SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): June 30, 1998
TRANSPORT CORPORATION OF AMERICA, INC.
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(Exact name of Registrant as specified in its charter)
Minnesota 0-24908 41-1386925
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1769 Yankee Doodle Road
Eagan, Minnesota 55121
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 686-2500
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Item 2. Acquisition or Disposition of Assets.
On June 30, 1998, Transport Corporation of America, Inc. (the
"Company") acquired all of the issued and outstanding capital stock of North
Star Transport, Inc., a private truckload carrier based in Eagan, Minnesota
("North Star"), pursuant to a Stock Purchase Agreement, dated May 20, 1998 and
as amended June 30, 1998, by and among the Company, North Star and North Star's
shareholders (the "Agreement"). The Company acquired the capital stock of North
Star from Messrs. Jon L. Miller, William I. Hagen and Michael D. Kandris who
were the primary shareholders of North Star. The remainder of North Star's
shareholders were family trusts for the benefit of the children of Messrs.
Miller and Hagen. All of North Star's shareholders are collectively referred to
as the "Selling Shareholders" in this report.
North Star is engaged in the same line of business as the Company. It
owns approximately 30 tractors and 1,200 trailers, and contracts with
approximately 625 independent contractor drivers who lease or own their own
equipment. North Star will be operated as a wholly-owned subsidiary of the
Company, with many operations coordinated with the Company to achieve operating
efficiencies and synergies.
The purchase price paid by the Company consisted of 1,200,000 shares of
the Company's Common Stock (valued at $16.00 per share) and $15,800,000 in cash.
Mr. William I. Hagen filed a Schedule 13G with the Securities and Exchange
Commission on July 1, 1998 reporting that he beneficially owns 6.7% of the
Company's Common Stock as a result of the payment to him of the stock portion of
the purchase price. A total of 65,000 shares of the stock portion of the
purchase price was held back by the Company subject to North Star satisfying a
$12.5 million net worth covenant in the Agreement to be determined by a closing
date audit.
The Company funded the cash portion of the purchase price through
borrowings from an increase to its existing line of credit with Firstar Bank of
Minnesota, N.A. The First Amendment to the Credit Agreement by and among the
Company and Firstar Bank of Minnesota, N.A., is filed with this report as
Exhibit 10.
The Agreement also (1) grants the Selling Shareholders the right to
nominate one director to the Company's Board of Directors; (2) grants the
Selling Shareholders a "put" right to sell the Company's Common Stock they
received back to the Company at $16.89 per share during the 60-day period
commencing on June 30, 2001; (3) prohibits the Selling Shareholders from
competing against North Star or soliciting former employees and customers of
North Star; and (4) grants the Selling Shareholders certain registration rights
with respect to the shares of the Company's Common Stock they received.
The Agreement and the Registration Rights Agreement are incorporated
herein by reference as Exhibits 2.1 and 2.2 hereto. The foregoing description of
the transaction, the Agreement and the registration rights does not purport to
be complete and is qualified in its entirety by reference to such exhibits.
<PAGE>
Item 5. Other Events.
In connection with the acquisition of North Star, the Company amended
its Rights Agreement, dated February 25, 1997, by and between the Company and
Norwest Bank Minnesota, N.A., to provide that the Selling Shareholders are not
to be deemed an "Acquiring Person" under the Rights Agreement until their
ownership of the Company's Common Stock equals or exceeds 17%. Amendment No. 1
to the Rights Agreement is incorporated herein by reference as Exhibit 4 hereto.
The foregoing description of the amendment does not purport to be complete and
is qualified in its entirety by reference to such exhibit.
Further, the Company amended Section 3.02 of its by-laws to increase
the size of its Board of Directors to six (6). The Company's by-laws, as so
amended, are filed with this report as Exhibit 3.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Financial information relating to the acquisition required by this item
will be filed as soon as practicable but in no event later than sixty (60) days
after the filing of this report.
(b) Pro forma financial information.
Financial information relating to the acquisition required by this item
will be filed as soon as practicable but in no event later than sixty (60) days
after the filing of this report.
(c) Exhibits.
Exhibit 2.1 Stock Purchase Agreement, dated May 20, 1998, by and
among Transport Corporation of America, Inc., North
Star Transport, Inc. and the shareholders of North
Star Transport, Inc.; and Amendment No. 1 to the
Stock Purchase Agreement, dated June 30, 1998.
Exhibit 2.2 Registration Rights Agreement, dated June 30, 1998,
by and among Transport Corporation of America, Inc.
and the shareholders of North Star Transport, Inc.
Exhibit 3 By-laws of Transport Corporation of America, Inc., as
amended.
Exhibit 4 Amendment No. 1 to Rights Agreement, dated June 29,
1998, by and between Transport Corporation of
America, Inc. and Norwest Bank Minnesota, N.A..
(Incorporated by reference to Exhibit 1 of Amendment
No. 2 to Form 8-A of Transport Corporation of
America, Inc., filed with the SEC on June 29, 1998.)
Exhibit 10 First Amendment to Credit Agreement, dated June 24,
1998, by and between Transport Corporation of
America, Inc. and Firstar Bank of Minnesota, N.A.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Transport Corporation of America, Inc.
By /s/ Robert J. Meyers
------------------------------------
Robert J. Meyers, President
Dated: July 15, 1998
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSPORT CORPORATION OF AMERICA, INC.,
NORTH STAR TRANSPORT, INC.
AND
THE SHAREHOLDERS OF
NORTH STAR TRANSPORT, INC.
Dated as of May 20, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..........................................................1
1.1 Specific Definitions...........................................1
1.2 Definitional Provisions........................................6
ARTICLE II
PURCHASE AND SALE OF STOCK...........................................7
2.1 Purchase and Sale of Capital Stock.............................7
ARTICLE III
CLOSING..............................................................7
3.1 Place and Date of Closing......................................7
3.2 Facilitation of Closing........................................7
3.3 Delivery of Stock Certificates.................................7
ARTICLE IV
PURCHASE PRICE.......................................................8
4.1 Purchase Price.................................................8
4.2 Additional Consideration.......................................8
4.3 Net Worth Covenant Adjustment..................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF NORTH STAR AND MESSRS. MILLER AND HAGEN...........................10
5.1 Organization...................................................10
5.2 Ownership and Capitalization of North Star.....................10
5.3 Subsidiaries...................................................11
5.4 Authority......................................................11
5.5 Consents Required; Violations..................................11
5.6 Reorganization.................................................12
5.7 Financial Statements...........................................12
5.8 Taxes..........................................................13
5.9 Absence of Undisclosed Liabilities.............................14
5.10 Absence of Certain Changes and Events..........................14
5.11 Tangible Assets................................................16
5.12 Intellectual Property..........................................16
5.13 Accounts Receivable and Other Contract Rights..................16
5.14 Real Property..................................................17
5.15 Certain Contracts, Leases, Agreements, Etc.....................17
5.16 Licenses; Compliance with Laws, Regulations, Etc...............19
5.17 Litigation.....................................................19
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5.18 Insurance Policies.............................................20
5.19 Labor Agreements...............................................20
5.20 Employees......................................................20
5.21 No Finders.....................................................22
5.22 Contracts with Related Parties.................................22
5.23 Customers......................................................22
5.24 Relations with Suppliers.......................................22
5.25 Environmental Matters..........................................23
5.26 Absence of Certain Business Practices..........................23
5.27 Corporate Records..............................................23
5.28 Banks and other Depositories...................................24
5.29 Disclosure.....................................................24
5.30 Net Worth......................................................24
ARTICLE VI
PERSONAL REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS......................................................24
6.1 Ownership of North Star........................................24
6.2 Authority......................................................24
6.3 No Conflicts...................................................25
6.4 Litigation.....................................................25
6.5 Brokers or Finders.............................................25
6.6 Disclosure.....................................................25
6.7 Investment Intent..............................................25
6.8 Beneficial Ownership of Transport America Stock................26
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TRANSPORT AMERICA..................27
7.1 Organization of Transport America..............................27
7.2 Ownership and Capitalization of Transport America..............27
7.3 Corporate Authority............................................28
7.4 Consents Required; Violations..................................28
7.5 Transport America's Common Stock...............................28
7.6 SEC Filings....................................................29
7.7 Absence of Certain Changes and Events..........................29
7.8 Licenses; Compliance with Laws, Regulations, Etc...............30
7.9 Litigation.....................................................30
7.10 Insurance Policies.............................................30
7.11 Labor Agreements...............................................30
7.12 Employees......................................................31
7.13 Taxes..........................................................31
7.14 Intellectual Property..........................................32
7.15 Environmental Matters..........................................32
7.16 No Finders.....................................................32
7.17 Disclosure.....................................................32
7.18 Customers......................................................33
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7.19 Corporate Records..............................................33
7.20 Absence of Undisclosed Liabilities.............................33
7.21 Investment Intent..............................................33
ARTICLE VIII
AGREEMENTS AND COVENANTS.............................................34
8.1 Additional Effects; Directors..................................34
8.2 Due Diligence and Confidentiality..............................35
8.3 Operation of North Star's Business.............................35
8.4 Reasonable Efforts.............................................38
8.5 Solicitation Discussions by North Star.........................39
8.6 Announcements..................................................39
8.7 Certain Payments...............................................39
8.8 Schedules......................................................40
8.9 Section 338(h)(10) Election....................................40
8.10 Regulatory Filings.............................................40
8.11 Tax Matters....................................................40
8.12 Operation of Transport America's Business......................42
8.13 Roseau Diesel Services, Inc....................................42
ARTICLE IX
PUT RIGHT............................................................42
9.1 Put............................................................42
ARTICLE X
NON-COMPETE AND NON-SOLICITATION.....................................43
10.1 Non-Compete and Non-Solicitation...............................43
10.2 Reasonableness of Restrictions.................................43
10.3 Remedies.......................................................43
ARTICLE XI
CONDITIONS TO CLOSING................................................44
11.1 Conditions to Obligations of North Star and the Shareholders...44
11.2 Conditions to Obligations of Transport America.................45
ARTICLE XII
TERMINATION AND FEES.................................................48
12.1 Termination....................................................48
12.2 Effect of Termination..........................................49
12.3 Fees and Expenses..............................................49
ARTICLE XIII
INDEMNIFICATION......................................................50
13.1 Survival of Representations and Warranties.....................50
13.2 Indemnification by North Star and Shareholders.................50
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13.3 Indemnification by Transport America...........................51
13.4 Limitation on Indemnification..................................51
13.5 Method of Asserting Claims.....................................51
13.6 Limitation on Rights Against Transport America and North Star..52
ARTICLE XIV
OTHER PROVISIONS.....................................................53
14.1 Further Assurances.............................................53
14.2 Complete Agreement.............................................53
14.3 Waiver, Discharge..............................................53
14.4 Notices........................................................53
14.5 Governing Law..................................................54
14.6 Successors and Assigns.........................................54
14.7 Amendment......................................................54
14.8 Extension; Waiver..............................................54
14.9 Titles and Headings; Construction..............................55
14.10 Benefit........................................................55
14.11 Counterparts...................................................55
14.12 Attorney-in-Fact for Shareholders..............................55
14.13 Cooperation....................................................55
14.14 Preservation of and Access to Records..........................55
14.15 Sales Taxes....................................................56
EXHIBITS:
B - Form of Opinion of Lindquist & Vennum P.L.L.P.
