) by surrender of
options then exercisable by the optionee valued at the excess of the aggregate
fair market value of the Common Stock subject to such options on the date of
exercise over the aggregate option exercise price of such Common Stock; (v) by
having the Company withhold such number of shares of Common Stock otherwise
issuable upon exercise of such option having an aggregate fair market value on
the date of exercise equal to the exercise price of the option; (vi) by such
other method as the Compensation Committee shall allow, or (vii) any combination
thereof in the discretion of the Compensation Committee. Payment of the option
price by delivery of shares of Common Stock would result in the transaction
being treated under the Code as a Section 1036 exchange with the participant
receiving a carry-over basis in the new shares and gain or loss being deferred
until the disposition of the new shares, provided that the applicable holding
period requirements are met with respect to the shares of Common Stock
surrendered upon exercise of the options.
Except as otherwise indicated below, the Board of Directors may terminate,
suspend or amend the Plan at any time as deemed advisable. However, the Plan is
intended to meet the requirements of Rule 16b-3 under the Act, which requires
shareholder approval for certain material amendments. Furthermore, the Board of
Directors cannot amend the Plan to (i) increase the number of shares that may be
issued pursuant to options under the Plan, or (ii) permit the grant of options
to the members of the committee administering the Plan. Finally, in no event
shall the Board of Directors or the Compensation Committee authorize an
adjustment in the exercise price of, or the number of shares subject to, an
outstanding option under the Plan.
For federal income tax purposes, the grant of non-qualified options under
the Plan will not result in any income being taxed to the optionee at the time
of the grant or in any tax deduction for the Company at such time. At the time a
non-qualified option is exercised under the Plan, the optionee will be treated
as having received ordinary income equal to the excess of the fair market value
of the shares of Common Stock acquired as of the date of exercise over the
option price paid. The Company will be allowed a deduction for federal income
tax purposes equal to the amount of ordinary income attributable to the optionee
upon exercise. The optionee's holding period for the shares of Common Stock
acquired will commence on the date of exercise, and the tax basis of the shares
will be the greater of their fair market value at the time of exercise or the
option price.
<PAGE> 1
EXHIBIT 3
PRESS RELEASE
The Board of Directors of WorldWay Corporation (formerly Carolina Freight
Corporation) announced today the proposed purchase by Arkansas Best Corporation
of all of WorldWay Corporation's outstanding shares.
Lary Scott, Chairman and CEO of WorldWay, noted, "We are in an industry in
which critical mass and density are the key factors for providing service levels
at a cost which allows the company to be competitive.
ABF has an enviable track record in that they have operated more
successfully than any of the big four National Master Freight Agreement
companies. I expect that after a short period of time, with additional business
levels from Carolina Freight and a selective pool of professional employees from
the two companies, ABF Freight System will improve its impressive performance
even further. The acquisition of WorldWay's other subsidiaries will also add to
Arkansas Best Corporation's diversity into international markets, truckload
distribution, logistics, and other related services. Such diversity is the
direction in which all major players in the transportation industry are moving
to compete effectively in today's marketplace."
Mr. Scott further stated, "The directors of WorldWay Corporation believe
that given the extensive changes that have taken place in the transportation
market place over the past five years, this creative combination is in the best
interest of the shareholders of WorldWay Corporation."
WorldWay Corporation is the holding company for seven subsidiaries
providing domestic and international surface transportation services as well as
logistics management and third-party services. Subsidiaries include Carolina
Freight Carriers Corporation. G.I. Trucking Company, Red Arrow Freight Lines,
Inc., Cardinal Freight Carriers, Inc., Innovative Logistics Incorporated, The
Complete Logistics Company, and CaroTrans International, Inc.
Arkansas Best Corporation is a diversified holding company engaged through
its subsidiaries primarily in motor carrier operations and truck tire retreading
and sales. Principal subsidiaries owned are ABF Freight System, Inc., Treadco,
Inc., Clipper Exxpress Company, and ABC Treadco, Inc.
<PAGE> 1
EXHIBIT 4
ARKANSAS BEST CORPORATION AND
WORLDWAY CORPORATION AGREE TO MERGER
(Fort Smith, Arkansas, July 10, 1995) -- Arkansas Best Corporation
(NASDAQ/NMS:"ABFS") ("Arkansas Best") announced today the signing of a
definitive agreement providing for the merger of a subsidiary of Arkansas Best
with WorldWay Corporation ("WorldWay", formerly known as Carolina Freight
Corporation) (NYSE: "WCN" and PSE: "WCN"), pursuant to which WorldWay will
become a wholly owned subsidiary of Arkansas Best.