C - Mutual Release
D - Form of Opinion of Moss & Barnett
E - Registration Rights Agreement
SCHEDULES:
A - Insurance Policies, Vehicles, Airplane
3.3 - Purchase Price
5.1 - Foreign Qualifications
5.2 - Ownership and Capitalization of North Star
5.3 - Subsidiaries
5.5 - Consents
5.8 - Taxes
5.9 - Absence of Undisclosed Liabilities
5.10 - Absence of Certain Changes and Events
5.11 - Tangible Assets
5.13 - Accounts Receivables
5.14 - Real Property
5.15 - Contracts
5.16 - Licenses, Compliance with Laws, Regulations, Etc.
5.17 - Litigation
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5.18 - Insurance Policies
5.19 - Labor Agreements
5.20 - Employees
5.22 - Contracts with Related Parties
5.23 - Customers
5.25 - Environmental Matters
5.28 - Banks
6.8 - Section 1(d) of Rights Agreement
7.2 - Capitalization
7.9 - Litigation
7.10 - Insurance Policies
7.12 - Employees
7.15 - Environmental Matters
8.3 - Operation of North Star's Business
8.9 - Allocation of Purchase Price
11.1(i) - Transition Services Agreement
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is made and entered into this 20th day of
May, 1998, by and among TRANSPORT CORPORATION OF AMERICA, INC., a Minnesota
corporation ("Transport America"), NORTH STAR TRANSPORT, INC., a Minnesota
corporation ("North Star"), and the shareholders of North Star listed on
Schedule 5.2 hereto and whose names appear on the signature page hereof
(referred to individually as a "Shareholder"; referred to collectively as the
"Shareholders").
WHEREAS, the Boards of Directors of Transport America and North Star
and the Shareholders deem it advisable and in the best interests of each
corporation and its respective shareholders that Transport America acquire all
of the outstanding capital stock of North Star (the "Stock Purchase") in
accordance with the provisions of this Agreement in order to advance the
long-term business interests of Transport America and North Star; and
WHEREAS, immediately prior to the Stock Purchase, North Star will
consummate the Reorganization;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"1996 Financial Statements" mean as defined in Section 5.7.
"1997 Financial Statements" mean as defined in Section 5.7.
"Acquired Business" means all Business and operations of North Star after the
Reorganization but specifically excluding the Divested Business and the Divested
Liabilities.
"Adverse Consequences" means all Losses incurred in connection with all actions,
suits, proceedings, hearings, investigations, charges, complaints, demands,
claims, injunctions, judgments, orders, decrees, and rulings, in each case net
of (i) tax effect, (ii) any insurance proceeds received, and (iii) any amounts
recovered from third parties by way of subrogation or otherwise. For purposes of
determining the tax effect of Adverse Consequences, the marginal combined
federal and state income tax rate of Transport America shall be deemed to be
thirty-nine percent (39%) and of the Shareholders shall be deemed to be
forty-eight percent (48%).
<PAGE>
"Affiliate" and "Affiliated" of any Person means any other Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the first Person.
"Agreement" means this Agreement and all Exhibits and Schedules hereto.
"Alternative Transaction" means as defined in Section 8.5.
"Audited Statement" means as defined in Section 4.3(b).
"Average Closing Price" means the average of the per share closing sales prices
of Transport America's Common Stock on The Nasdaq Stock Market for the fifteen
(15) trading days immediately before the Closing Date.
"Business" means all assets (including Business Assets), operations and business
of North Star.
"Business Assets" means all the assets, properties, rights, intents, contract
rights, permits, claims and business of North Star immediately after the
Reorganization of every kind, nature and description, wherever located, whether
now owned or hereafter acquired, whether tangible or intangible, real, personal
or mixed, absolute or contingent, known or unknown.
"Capital Stock" means all of the shares of common stock, regardless of series or
class, preferred stock, common stock equivalents or any other securities of a
Person convertible, exchangeable or exercisable to shares of common or preferred
stock of a Person.
"Cash Portion" means as defined in Section 4.1(a).
"Closing" and "Closing Date" mean as defined in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means as defined in Section 7.6.
"Director Candidates" shall mean as defined in Section 8.1.
"Divested Business" means the assets and Liabilities of North Star sold,
assigned, transferred or otherwise disposed of by North Star in the
Reorganization.
"Divested Liabilities" means any and all debts, Liabilities, commitments,
covenants, and obligations (whether known or unknown, contingent or liquidated,
disputed or uncontested), if any, which relate to or arise out of the Divested
Business, including, but not limited to those Liabilities, if any, set forth on
Schedule A.
"Due Diligence Investigation" means as defined in Section 8.2.
"Employee Plans" means any health care plan or arrangement; life insurance or
other death benefit plan; deferred compensation or other pension or retirement
plan; stock option, bonus or other incentive plan; severance or early retirement
plan; or other fringe or employee benefit plan
<PAGE>
or arrangement; driver compensation plans; or any employment or consulting
contract or executive compensation agreement; whether the same are written or
otherwise, formal or informal, voluntary or required by law or by a specified
Person's policies or practices, including, without limitation, any "pension
plan" as defined in Section 3(2) of ERISA which is not a Multiemployer Plan, and
any "welfare plan" as defined in Section 3(l) of ERISA (whether or not any of
the foregoing is funded), (i) to which a specified Person or its ERISA Affiliate
is a party or by which a specified Person or its ERISA Affiliate is bound; (ii)
which a specified Person or its ERISA Affiliate has at any time established or
maintained for the benefit of or relating to present or former employees, leased
employees or agents, and/or their dependents, or directors of a specified Person
or its ERISA Affiliate; or (iii) with respect to which a specified Person or its
ERISA Affiliate has made any payments or contributions.
"Environmental Laws or Regulations" means all federal, state, county, municipal,
local and other statutes, laws, ordinances, regulations, rules, policies,
consent decrees, judicial or administrative orders or other requirements
relating to the environment, including but not limited to the air, water, noise,
odor, land, soil, pesticides, agricultural or industrial chemicals, hazardous or
toxic substances, or wastes or to human health or safety associated with the
environment, all as amended or modified from time to time, including but not
limited to the Comprehensive Environmental Response Compensation and Liability
Act ("CERCLA") as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), 42 U.S.C. ss. 9601, et seq.; the Resource Conservation and
Recovery Act, as amended ("RCRA"), 42 U.S.C. ss. 6901, et seq.; the Clean Water
Act, 33 U.S.C. ss. 1251, et seq.; the Clean Air Act, 42 U.S.C. ss. 7401, et
seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601, et seq., all as
amended from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means all trades or businesses (whether or not incorporated)
which are or, at any time during the period from January 1, 1992 to the present,
were members of a group of which a specified Person is or was a member which are
or were under common control within the meaning of Code Section 414 (b) or (c)
or which are or were treated, together with the specified Person, as a single
corporation under Sections (m) and (o) of the Code.
"Exchange Act" means as defined in Section 7.6.
"Facilities" means all real property, together with all buildings, fixtures and
improvements thereon, owned (or formerly owned) by a Person or in which a Person
has or in the past had any lease, operator or other interest.
"Financial Information" means as defined in Section 5.7.
"GAAP" means as defined in Section 5.7.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" means letters patent and patent applications; Trademarks
(as defined below); copyrights and copyright registrations and applications;
and/or discoveries, technology,
<PAGE>
know-how, trade secrets, processes, formulas, drawings and designs, computer
programs or software, and all amendments, modifications, and improvements to any
of the foregoing.
"Knowledge" means (A) with respect to a Shareholder, the actual knowledge of
such Shareholder, (B) with respect to North Star, the actual knowledge of the
Shareholders or any officer, director or key management personnel of North Star,
and (C) with respect to Transport America, the actual knowledge of any officer,
director or key management personnel of Transport America.
"Liability" means any liability and payment obligation whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, and whether liquidated or unliquidated, including any liability
for Taxes.
"Liens" means liens, mortgages, charges, claims, security interests, pledges,
encumbrances, options, restrictions or third party interests of any nature.
"Losses" shall mean all damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities (which in the case of any breach or alleged breach of
the representations and warranties contained in Sections 5.25 and 7.15, shall
include Liability incurred by a specified Person or its Affiliates for
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damages, personal injuries or civil or criminal
penalties in connection therewith), obligations, liens, losses, expense, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Material Adverse Effect" means a material adverse effect upon the business,
properties, assets, financial condition results of operating or prospects of a
specified Person.
"Material North Star Change" means as defined in Section 5.10.
"Merger Agreement" means The Agreement and Plan of Merger by and among North
Star, the Shareholders, Transco and Transco's shareholders, and the related
Articles of Merger, for the purpose of merging Transco with and into North Star
in the Reorganization.
"Multiemployer Plan" means as defined in Section 3(37) of ERISA.
"Net Worth" means North Star's total assets at book value minus its total
liabilities after the Reorganization but prior to the Closing in each case as
reflected on the Audited Statement, increased by the amount of any sales taxes
and licensing fees actually paid or accrued by North Star as a result of the
merger of Transco with and into North Star payable on the tractors owned by
Transco at the time of the merger.
"North Star Director" means as defined in Section 8.1.
"Purchase Price" means as defined in Section 4.1.
"Purchased Shares" means as defined in Section 2.1.
<PAGE>
"Real Property" means as defined in Section 5.14.
"Regulated Substance" means asbestos, urea formaldehyde, polychlorinated
biphenyls, nuclear fuel or materials, chemical waste, radioactive materials,
explosives, known carcinogens, petroleum products and their constituents,
pesticides, fertilizers, or other substance which is dangerous, toxic,
radioactive, corrosive, flammable, infectious, carcinogenic or otherwise
hazardous or, which is a pollutant, contaminant, chemical, material, waste or
substance regulated by any Environmental Laws or Regulations.
"Reorganization" means the reorganization of North Star consummated immediately
prior to the Closing pursuant to the Reorganization Documents and the other
reorganization transactions contemplated thereby, whereunder, among other
things, (i) first, Transco will be merged with and into North Star, (ii) second,
Michael D. Kandris will be issued five percent (5%) of the issued and
outstanding shares of Capital Stock of North Star, (iii) third, all of North
Star's interests in Transmanagement Insurance Agency, LLC, a Minnesota limited
liability company, will be sold, transferred or otherwise disposed of, together
with any Liabilities, related to such interests such that North Star has no
further Liability, (other than as to be provided in the Transition Services
Agreement) or ownership interest with respect thereto; (iv) fourth, all
insurance policies on the lives of any Shareholder, Wayne Czeh, Robert Sack and
Dennis McCabe described on Schedule A will be transferred out of North Star such
that North Star has no further Liability or ownership interest with respect
thereto; (v) fifth, any interest of North Star in those vehicle used by a
Shareholder and described on Schedule A will be transferred or assigned from
North Star together with any insurance policy on such vehicles, if any, such
that North Star has no further Liability or ownership interest therefor; and
(vi) sixth, any interest of North Star in an airplane currently owned by North
Star and described on Schedule A will be transferred from North Star together
with any insurance policy on such airplane, if any, such that North Star has no
further Liability or ownership interest with respect thereto.
"Reorganization Documents" means the Merger Agreement, the Assignment of
Membership Interest by and among Transmanagement Insurance Agency, LLC, North
Star and the Shareholders for the purpose of divesting North Star's member
interests in Transmanagement Insurance Agency, LLC, a Minnesota limited
liability company, and all other documents, resolutions, instruments,
assignments, bills of sale (including the aircraft bill of sale) and agreements,
however titled, to be executed and delivered to effectuate the Reorganization as
contemplated by this Agreement.
"Rights Agreement" means as defined in Section 6.8.
"SEC Documents" mean as defined in Section 7.6.
"Section 338 Election" means as defined in Section 4.2.
"Securities Act" means as defined in Section 6.7(a).
"Shareholders' Representatives" means the Persons designated in Section 14.12 as
the Shareholders' attorneys-in-fact for purposes of this Agreement.
<PAGE>
"Stock Portion" means as defined in Section 4.1(b).
"Stock Purchase" means as defined in the Recitals to this Agreement.
"Taxes" means all taxes, penalties, interest, fines, duties, withholdings,
assessments, and charges assessed or imposed by any federal, state, local or
foreign governmental authority.
"TCA Net Worth" means Transport America's total assets minus its total
liabilities in each case as reflected on Transport America's audited
consolidated financial statements for the year ended December 31, 1997.
"Trademarks" means all tradenames, trademarks or service marks, and all
registrations and applications related thereto, common law trademarks, and all
goodwill associated therewith.
"Transaction Documents" means this Agreement, the Mutual Release substantially
in the form attached hereto as Exhibit C, the Registration Rights Agreement
substantially in the form attached hereto as Exhibit E, the three separate Lease
Agreements expressly contemplated by Sections 11.1(j) and 11.2(j) hereto, the
Reorganization Documents, and the Transition Services Agreement provided for in
Section 11.1 and all agreements entered into pursuant to such Transition
Services Agreement.
"Transco" means Transco, Inc., a Minnesota corporation, which will be merged
into North Star in the Reorganization.
1.2 Definitional Provisions.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provisions of this Agreement.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) References to an "Exhibit" or to a "Schedule" are, unless
otherwise specified, to one of the Exhibits or Schedules attached to or
referenced in this Agreement, and references to an "Article" or a "Section" are,
unless otherwise specified, to one of the Articles or Sections of this
Agreement.
(d) References in this Agreement to times of the day shall be
to Minneapolis, Minnesota time.
(e) The term "Person" includes any individual, partnership,
joint venture, corporation, trust, unincorporated organization, other entity or
group, or government or any department or agency thereof.
<PAGE>
ARTICLE II
PURCHASE AND SALE OF STOCK
2.1 Purchase and Sale of Capital Stock. Subject to the terms and
conditions herein set forth, each Shareholder agrees to sell, transfer and
convey to Transport America, and Transport America agrees that it will purchase
from each Shareholder, on the Closing Date, the shares of Capital Stock of North
Star set forth on Schedule 3.3 hereto, which shares will then constitute all the
issued and outstanding shares of Capital Stock of North Star, for the aggregate
purchase price set forth in Article IV hereof (all of the shares of Capital
Stock being purchased pursuant hereto being referred to herein as the "Purchased
Shares").
ARTICLE III
CLOSING
3.1 Place and Date of Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Lindquist & Vennum P.L.L.P. as soon as practicable after satisfaction of the
conditions stated in Article XI, hereof (the "Closing Date"). All actions taken
at the Closing shall be deemed to have been taken simultaneously at the time the
last of any such actions is taken or completed.
3.2 Facilitation of Closing. Between the date of this Agreement and the
Closing Date, the parties to this Agreement must take all actions reasonably
necessary to promptly facilitate the Closing.
3.3 Delivery of Stock Certificates. At the Closing, each Shareholder
shall deliver to Transport America all certificates representing the Purchased
Shares owned by such Shareholder, duly endorsed for transfer. At the Closing,
North Star shall deliver to Transport America all agreements, certificates or
other documents evidencing any option, warrant or other right to purchase stock
or other securities of North Star, in each case duly endorsed for transfer or
cancelled, as appropriate, in accordance with their respective terms. At the
Closing, Transport America shall deliver to each Shareholder (i) certificates
representing that Shareholder's portion of the Stock Portion (subject to a
hold-back of an aggregate of 65,000 shares as provided in Section 4.3 (the
"Hold-Back Shares"), with respect to which shares the Shareholders shall execute
and deliver to Transport America at Closing stock powers duly endorsed in blank)
and (ii) immediately available funds representing that Shareholder's portion of
the Cash Portion. North Star shall deliver to Transport America, at least 5
business days prior to the Closing, Schedule 3.3 to this Agreement (prepared in
accordance with Section 4.1), fully completed, to allow Transport America
sufficient time to comply with its obligations under this Section, including the
holders of, and number of shares constituting, the Hold-Back Shares. No scrip or
fractional shares of Transport America's Common Stock shall be issued to any
Shareholder. In lieu of a fractional share, a Shareholder shall be entitled to
receive an amount in cash equal to the product of (i) the fraction of a share of
Transport America's Common Stock the Shareholder is entitled to receive and (ii)
the Average Closing Price.