The first step of the acquisition will be a cash tender offer for all
outstanding shares of WorldWay at $11.00 per share net which will commence by
July 17, 1995, Arkansas Best will acquire any shares (other than dissenting
shares) not purchased in the tender offer in a subsequent, cash merger at the
same $11.00 per share net price. WorldWay currently has approximately 6,561,672
common shares outstanding and approximately $70 million of debt.
"WorldWay, which had 1994 consolidated revenues of $935 million, represents
a tremendous opportunity for Arkansas Best," Robert A. Young III, Chief
Executive Officer of Arkansas Best stated. "The acquisition helps Arkansas Best
create one of the premier LTL motor carriers in the United States and expands
our international and logistics offerings. It will also give us an entry into
the truckload industry. The transaction is expected to be non-dilutive and to
contribute to earnings in 1996. Moreover, Arkansas Best expects to take
advantage of substantial synergies in the near term."
Lary Scott, Chairman of WorldWay, said, "Our board and management team have
endorsed the combination of WorldWay and Arkansas Best in order to provide our
shareholders, employees, customers and programs with the support necessary to
continue to grow and prosper within the transportation industry. Arkansas Best
will help support our efforts to effectively serve our customers."
The tender offer is subject to the receipt of an informal written opinion
satisfactory to Arkansas Best from tho Interstate Commerce Commission (the
"ICC") regarding the use of voting trusts in connection with the offer and the
proposed merger and the ICC granting Arkansas Best temporary authority to
operate the properties of WorldWay pending ICC approval or exemption from
approval. The offer is also subject to other customary conditions.
Morgan Stanley & Co. Incorporated is acting as financial advisor to
Arkansas Best and dealer manager for the tender offer. The tender offer will be
made only pursuant to definitive offering documents to be filed with the
Securities and Exchange Commission.
WorldWay, headquartered in Charlotte, North Carolina, through its
subsidiaries, offers domestic and international surface transportation services
as well as logistics management and third-party services.
Arkansas Best, which had 1994 consolidated revenues of $1.1 billion,
headquartered in Fort Smith, Arkansas, is primarily engaged, through its
subsidiaries: ABF Freight System, Inc. in LTL shipments of general commodities,
Clipper Exxpress Company in rail intermodal, Integrated Distribution Inc. in
logistics, and is also engaged in truck tire retreading and new truck tire sales
through Treadco, Inc., its 46%-owned subsidiary.
END OF RELEASE
For further information, contact Mr. Randall M. Loyd, Director of Financial
Reporting, at (501) 785-6200.
<PAGE> 1
EXHIBIT 5
LOGO
July 14, 1995
Dear Shareholder:
We are pleased to report that on July 8, 1995, WorldWay Corporation entered
into an Agreement and Plan of Merger with Arkansas Best Corporation and one of
its subsidiaries, ABC Acquisition Corporation, which provides for the
acquisition of WorldWay Corporation common stock at a price of $11.00 per share
in cash. Under the terms of the Agreement, ABC Acquisition will commence a
tender offer for all outstanding shares of WorldWay common stock at $11.00 per
share. Subject to successful completion of the tender offer, and satisfaction of
certain conditions in the Agreement, ABC Acquisition will be merged into
WorldWay and all shares not purchased in the tender offer (other than shares
held by Arkansas Best Corporation, ABC Acquisition, or WorldWay, or any of their
respective subsidiaries, or dissenting shareholders) will be converted into the
right to receive $11.00 per share in cash in the merger.
Your Board of Directors has unanimously approved the offer and determined
that the terms of the offer and the merger are fair to and in the best interest
of WorldWay shareholders. Accordingly, the Board of Directors unanimously
recommends that all WorldWay shareholders accept the offer and tender their
shares.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinion of
Donaldson, Lufkin & Jenrette Securities Corporation, financial advisor to
WorldWay, that the consideration of $11.00 per share to be received by the
common shareholders pursuant to the offer and the merger is fair to such common
shareholders from a financial point of view.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is ABC
Acquisition's Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read the enclosed
materials carefully.
If you hold shares in the Dividend Reinvestment Plan, you may tender all or
a portion of them by checking the appropriate box under the caption "Tender of
Dividend Reinvestment Plan Shares" in the Letter of Transmittal.
The management and directors of WorldWay thank you for the support you have
given the Company.