<PAGE>
ARTICLE IV
PURCHASE PRICE
4.1 Purchase Price. Each Shareholder of North Star will, at the
Closing, receive from Transport America that portion of the aggregate Cash
Portion and the aggregate Stock Portion (subject to the Hold-Back Shares being
held by Transport America as provided in Section 4.3, with respect to which
shares the Shareholders shall have executed and delivered to Transport America
at Closing stock powers duly endorsed in blank) of the Purchase Price set out
opposite their respective names on Schedule 3.3, as more specifically set forth
on Schedule 3.3 and calculated as follows:
(a) CASH PORTION. The aggregate cash portion of the Purchase
Price shall be Fifteen Million Eight Hundred Thousand and no/100 Dollars
($15,800,000) (the "Cash Portion").
(b) STOCK PORTION. The aggregate stock portion of the Purchase
Price shall be 1,200,000 shares of Common Stock of Transport America (the "Stock
Portion"), of which the 65,000 Hold-Back Shares shall be held back by Transport
America with stock powers duly endorsed in blank by the Shareholders and
released upon acceptance of the Audited Statement after adjustments, if any,
reflecting any decrease resulting from a Deficit as provided in Section 4.3.
4.2 Additional Consideration. The parties hereto have agreed to
structure the Stock Purchase as a purchase of all the outstanding Capital Stock
of North Star with an election pursuant to Section 338(h)(10) of the Code (the
"Section 338 Election"), such that receipt of the Stock Portion will be a
taxable event to the Shareholders and Transport America will for income tax
purposes be able to record North Star's assets on its books at the portion of
Purchase Price allocated thereto pursuant to Section 8.9 hereof and fully
amortize for federal income tax purposes the portion of the Purchase Price
allocated to good will pursuant to Section 8.9 hereof.
Recognizing the tax benefits to Transport America and the tax
detriments to Shareholders as a result of the Section 338 Election, Transport
America shall pay the Shareholders in cash the following amounts in addition to
the Purchase Price.
At the end of each of Transport America's fiscal quarters commencing
June 30, 1999 and lasting until the Put right set forth in Article IX first
becomes exercisable, Transport America will pay the Shareholders in the
aggregate the amount calculated by multiplying Ninety Thousand Seven Hundred
Twenty and no/100 Dollars ($90,720) by a fraction, the numerator of which is the
aggregate number of shares underlying the Stock Portion still owned by the
Shareholders at the end of the relevant fiscal quarter and the denominator of
which is 1,200,000. Each such payment shall be made by Transport America in
immediately available funds within fifteen (15) days of the end of each such
fiscal quarter, with the first such payment to be made on or before July 15,
1999; provided, however, that notwithstanding the foregoing, Transport America
shall not be required to make such payments until a reasonable time after the
Shareholders have provided the information referred to below regarding the
number of shares owned at the end of the applicable quarter.
<PAGE>
It is understood by North Star and the Shareholders that the income tax
payment obligations of each Shareholder arising out of the receipt of the
Purchase Price shall not be or become the tax payment obligations of Transport
America by virtue of this Section. In addition, Transport America shall not be
responsible for the proper allocation of such payments among the Shareholders,
but shall pay the applicable amount payable under this section to a single
account established for the Shareholders. The Shareholders agree to give
Transport America such information as Transport America may reasonably request
in order to determine the aggregate number of shares of the Stock Portion that
are owned by the Shareholders at the end of the applicable payment period.
4.3 Net Worth Covenant Adjustment.
(a) As set forth in Section 5.30, North Star's Net Worth must
be at least $12,500,000. If North Star's Net Worth is less than $12,500,000, the
Purchase Price shall be reduced by the difference between $12,500,000 and the
actual Net Worth of North Star (such difference being herein referred to as the
"Deficit"). Any such Deficit shall be paid by the Shareholders by delivering to
Transport America within fifteen (15) days after the Audited Statement has been
finally approved and accepted, that number of shares of Transport America's
Common Stock calculated by dividing the Deficit by Sixteen and No/100 Dollars
($16.00). For the purpose of paying the Deficit, Transport America shall hold
back the 65,000 Hold-Back Shares issued at Closing as part of the Stock Portion.
Any Deficit shall first be deducted from the Hold-Back Shares. If the value of
the Hold-Back Shares (calculated at $16.00 per share) exceeds the Deficit,
Transport America shall deliver the excess Hold-Back Shares to the Shareholders
in such manner as the Shareholders' Representatives may reasonably designate. If
the Deficit exceeds the value of the Hold-Back Shares, the Shareholders shall
deliver to Transport America additional shares of Transport America's Common
Stock the value of which (calculated at $16.00 per share) equals such excess.
(b) Within sixty (60) days after the Closing Date, the
Shareholders shall prepare and cause Larson, Allen, Weishair & Co. ("LAWCO"),
North Star's independent public accountants prior to the Closing, to audit and
deliver to the Shareholders and Transport America an audited balance sheet of
North Star as of the close of business on the Closing Date, together with the
opinion of LAWCO thereon (the "Audited Statement"), which Audited Statement
shall be (i) prepared to give effect to the consummation of the Reorganization
but not to give effect to the Stock Purchase, and (ii) prepared in accordance
with GAAP (as hereinafter defined) applied on a basis consistent with the
preparation of the 1997 Financial Statements. Transport America and its
representatives shall have the right to review the Audited Statement and perform
other audit and review procedures, including a review of the working papers of
LAWCO relative to preparation of the Audited Statement.
(c) The Shareholders hereby represent and warrant to Transport
America that the Audited Statement shall (i) be in accordance with the books and
records of North Star and Transco as of the Closing, and (ii) be in accordance
with GAAP applied on a basis consistent with North Star's audited financial
statements for its fiscal year ended December 31, 1997. Transport America shall
be deemed to have accepted the Audited Statement unless within twenty (20) days
after delivery thereof, it gives written notice to the Shareholders of Transport
<PAGE>
America's good faith objection to any item therein. In the event Transport
America gives such written notice of good faith objection and the Shareholders
and Transport America have not been able to resolve such dispute by a date forty
(40) days after delivery of the Audited Statement to Transport America, either
party may require that such dispute be resolved by arbitration under the rules
but not under the jurisdiction of the American Arbitration Association by one
arbitrator who shall be a certified public accountant and a partner in one of
the major accounting firms (with no current or prior relationship to the parties
to this Agreement) selected by mutual agreement of the parties. Each party shall
bear its own expenses in preparing and reviewing such Audited Statement and in
connection with any such arbitration proceeding, provided that North Star may
accrue its reasonably estimated portion of such expenses.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF NORTH STAR AND MESSRS. MILLER AND HAGEN
North Star, Jon Miller and William Hagen, jointly and severally,
represent and warrant to Transport America as of the date hereof and as of the
Closing Date (unless otherwise stated herein) as follows:
5.1 Organization. Each of North Star and, until its merger with North
Star in the Reorganization, Transco, is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota, and is
qualified to do business as a foreign corporation in all jurisdictions where
such qualification is necessary and the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect upon North Star (which
jurisdictions are listed in Schedule 5.1 hereto). North Star has all necessary
power and authority to own its properties and assets and conduct the Acquired
Business as presently being conducted and had all necessary power and authority
to own its properties and assets and conduct its Divested Business prior to the
Reorganization. Transco has and, until its merger with North Star in the
Reorganization, will have all necessary power to own its properties and assets
and conduct its business as presently being conducted. Each of North Star and
Transco has heretofore made available to Transport America complete and correct
copies of its Articles of Incorporation, and all amendments thereto, and of its
Bylaws and any other governing documents or instruments, in each case as in
effect immediately prior to the Closing, and true, complete and correct copies
of all minutes of meetings and actions of their respective Boards of Directors
and any committee thereof and their respective shareholders.
5.2 Ownership and Capitalization of North Star.
(a) The authorized Capital Stock of North Star consists of
100,000 shares of Class A Voting Common Stock, of which there are 50,000 shares
issued and outstanding as of the date hereof, and of which there will be 50,000
shares issued and outstanding as of the Closing and 9,900,000 shares of Class B
Non-Voting Common Stock, of which there are 4,950,000 shares issued and
outstanding as of the date hereof, and of which there will be 5,505,556 shares
issued and outstanding as of the Closing. All issued and outstanding shares of
Capital Stock of
<PAGE>
North Star are validly issued, fully paid, and non-assessable and were not
issued in violation of any pre-emptive or similar rights. Until its merger with
North Star in the Reorganization, the authorized Capital Stock of Transco
consists of 1,000,000 shares of Common Stock, of which there are 10,000 shares
issued and outstanding. All issued and outstanding shares of Capital Stock of
Transco are validly issued, fully paid and non-assessable and were not issue in
violation of any pre-emptive or similar rights. Except as set forth on Schedule
5.2 hereto, there are no voting trust agreements or any other contracts,
agreements, arrangements, commitments, plans or understandings to which North
Star is a party, restricting or otherwise relating to voting or dividend rights
with respect to any shares of North Star's Capital Stock or the transfer of any
such shares. Except as set forth on Schedule 5.2 hereto, there are no options,
warrants, calls, subscriptions, convertible or exchangeable securities, rights,
agreements, commitments or arrangements, obligating North Star to redeem,
purchase, issue, transfer or sell any shares of its Capital Stock or any other
securities convertible into, exercisable or exchangeable for, or evidencing the
right to subscribe for, any shares of its Capital Stock. Except as set forth on
Schedule 5.2 hereto, there are no declared or accrued but unpaid dividends or
distributions payable on any shares of North Star's issued and outstanding
Capital Stock.
(b) The Shareholders are the sole registered and, except for
those Shareholders which are trusts identified on Schedule 5.2, beneficial
owners of all issued and outstanding shares of North Star's Capital Stock. The
names of such Shareholders and the number of shares of North Star's Capital
Stock owned by each Shareholder is fully and correctly set forth on Schedule 5.2
and Schedule 5.2 correctly lists the holders and amounts of all outstanding
Capital Stock of North Star. No individual or entity other than the Shareholders
is entitled to any portion of the Purchase Price. Schedule 5.2 lists all current
principal and income beneficiaries of each trust so identified. The Cash Portion
and the Stock Portion to be received by each Shareholder are correctly set forth
on Schedule 3.3.
5.3 Subsidiaries. Except as set forth on Schedule 5.3 hereto, neither
North Star nor Transco owns, directly or indirectly, any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture or other business association
or entity, other than North Star's membership interest in Transmanagement
Insurance Agency, LLC which will be divested in the Reorganization.
5.4 Authority. The execution, delivery and performance of this
Agreement by North Star has been duly and validly authorized and approved by all
requisite corporate action on the part of North Star's Board of Directors and
Shareholders, and North Star has all requisite power and authority to do and
perform all acts and things required to be done by it under this Agreement. This
Agreement and the agreements contemplated hereby have been or will be duly
executed on or before the Closing Date and delivered by North Star and will
constitute the legal, valid and binding obligation of North Star, enforceable in
accordance with its terms.
5.5 Consents Required; Violations. The execution and delivery of the
Transaction Documents and the consummation of the transactions contemplated by
the Transaction Documents will not:
<PAGE>
(a) Conflict with, violate or result in a breach of the terms,
conditions or provisions of or constitute a default under the Articles of
Incorporation, Bylaws, or other governing instruments of North Star or Transco,
any law or regulation, or except as set forth in Schedule 5.5, any material
agreement, debt instrument, mortgage, lease, judgment, order, award, decree or
other instrument or restriction to which North Star or Transco is a party or by
which North Star or Transco, or the Acquired Business or the Divested Business
or any of the Business Assets is bound or affected;
(b) Require North Star or any of its Affiliates to obtain any
affirmative approval, consent, permit, authorization, or other order or action
of any court, governmental authority, regulatory body, creditor or any other
Person, except as listed on Schedule 5.5;
(c) Give any Person with rights under any contract, debt
instrument, mortgage, lease, judgment, order, award or decree (or under any
other agreement, instrument or restriction) to which North Star or Transco is a
party or by which either of them is bound the right to accelerate, terminate,
modify or otherwise change the rights or obligations of such Person or of North
Star or Transco thereunder, except as listed on Schedule 5.5; or
(d) Result in the creation or imposition of any Lien upon any
of the Business Assets.
5.6 Reorganization. The Reorganization has been duly authorized by
North Star and any other party thereto. As of the Closing, the Reorganization
will have been completed and each of the Reorganization Documents will have been
duly authorized, executed and delivered by North Star and the other parties
thereto and will constitute the legal, valid and binding obligation of each
party thereto. As of the Closing, the Reorganization Documents and other
documents delivered and transactions completed in connection with the
Reorganization will be legally sufficient to, among other things, (i) merge
Transco with and into North Star, (ii) issue five percent (5%) of the issued and
outstanding shares of Capital Stock of North Star to Michael D. Kandris, (iii)
transfer from North Star all of its interests in Transmanagement Insurance
Agency, LLC, a Minnesota limited liability company, without any Liability (other
than as to be provided in the Transition Services Agreement) or ownership
interest related thereto remaining with North Star; (iv) transfer from North
Star all rights and Liabilities to the insurance policies on the lives of any
Shareholder, Wayne Czeh, Robert Sack and Dennis McCabe, listed on Schedule A, so
that North Star has no further Liability or ownership interest with respect
thereto; (v) transfer or assign from North Star all rights and Liabilities
relating to vehicles used by any Shareholder together with any Liability for an
insurance policy on such vehicles, if any, listed on Schedule A, so that North
Star has no further Liability or ownership interest with respect thereto; and
(vi) transfer from North Star all rights and Liabilities to any airplane, listed
on Schedule A, together with any insurance policy on such air plane, if any, so
that North Star has no further Liability or ownership interest with respect
thereto.
5.7 Financial Statements. North Star has previously furnished Transport
America a true and complete copy of audited combined financial statements of
North Star, Transco and certain of their Affiliates for the fiscal year ended
December 31, 1996 together with notes thereto and auditor's report thereon (the
"1996 Financial Statements") and a true and complete copy of
<PAGE>
audited combined financial statements of North Star, Transco and certain of
their Affiliates for the fiscal years ended December 31, 1996 and 1997 together
with notes thereto and auditor's report thereon (the " 1997 Financial
Statements"). North Star has provided Transport America with unaudited combined
monthly financial statements of North Star, Transco and certain of their
Affiliates for the three months ended March 31, 1998 (the 1996 Financial
Statements, the 1997 Financial Statements, and the March 31, 1998 monthly
financial statements are hereafter referred to as "Financial Information"). As
of their respective dates, the Financial Information, including the notes
thereto, (i) are true, complete and correct in all material respects, (ii) have
been prepared in conformity with generally accepted accounting principles
("GAAP") consistently maintained and applied throughout the periods indicated
and consistent with past practice, (iii) present fairly and accurately in all
material respects the financial position of North Star and Transco at the
respective dates of the balance sheets included therein and the results of
operations and cash flows of North Star and Transco for the respective periods
indicated, (iv) are in accordance with the books and records of North Star and
Transco for the respective periods indicated, and (v) do not omit to state or
reflect any material fact concerning North Star or Transco required by GAAP to
be stated or reflected therein, except that the March 31, 1998 monthly financial
statements lack footnotes and other presentation items required by GAAP and are
subject to normal year-end adjustments.
5.8 Taxes. North Star filed an election to be treated as an S
Corporation effective January 1, 1988, and from that date through the Closing
has been and will be fully qualified as an S Corporation under the Code. North
Star has in effect with respect to its current taxable year and has had in
effect at all times since January 1, 1988, a valid election pursuant to Section
1362(a) of the Code. Transco filed an election to be treated as an S Corporation
effective September 18, 1996, and from that date through the Closing has been
and will be fully qualified as an S Corporation under the Code. In the event
that either North Star's or Transco's Subchapter S Corporation election and
status under the Code is held invalid with respect to any period of time prior
to the Closing Date and, as a result, either North Star or Transco is required
to pay corporate Taxes with respect to any period of time prior to the Closing
Date, the Shareholders shall promptly reimburse Transport America for any and
all such Tax payments. Subject to the foregoing, North Star, Transco and the
Shareholders have timely filed and will timely file all federal, state, county,
local and foreign income, excise, property, franchise, and other tax returns
which are required to be filed by it and them (in connection with income from
North Star and Transco), respectively, with respect to any period of time ending
on or before the Closing Date and, subject to the foregoing, have paid or will
pay all taxes, if any, with respect to such periods which have or may hereafter
become due so that North Star will not have any tax deficiencies, including
penalties and interest, assessed against North Star arising from any audit by
any tax authority with respect to any period ending on or prior to the Closing
Date. Such returns are true, complete and correct in all material respects and
copies of the same for the three (3) years ended December 31, 1997 have been
delivered to Transport America. Except as set forth on Schedule 5.8, neither
North Star nor Transco has received notice of any tax deficiency proposed or
assessed against it which has not been paid through settlement or otherwise, and
it has not executed any waiver of any statute of limitations on the assessment
or collection of any tax. Except as set forth on Schedule 5.8, to the Knowledge
of North Star, none of North Star's or Transco's tax returns has been audited by
governmental authorities in or during the three most
<PAGE>
recent full fiscal years of North Star. Except as set forth on Schedule 5.8,
neither North Star nor Transco has received any notice of any impending audit by
any taxing authority. None of North Star or its Affiliates are subject to or
bound by any agreement which imposes an actual or potential tax indemnification
obligation on North Star or Transco.
5.9 Absence of Undisclosed Liabilities. Except as set forth on Schedule
5.9, North Star has no material Liabilities related to the Acquired Business or
the Divested Business or the Business Assets, nor, to the Knowledge of North
Star, is there any legal basis therefor, except:
(a) Liabilities set forth or reserved against (which reserves
are adequate) in the Financial Information;
(b) Normal Liabilities incurred in the ordinary course of
business consistent with past practice since December 31, 1997; and
(c) Liabilities such as contractual obligations which are not
required by GAAP to be disclosed in the Financial Information.