On behalf of the Board of Directors,
Sincerely,
[SIG]
Lary R. Scott,
Chairman of the Board and
Chief Executive Officer
400 Two Coliseum Centre, 2400 Yorkmont Road - Charlotte, NC 28217 -
(704) 329-0123
P.O. Box 31308 - Charlotte, NC 28231-1308
<PAGE> 1
EXHIBIT 6
LOGO
July 8, 1995
Board of Directors
WorldWay Corporation
400 Two Coliseum Center
2400 Yorkmont Road
Charlotte, North Carolina 28217
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the common shareholders of WorldWay Corporation (the "Company") of the
consideration to be received by such shareholders pursuant to the terms of the
Agreement and Plan of Merger dated as of July 8, 1995, among Arkansas Best
Corporation ("Arkansas Best"), the Company and ABC Acquisition Corporation, a
wholly owned subsidiary of Arkansas Best (the "Agreement").
Pursuant to the Agreement, ABC Acquisition Corporation will commence a
tender offer for any and all outstanding shares of the Company's common stock at
a price of $11.00 per share. The tender offer is to be followed by a merger in
which the shares of all shareholders who did not tender would be converted into
the right to receive $11.00 per share in cash.
In arriving at our opinion, we have reviewed the Agreement. We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company including information provided during discussions
with management. Included in the information provided during discussions with
management were certain financial projections of the Company for the period
beginning May 21, 1995 and ending December 31, 1997 prepared by the management
of the Company. In addition, we have compared certain financial and securities
data of the Company with various other companies whose securities are traded in
public markets, reviewed the historical stock prices and trading volumes of the
common stock of the Company, reviewed prices and premiums paid in other business
combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion. With the
exception of a single party which was contacted in July, 1994, we were not
requested to, nor did we, solicit the interest of any other party in acquiring
the Company, nor did we participate in any direct negotiations with Arkansas
Best or its representatives.
In rendering our opinion, we have relied upon and assumed the accuracy,
completeness and fairness of all of the financial and other information that was
available to us from public sources, that was provided to us by the Company or
its representatives, or that was otherwise reviewed by us. We have not assumed
any responsibility for making an independent evaluation of the Company's assets
or liabilities or for making any independent verification of any of the
information reviewed by us. We have relied as to all legal matters on advice of
counsel to the Company.
<PAGE> 2
Board of Directors
WorldWay Corporation
Page2
July 8, 1995
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not constitute a
recommendation to any common shareholder as to whether to tender their shares or
as to how such shareholder should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. DLJ has been engaged by the
Company in a financial advisory capacity since April 27, 1994.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by the common shareholders
of the Company pursuant to the Agreement is fair to the common shareholders of
the Company from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ L. PRICE BLACKFORD
L. Price Blackford
Managing Director
<PAGE> 1
EXHIBIT 7
June 8, 1995
Arkansas Best Corporation
P.O. Box 10048
Fort Smith, AR 72917-0048
Attention: Mr. Robert A. Young III
President -- CEO
Dear Robert:
In connection with your consideration of a possible negotiated transaction
with WorldWay Corporation and/or its subsidiaries, affiliates or divisions
(collectively, with such subsidiaries, affiliates and divisions, the "Company"),
the Company is prepared to make available to you certain information concerning
the business, financial condition, operations, assets and liabilities of the
Company. As a condition to such information being furnished to you and your
directors, officers, employees, agents, advisors, attorneys, accountants,
consultants, bankers and financial advisors (collectively, "Representatives"),
you agree to treat any information concerning the Company (whether prepared by
the Company, its advisors or otherwise and irrespective of the form of
communication) which is furnished to you or to your Representatives now or in
the future by or on behalf of the Company (herein collectively referred to as
the "Evaluation Material") in accordance with the provisions of this letter
agreement, and to take or abstain from taking certain other actions hereinafter
set forth.
The term "Evaluation Material" also shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents prepared by
you or your Representatives which contain, reflect or are based upon, in whole
or in part, the information furnished to you or your Representative pursuant
hereto. The term "Evaluation Material" does not include information which (i) is
or becomes generally available to the public other than as a result of a
disclosure by you or your Representatives, (ii) was within your possession prior
to its being furnished to you by or on behalf of the Company pursuant hereto,
provided that the source of such information was not known by you to be bound by
a confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any other party with respect to
such information or (iii) becomes available to you on a nonconfidential basis
from a source other than the Company or any of its Representatives, provided
that such source is not bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality of the Company or
any other party with respect to such information.