5.10 Absence of Certain Changes and Events. Except as disclosed on
Schedule 5.10, since December 31, 1997, there has been no material change in the
assets, Liabilities, employee relations, customer relations or vendor relations,
prospects, operations or condition, financial or otherwise, of North Star or the
Acquired Business from that reflected in the Financial Information, other than
changes in the ordinary course of business consistent with past practices which
have not materially adversely affected any of North Star's assets or materially
increased any of the Liabilities of the Acquired Business. Without limiting the
generality of the foregoing, except as disclosed on Schedule 5.10, since
December 31, 1997, North Star or Transco has not:
(a) entered into any transaction or agreement or incurred any
material obligation or Liability connected with the Business, other than
transactions in the ordinary course of business consistent with past practice;
(b) mortgaged, pledged or subjected to any Lien (except Liens
for taxes not yet due and the security interest claimed by North Star's lenders
in certain after-acquired property) any of North Star's or Transco's assets;
(c) sold, assigned or otherwise transferred, or authorized the
sale, assignment or other transfer of, any of North Star's or Transco's assets,
other than transactions in the ordinary course of business consistent with past
practice and other than as set forth in the Reorganization Documents or provided
for in Schedule 8.3;
(d) suffered any damage, destruction or loss (whether or not
covered by insurance) affecting any of North Star's material assets or the
Acquired Business;
(e) waived or relinquished any rights of substantial value
relating to North Star's assets or the Acquired Business or the Liabilities
attributable to the Acquired Business without adequate consideration;
<PAGE>
(f) amended in any respect adverse to North Star or the
Acquired Business or terminated, orally or in writing, any material contract,
agreement or order included in or relating to the Business Assets or the
liabilities attributable to the Acquired Business, or received notice of
amendment or termination of any such contract, agreement or order;
(g) made or authorized any loan, borrowing, investment,
advance or guaranty (except advances or credits to customers, suppliers or
vendors in the ordinary course of business consistent with past practices), or
made or authorized any capital expenditure of a material nature which is
inconsistent with past practices;
(h) made any material change in the methods, price or terms of
sale of the products and services sold in the conduct of the Acquired Business;
(i) canceled or terminated or suffered the cancellation or
termination of any relationship with any material customer, supplier or
distributor or given or received any notice that any such relationship may be
canceled or terminated;
(j) become a party to, settled or agreed to settle any
litigation, action or proceeding relating to the Acquired Business before any
court, arbitrator or governmental body;
(k) increased any compensation or other benefit payable to
current or former employees, consultants or independent contractors of the
Acquired Business other than in connection with customary periodic evaluations
and consistent with past practices;
(l) suffered any change, event or condition which,
individually or in the aggregate, had or could reasonably be expected to have a
Material Adverse Effect on North Star or the Acquired Business;
(m) paid or agreed to pay any brokerage, finder's fee, taxes
or other expenses in connection with, or incurred any severance pay obligations
by reason of, this Agreement or the transactions contemplated hereby;
(n) made any change in accounting methods or practices
(including without limitation any change in depreciation or amortization
policies or rates);
(o) revalued any of North Star's or Transco's assets;
(p) accepted any cancellation of any of the material debts or
claims of North Star or Transco regarding the Acquired Business;
(q) taken any action or inaction which has caused or will with
notice, the passage of time or both, cause a breach or default in any material
contract, obligation, lease or license to which North Star or Transco is a party
or by which North Star or Transco and/or North Star's or Transco's assets are
bound;
(r) made any purchase commitment by or on behalf of the
Acquired Business in excess of the normal, ordinary and usual requirements of
the Acquired Business or at any price
<PAGE>
in excess of the then current market price or upon terms and conditions more
onerous than those usual and customary in the industry;
(s) accelerated collection of any account receivable, whether
or not by offering a discount or other accommodation to its customers or other
debtors;
(t) hired or engaged any independent contractor to render
services to the Business in amounts which are inconsistent with past practices;
or
(u) entered into any written or oral agreement or made any
commitment to take any action described in clauses (a) through (t) above.
Each of the changes, events and actions described in this Section 5.10
shall herein be individually referred to as a "Material North Star Change" and
shall collectively be referred to as "Material North Star Changes."
5.11 Tangible Assets. As of the Closing Date and except as set forth on
Schedule 5.11, all right, title and interest in and to all tangible Business
Assets is owned by North Star, free and clear of any Liens. To the Knowledge of
North Star, the tangible Business Assets are generally suitable for the uses for
which intended, are free from material defects and in reasonable operating
condition (ordinary wear and tear excepted). Except as set forth on Schedule
5.11, to the Knowledge of North Star, all material items of machinery and
equipment used in the Acquired Business meet the manufacturer's or North Star's
written performance standards for such machinery or equipment. All material
tangible Business Assets are being and have been serviced and maintained in all
material respects in accordance with industry standards and to the Knowledge of
North Star, in a manner that would not void or limit the coverage of any
warranty thereon, and to the Knowledge of North Star, neither North Star nor any
of its Affiliates has taken or failed to take any other action which would void
or limit any warranty coverage on any material tangible Business Assets or which
would have a Material Adverse Effect on North Star. As of the Closing, North
Star has no Liability or ownership interest in any tangible asset of the
Divested Business other than as to be provided in the Transition Services
Agreement.
5.12 Intellectual Property. North Star owns or licenses all
Intellectual Property that is material or necessary to the Acquired Business as
it is currently being conducted. The Acquired Business as currently conducted
does not infringe, misuse, misappropriate or conflict with the Intellectual
Property rights of others in a way which is likely to have a Material Adverse
Effect on North Star.
5.13 Accounts Receivable. Except as set forth on Schedule 5.13, as of
the Closing Date, all right, title and interest in and to all accounts
receivable of the Acquired Business will be owned by North Star, free and clear
of any Liens. Except to the extent of reserves for bad debts to be reflected in
the Audited Statement (which reserves shall be adequate), the aggregate amount
of accounts receivable reflected on the Audited Statement will be valid and
collectible in the ordinary course of business within 90 days after the Closing.
<PAGE>
5.14 Real Property.
(a) Schedule 5.14 identifies all real property owned or leased
by North Star or Transco and used in connection with the Acquired Business (the
"Real Property"). Except (i) as set forth on Schedule 5.14, (ii) for municipal
zoning ordinances and land use restrictions, (iii) for recorded easements and
covenants, (iv) as set forth in the applicable leases, and (v) for general real
estate taxes and assessments levied in the year of Closing, there are no
material Liens respecting any of the Real Property. North Star has valid and
subsisting leasehold interests in all leases used in the Acquired Business (as
presently conducted). As of the Closing Date, North Star will have no ownership
or leasehold interest, and will have no Liability, with respect to any real
property owned, leased or used in connection with the Divested Business.
(b) The buildings, structures and improvements included with
the Real Property are in all material respects structurally sound and in good
condition and repair (ordinary wear and tear excepted), and all material
mechanical, electrical, heating, air conditioning, sewer, water and plumbing
systems are in proper working order.
(c) To the Knowledge of North Star, neither the whole nor any
portion of the Real Property is subject to any governmental decree or order to
be sold or is being condemned or otherwise taken by any public authority, with
or without payment or compensation therefor, nor has North Star been notified of
any proposed condemnation or other taking.
(d) All utilities required for the current operation of the
improvements on the Real Property are installed and operating, all installation
and connection charges have been paid in full. North Star has received no actual
notice of actual or threatened reduction, curtailment or limitation on use of
any utility service now supplied to the Real Property.
(e) The zoning, deed restrictions, covenants and applicable
laws and ordinances applying to the Real Property permit the presently existing
improvements and a continuation of the Business presently being conducted on
such property.
(f) No portion of the Real Property is located in a flood
plane or flood hazard area or in a designated wetlands area, and no portion of
the Real Property has been used as a landfill.
(g) No material default or breach by North Star exists under
any of the covenants, conditions, restrictions, rights-of-way or easements
affecting the Real Property or any portion thereof. No deed restriction, or
other condition applying to the Real Property contains a forfeiture provision.
(i) To the Knowledge of North Star, no special assessments or
reassessments of the Real Property are planned or threatened.
5.15 Certain Contracts, Leases, Agreements, Etc. Schedule 5.15
identifies each lease, contract, agreement or other commitment, written or
otherwise, to which North Star will be a party after the Reorganization
involving:
<PAGE>
(a) The purchase of (x) any services, raw materials,
components, or supplies involving more than $25,000 per contract or series of
similar contracts per year, or (y) any machinery or equipment involving more
than $25,000 per contract or series of similar contracts per year.
(b) The sale of any material assets, products or services
other than in the ordinary course of business (including customer purchase
orders, promotional plans, price lists, and current catalogues), which is not
yet fully performed, or any contract for North Star's provision of warranties,
sales credits, discounts on services, advertising allowances, promotional
services or other commitments relating to its Business other than in the
ordinary course of business; or
(c) Any dealer, distributor, broker, agent, sales
representative or any other agreements or authorizations for the sale of any of
North Star's products or services, identifying which agreements or commitments
cannot be terminated upon less than 90 days notice, with or without cause by
North Star, without Liability.
(d) Any powers of attorney granted by North Star or any of the
Shareholders or any other authorizations of third Persons to act as agents for
North Star (other than customary Independent Contractor Agreements with North
Star's owner-operators).
(e) Any license or lease agreements other than customary
Independent Contractor Agreements with North Star's owner-operators which,
individually or in the aggregate, are material to North Star.
(f) Any guarantees or other documents, instruments or
contracts pursuant to which North Star is obligated for the debts or commitments
of a third party.
(g) The granting or sufferance of any Lien.
(h) Any agreements regarding the decertification of any union
or North Star's responsibilities with respect thereto.
(i) Any contract of employment (other than with at-will
employees terminable at any time with no Liability other than as provided in the
Employee Plans) or for consulting or management services.
(j) Any contract which provides for the receipt (other than
normal customer transportation contracts) or expenditure by North Star in excess
of $25,000 during that portion of its term which follows the Closing Date.
(k) All outstanding notes, evidences of indebtedness,
conditional sales contracts, deeds of trust, indentures, loan or credit
agreements or similar instruments for money borrowed by North Star or Transco or
credit terms extended to North Star or Transco, or for money lent or credit
extended by North Star or Transco (excluding normal trade credit and normal
operating advances to independent contractors) written or otherwise, and all
amendments or modifications, if any, thereof.
<PAGE>
(l) Any contract or agreement other than customary Independent
Contractor Agreements with North Star's owner-operators which imposes an actual
or potential indemnification obligation on North Star.
(m) Any other contract or agreement which is material to North
Star.
As of the Closing, North Star will have no Liability with respect to
any contractual obligation of the Divested Business other than as to be provided
in the Transition Services Agreement.
5.16 Licenses, Compliance with Laws, Regulations, Etc. Schedule 5.16
identifies all material permits, licenses, approvals or similar permissions
obtained by North Star and Transco or required by applicable law for the conduct
of the Acquired Business, including those required for North Star and Transco
under any Environmental Laws or Regulations. Except as set forth on Schedule
5.16, North Star possesses all material, permits, licenses and other approvals
and authorizations which are necessary or required by law for the conduct of the
Acquired Business as currently being conducted or operated, and all of such
licenses, permits and other approvals and authorizations are, and will be as of
the Closing Date, in good standing, full force and effect and shall not be
adversely affected by the consummation of the transactions hereby contemplated.
The operations of the Acquired Business have complied, and are in compliance, in
all material respects with all such permits, licenses, approvals and
authorizations and applicable laws (including but not limited to, Environmental
Laws and Regulations, common law, federal and state regulations respecting
driver records and compliance practices, and safe and legal operation of a
for-hire public carrier), statutes, ordinances, orders, decrees, rules,
regulations, interpretations and requirements promulgated by governmental or
other authorities binding on North Star. Except as set forth on Schedule 5.16,
North Star's safety rating, pursuant to the rules and regulations of the U.S.
Department of Transportation is satisfactory.
5.17 Litigation. Except as set forth in Schedule 5.17, there is no
action, lawsuit, claim, proceeding, arbitration, mediation or investigation of
any kind pending, or, to the Knowledge of North Star, threatened against, by, or
affecting North Star, the Business, any Business Asset, any Facility or any
Shareholder which if decided adversely against North Star or any Shareholder
could reasonably be expected to have a Material Adverse Effect upon North Star,
the Acquired Business, the Business Assets or the validity of the transactions
contemplated by this Agreement. Neither North Star nor any Shareholder, is in
default with respect to any order, writ, injunction, or decree of any court or
of any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting or
relating to North Star, the Acquired Business, or the Business Assets. No suit,
action or other proceeding is pending or, to the Knowledge of North Star,
threatened by or before any court or governmental agency in which it is sought
to restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might eventually result in any such suit, action or other
proceeding is pending or, to the Knowledge of North Star, threatened. Except as
set forth on Schedule 5.17, no Shareholder or any of their Affiliates has taken
any action which will result in any action, lawsuit, claim, proceeding,
arbitration, mediation or investigation of any kind against North Star, the
Business, any Business Asset or any Facility of North Star and which could
reasonably be
<PAGE>
expected to have a Material Adverse Effect on North Star, the Business, any
Business Asset or any such Facility.
5.18 Insurance Policies. Schedule 5.18 hereto identifies all policies
of insurance relating to the Acquired Business. Such policies are in full force
and effect, all premiums due thereon on or before the Closing Date will have
been paid or accrued. North Star and its Affiliates have complied with the
provisions of such policies in all material respects. No notice of cancellation
or non-renewal with respect to any insurance policy has been received by North
Star or any of its Affiliates. Except as set forth on Schedule 5.18, there are
no pending claims against such insurance policies involving an amount in excess
of $75,000. North Star has not received any notice from its insurance carrier
disclaiming coverage as to any claims pending against its insurance policies
which would otherwise be within the scope of such policies. Schedule 5.18
identifies all claims paid or settled within the past three years or currently
pending against North Star's insurance policies, involving an amount in excess
of $75,000. To the Knowledge of North Star, North Star's insurance policies
provide adequate insurance coverage for the Acquired Business of the kinds, in
the amounts and against the risks customarily maintained by organizations
similarly situated. Except as set forth on Schedule 5.18, as of the Closing,
North Star will have no Liability with respect to any insurance policy covering
or relating to any aspect of the Divested Business or any of its Affiliates
prior to the Reorganization other than as to be provided in the Transition
Services Agreement.
5.19 Labor Agreements. Except as specifically set forth in Schedule
5.19: (i) Neither North Star or Transco is a party to any collective bargaining
agreement with any labor organization or to any other agreement or understanding
containing any severance pay liabilities or obligations; (ii) there is no unfair
labor practice claim pending or, to the Knowledge of North Star, threatened
against North Star or Transco and to the Knowledge of North Star, there is no
basis for any such claim; (iii) there is not currently pending or, to the
Knowledge of North Star, threatened any demand for recognition from any labor
union with respect to, and North Star has no Knowledge of any attempt that has
been made or is being made to organize, any employees; and (iv) within the three
(3) year period preceding the date of this Agreement, neither North Star nor
Transco has experienced any strike, slow-down, work stoppage or lockout, by or
with respect to any of its employees.
5.20 Employees. Schedule 5.20 sets forth a list of all Employee Plans
of North Star and Transco. Except as specifically set forth in Schedule 5.20:
(a) Each of North Star's and Transco's Employee Plans has been
consistently administered in substantial compliance with its terms and
provisions and with all applicable laws and regulations, including the Code and
ERISA; each Employee Plan of North Star and Transco which is an employee pension
plan as defined in Section 3(2) of ERISA meets the applicable requirements for
qualification under Section 401(a) and for exemption under Section 501(a) of the
Code. All reports required under ERISA or any other law or regulation to be
filed by North Star or any ERISA Affiliate have been duly filed with the
relevant governmental body, and all such reports are true and correct as of the
date given in all material respects, and all Employee Plans have timely complied
in all material respects with the disclosure of information regarding the
Employee Plans required under Title 1 of ERISA.
<PAGE>
(b) All contributions required to be made prior to the Closing
Date to any Employee Plan of North Star and Transco have been paid or accrued
for and neither North Star nor Transco has any liability for any Employee Plans
or any Multiemployer Plans that has not been provided for through contributions,
insurance or by appropriate accrual on the Closing Date which have arisen or
accrued prior to the Closing.
(c) Neither North Star nor Transco has engaged in any
nonexempt "prohibited transaction" within the meanings of Sections 503 and 4975
of the Code or Section 406 of ERISA.
(d) North Star or Transco is not and has never been (i) a
party or contributor to, or incurred withdrawal liability under Section 4201 of
ERISA with respect to, any Multiemployer Plan (as such term is defined in
Section 3(37) of ERISA), or (ii) a party or contributor to any plan maintained
by more than one employer (as described in Section 413(c) of the Code).
(e) There are no lawsuits or claims brought by any present or
former North Star or Transco employee against North Star or Transco or any of
their respective Employee Plans which have not been finally resolved, and there
are no claims or assessments pending or to the Knowledge of North Star
threatened against North Star or Transco or any of their respective Employee
Plans by any present or former North Star or Transco employee or governmental
entity other than claims for benefits in the normal course.
(f) To the Knowledge of North Star, no employee of North Star
or Transco whose total remuneration for the last fiscal year was, or for the
current year has been set at, in excess of $50,000 is subject to or otherwise
restricted by any employment or noncompetition agreement between such employee
and a former employer of such employee. To the Knowledge of North Star, no other
employee of North Star or Transco is subject to or otherwise restricted by any
employment or noncompetition agreement between such employee and a former
employer of such employee.
(g) At no time since January 1, 1992, to the Closing Date were
there any entities which were or are considered to be a single employer with
North Star or Transco under Code Section 414.
(h) Except as otherwise expressly provided in North Star's and
Transco's Employee Plans or as otherwise required by applicable law, no
condition exists that would materially increase the expense to the employer
whose employees are covered under any of North Star's or Transco's Employee
Plans nor does any condition exist which would prevent the amendment or
termination of any such Employee Plan.