You hereby agree that you and your Representatives shall use the Evaluation
Material solely for the purpose of evaluating a possible negotiated transaction
between the Company and you, that the Evaluation Material will be kept
confidential and that you and your Representatives will not disclose any of the
Evaluation Material in any manner whatsoever, provided, however, that (i) you
may make any disclosure of such information to which the Company gives its prior
written consent and (ii) any of such information may be disclosed to your
Representatives who need to know such information for the sole purpose of
evaluating a possible negotiated transaction with the Company and who are made
aware of the existence of this agreement. In any event, you shall be responsible
for any breach of this letter agreement by any of your Representatives and you
agree at your sole expense, to take all reasonable measures (including but not
limited to court proceedings) to restrain your Representatives from prohibited
or unauthorized disclosure or use of the Evaluation Material.
In addition, you agree that, without the prior written consent of the
Company, you and your representatives will not disclose to any other person the
fact that the Evaluation Material has been made available to you, that
discussions or negotiations are taking place concerning a possible transaction
involving
<PAGE> 2
the Company or any of the terms, conditions, or other facts with respect thereto
(including the status thereof) provided, that you may make such disclosure if
you determine in good faith that such disclosure must be made by you in order
that you not commit a violation of law. Without limiting the generality of the
foregoing, you further agree that, without the prior written consent of the
Company, you will not, directly or indirectly, enter into any agreement,
arrangement or understanding, or any discussions which might lead to such
agreement, arrangement or understanding, with any person regarding a possible
transaction involving the Company. The term "person" as used in this letter
agreement shall be broadly interpreted to include the media and any corporation,
partnership, group, individual or other entity.
In the event that you or any of your Representatives are requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, you shall provide
the Company with prompt written notice of any such request or requirement so
that the Company may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by the
Company, you or any of your Representatives are nonetheless, in the written
opinion of counsel, legally compelled to disclose Evaluation Material to any
tribunal or else stand liable for contempt or suffer other censure or penalty,
you or your Representative may, without liability hereunder, disclose to such
tribunal only that portion of the Evaluation Material which such counsel advises
you is legally required to be disclosed, provided that you exercise your best
efforts to preserve the confidentiality of the Evaluation Material, including,
without limitation, by cooperating with the Company to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Evaluation Material by such tribunal.
If you decide that you do not wish to proceed with a transaction with the
Company, you will promptly inform the Company of that decision. In the case, or
at any time upon the request of the Company for any reason, you will promptly
deliver to the Company all Evaluation Material (and copies thereof) furnished to
you or your Representatives by or on behalf of the Company pursuant hereto. In
the event of such a decision or request, all other Evaluation Material prepared
by you or your Representative shall be destroyed and no copy thereof shall be
retained. Notwithstanding the return or destruction of the Evaluation Material,
you and your Representatives will continue to be bound by your obligations of
confidentiality and other obligations hereunder.
You understand and acknowledge that neither the Company nor any of its
Representatives make any representation or warranty, express or implied, as to
the accuracy or completeness of the Evaluation Material. You agree that neither
the Company nor any of its Representatives shall have any liability to you or to
any of your Representatives relating to or resulting from the use of the
Evaluation Material or any errors therein or omissions therefrom. Only those
representations or warranties which are made in a final definitive agreement
regarding any transactions contemplated hereby, when, as and if executed, and
subject to such limitations and restrictions as may be specified therein, will
have any legal effect.
Both parties understand and agree that no contract or agreement providing
for any transaction involving the Company shall be deemed to exist between you
and the Company unless and until a final definitive agreement has been executed
and delivered, and both parties hereby waive, in advance, any claims (including,
without limitation, breach of contract) in connection with any transaction
involving the Company unless and until the parties shall have entered into a
final definitive agreement. Both parties also agree that unless and until a
final definitive agreement regarding a transaction between the Company and you
has been executed and delivered, neither the Company nor you will be under any
legal obligation of any kind whatsoever with respect to such a transaction by
virtue of this letter agreement except for the matters specifically agreed to
herein. You further acknowledge and agree that the Company reserves the right,
in its sole discretion, to reject any and all proposals made by you or any of
your Representatives with regard to a transaction between the Company and you,
and to terminate discussions and negotiations with you at any time. You further
understand that (i) the Company and its Representatives shall be free to conduct
any process for any transaction involving the Company, if and as they in their
sole discretion shall determine (including without limitation, negotiating with
any other interested parties and entering into a definitive agreement without
prior notice to you or any other person), (ii) any procedures relating to such
process or transaction may be changed at any time without notice
2
<PAGE> 3
to you or any other person, and (iii) you shall not have any claims whatsoever
against the Company, its representatives or any of their respective directors,
officers, stockholders, owners, affiliates or agents arising out of or relating
to any transaction involving the Company (other than those as against the
parties to a definitive agreement with you in accordance with the terms thereof)
nor, unless a definitive agreement is entered into with you, against any third
party with whom a transaction is entered into. Neither this paragraph nor any
other provision in this agreement can be waived or amended except by written
consent of both parties, which consent shall specifically refer to this
paragraph (or such provision) and explicitly make such waiver or amendment.
You agree that, until the expiration of the "Restricted Period" as defined
in the next-to-last paragraph of this letter agreement, neither you nor any of
your affiliates will, unless invited (in writing on an unsolicited basis) by
action of the Board of Directors of the Company: (i) acquire, offer or propose
to acquire, or agree to seek to acquire, directly or indirectly, by purchase or
otherwise, any securities or direct or indirect rights or opinions to acquire
any securities of the Company or any subsidiary thereof, or of any successor to
or person in control of the Company, or any assets of the Company or any
subsidiary or division thereof or of any such successor or controlling person;
(ii) enter into or agree, offer, propose or seek to enter into, or otherwise be
involved in or part of, directly or indirectly, any acquisition transaction or
other business combination relating to all or part of the Company or its
subsidiaries or any acquisition transaction for all or part of the assets of the
Company or any subsidiary of the Company or any of their respective businesses;
(iii) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the rules of the
Securities and Exchange Commission) to vote, or seek to advise or influence any
person or entity with respect to the voting of, any voting securities of the
Company; (iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) with respect
to any voting securities of the Company or any of its subsidiaries; (v) seek or
propose, alone or in concert with others, to influence or control the Company's
management or policies; (vi) directly or indirectly enter into any discussions,
negotiations, arrangements or understandings with any other person with respect
to any of the foregoing activities or propose any of such activities to any
other person; (vii) advise, assist, encourage, act as a financing source for or
otherwise invest in any other person in connection with any of the foregoing
activities; or (viii) disclose any intention, plan or arrangement inconsistent
with any of the foregoing. You will promptly advise the Company of any material
inquiry or proposal made to you with respect to any of the foregoing. You also
agree that during the Restricted Period referred to in the second preceding
sentence, neither you nor any of your affiliates will: (i) request the Company
or its advisors, directly or indirectly, to (1) amend or waive any provision of
this paragraph (including this sentence) or (2) otherwise consent to any action
inconsistent with any provision of this paragraph (including this sentence); or
(ii) take any initiative with respect to the Company or any of its subsidiaries
that could require the Company to make a public announcement regarding (1) such
initiative, (2) any of the activities referred to in the second preceding
sentence, (3) the possibility of any acquisition transaction or business
combination, or (4) the possibility of your, or any other person's, acquiring
control of the Company, whether by means of a business combination or otherwise.
Each party agrees that during the Restricted Period, without the prior
written consent of the other party, it will not, directly or indirectly, solicit
to hire or hire (or cause or seek to cause to leave the employ of the
other): (i) any executive employed by the other; (ii) any other employee of the
other or any subsidiary of the other with whom you have had contact or who (or
whose performance) became known to you in connection with the process
contemplated by this agreement.
It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
future exercise thereof or the exercise of any other right, power or privilege
hereunder.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
Notwithstanding anything in this agreement to the contrary, all
restrictions applicable to you and contained in this letter agreement, including
all restrictions with respect to the confidentiality of the Evaluation Material,
shall terminate and expire at the earliest to occur of any of the following
(herein referred
3
<PAGE> 4
to as the "Restricted Period"): (i) December 31, 1995; (ii) at such time that
the Company announces or otherwise enters into an agreement contemplating the
sale of the Company or all or substantially all of its assets; (iii) upon any
person acquiring, directly or indirectly, beneficial ownership of more than 15%
of the Company's outstanding Common Stock; (iv) upon the announcement or
commencement of any tender offer or exchange offer for any of the Company's
Common Stock; or (v) upon the announcement or execution of any agreement
contemplating an extraordinary transaction affecting the Company or its
outstanding Common Stock.
Please confirm your agreement with the foregoing by signing and returning
one copy of this letter to the undersigned, whereupon this letter agreement
shall become a binding agreement between you and the Company.
Very truly yours,
WORLDWAY CORPORATION
By: /s/ LARY R. SCOTT
------------------------------------
Lary R. Scott
Chairman and CEO
Accepted and agreed as of the date first written above:
ARKANSAS BEST CORPORATION
By: /s/ ROBERT A. YOUNG III
----------------------------------
Name: Robert A. Young III
Title: President -- CEO
4