(i) The consummation of this transaction does not (i) entitle
any North Star or Transco employee to severance pay or any other payment, (ii)
accelerate the time of payment or vesting or increase the amount of any
compensation due to any such employee, or (iii) trigger any change in control or
similar provision in any Employee Plan, agreement or collective bargaining
agreement by which North Star or Transco is bound.
<PAGE>
(j) North Star and Transco are in substantial compliance with
all applicable federal, state, and local laws relating to the employment of
labor, including the provisions thereof relating to wages, hours, occupational
health and safety, health and welfare insurance, collective bargaining,
discrimination, and the payment of withholding and social security taxes, and
North Star or Transco is not liable for any arrears of wages, or any tax or
penalties, for failure to comply with any of the foregoing. North Star or
Transco is not in receipt of any complaint, demand letter or charge issued by
any federal, state or local agency alleging a violation of any law, regulation
or ordinance respecting employment or employment practices, nor has North Star
or Transco heretofore incurred any liability under the Workers Adjustment and
Retraining Notification Act or similar state law or regulation, any of the
foregoing of which could reasonably be expected to have a Material Adverse
Effect on North Star or Transco.
(k) North Star has furnished Transport America the name and
current annual salary rate of each director and officer of North Star and
Transco and each employee whose total remuneration for the last fiscal year was,
or for the current year has been set at, in excess of $50,000. Schedule 5.20
sets forth such information and a summary of the bonuses and additional
compensation paid with respect to the fiscal year ended December 31, 1997 or
authorized to be paid in the current fiscal year. Schedule 5.20 sets forth (i)
the names of all former employees whose employment has terminated either
voluntarily or involuntarily during the preceding twelve-month period to which
North Star or Transco has any continuing obligation or Liability; and (ii) the
names of all employees of North Star or Transco who are on a short or long term
disability, workers' compensation disability, sick leave, personal leave or is
otherwise unable to return to work prior to Closing, the expected duration of
their disability or leave, and any benefits to which such individuals are
entitled as of the Closing.
5.21 No Finders. No act of North Star or any Shareholder has given or
will give rise to any claim against any of the parties hereto for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated herein.
5.22 Contracts with Related Parties. Except as specifically set forth
in Schedule 5.22, there are no agreements or contracts by and among North Star,
Transco and any of North Star's officers, directors, Shareholders or any entity
in which any officer, director or Shareholder owns a more than five percent (5%)
equity interest.
5.23 Customers. Except as specifically set forth in Schedule 5.23, no
single customer of North Star or Transco accounted for over five percent (5%) of
revenues during the fiscal year ending December 31, 1997; and North Star has no
Knowledge or information indicating that any material customer of the Business
intends to cease doing business with North Star or Transco or decrease the
amount of business it does with North Star or Transco in any material respect.
5.24 Relations with Suppliers. Since December 31, 1997, no supplier of
North Star or Transco has canceled or curtailed any material contract or order
for, provision of, and, to the Knowledge of North Star, there has been no threat
by any supplier not to provide, material raw materials, products, supplies, or
services. North Star believes that its relationships with suppliers to the
Acquired Business are good, and North Star has no Knowledge of facts which would
reasonably lead North Star to conclude that any such relationship, or the
ability of any such
<PAGE>
supplier to perform its obligations, may be in jeopardy or result in any
material liability to North Star. To North Star's Knowledge, North Star has no
material Liability for the failure of any suppliers to comply with any
applicable laws, statutes, orders, rules, regulations and requirements
promulgated by governmental or other authorities, and North Star does not have
any Knowledge of any failure by any such supplier to so comply.
5.25 Environmental Matters.
(a) No above ground or underground tanks (whether or not
currently in use) are located under, in or on any Facility of North Star or
Transco, or have been located under, in or on any such Facility and have
subsequently been removed or filled, except for those listed and described on
Schedule 5.25. To the extent storage tanks exist on or under any Facility of
North Star or Transco, such storage tanks have been duly registered with all
appropriate regulatory and governmental bodies and otherwise are in compliance
in all material respects with applicable Federal, state and local statutes,
regulations, ordinances and other regulatory requirements.
(b) North Star has provided and disclosed to Transport America
all reports, information, notices and communications, written or oral, in North
Star's possession or of which North Star has Knowledge pertaining to the
environmental condition of any Facility of North Star and Transco or the
remediation of any contamination thereof. North Star does not have Knowledge of
any material expenditures or other actions required to bring its or Transco's
Facilities in compliance with the Environmental Laws or Regulations.
(c) Except as set forth in Schedule 5.25, no Facility of North
Star or Transco has been used by North Star or, to the Knowledge of North Star,
any other Person to generate, manufacture, refine, transport, treat, store,
handle or dispose of any Regulated Substance in violation of any Environmental
Law or Regulation. To the Knowledge of North Star, North Star's or Transco's
Facilities have not been impacted by any release or threatened release of a
Regulated Substance and they do not contain any condition which could reasonably
be expected to result in a claim, right of action or recovery by any Person or
entity under any Environmental Laws or Regulations.
5.26 Absence of Certain Business Practices. To the Knowledge of North
Star, neither North Star nor Transco nor any officer, employee or agent of North
Star or Transco, nor any other Person acting on their behalf, has directly or
indirectly, within the past three years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee, a candidate
for a political office, or other Person who is or may be in a position to help
or hinder business (or assist North Star or Transco in connection with any
actual or proposed transaction) which could reasonably be expected to subject
North Star or Transco to any damage or penalty in any civil, criminal or
governmental litigation or proceeding or pursuant to Foreign Corrupt Practices
Act.
5.27 Corporate Records. The corporate minute books and related records
of North Star and Transco are complete in all material respects and correctly
reflect all corporate actions taken by them at all meetings or through written
action and correctly record all resolutions.
<PAGE>
5.28 Banks and other Depositories. Schedule 5.28 sets forth a correct
and complete list of the names and account numbers of each of North Star's and
Transco's bank accounts, brokerage accounts, savings accounts, certificates of
deposit and similar cash investments, and safe-deposit boxes, together with the
identification of Persons authorized to withdraw or otherwise deal with them.
5.29 Disclosure. No representation or warranty by North Star in this
Agreement, and no information disclosed in the Schedules supplied by North Star
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not misleading.
5.30 Net Worth. North Star's Net Worth as to be reflected in the
Audited Statement shall be at least $12,500,000.
ARTICLE VI
PERSONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each of the Shareholders hereby represents and warrants to Transport
America, severally and not jointly, and only to the extent that such
representations and warranties relate specifically to such Shareholder, as of
the date hereof and as of the Closing Date (unless otherwise stated herein) as
follows, it being understood that no Shareholder is hereby making any
representations with respect to any other Shareholder:
6.1 Ownership of North Star. Schedule 5.2 correctly and completely sets
forth the total number of any and all shares of North Star's Capital Stock held
by such Shareholder and such Shareholder has no other equity interest in North
Star. Such Shareholder is the sole record and, except for those Shareholders
which are trusts identified on Schedule 5.2, beneficial owner of such shares,
has the right to vote such shares (if such shares are voting) and exercise all
other rights and powers with respect thereto, has good and marketable title
thereto free from any Liens, and except as set forth on Schedule 5.5, has the
unrestricted right to convey such shares to Transport America without the
consent of any third party. Schedule 5.2 lists all current income and principal
beneficiaries of each trust identified on such Schedule. Except as set forth on
Schedule 5.2, there is no restriction, subscription, option, warrant, right,
call, contract, voting trust, irrevocable proxy, voting arrangement, commitment,
understanding or agreement relating to the sale, voting or transfer of any of
the shares of North Star's Capital Stock held by such Shareholder.
6.2 Authority. The execution, delivery and performance of this
Agreement by such Shareholder has been duly and validly authorized and approved
by all requisite action on the part of such Shareholder, and such Shareholder
has all requisite power and authority to do and perform all acts and things
required to be done by such Shareholder under this Agreement. This Agreement has
been duly executed and delivered by the Shareholder and constitutes the legal,
valid and binding obligation of the Shareholder, enforceable in accordance with
its terms.
<PAGE>
6.3 No Conflicts. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby 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 elimination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of any Lien of any kind upon any of the shares of North
Star's Capital Stock owned by such Shareholder under, or require any consent,
authorization or approval under (i) any provision of any organizational
documents of such Shareholder or (ii) any judgment, order or decree or any
statute, law, ordinance, rule or regulation applicable to such Shareholder.
6.4 Litigation. There is no action, lawsuit, proceeding, or
investigation of any kind pending, or, to the Knowledge of any such Shareholder,
threatened by or before any court or governmental agency or panel or tribunal of
any type in which it is sought to restrain or prohibit or to obtain damage or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby by such Shareholder or with respect to such
Shareholder's shares of Capital Stock of North Star.
6.5 Brokers or Finders. Such Shareholder has not engaged the services
of any broker or finder with respect to the transactions contemplated by this
Agreement, and no Person has or will have in connection with such transactions,
as a result of the actions of such Shareholder, any right, interest or valid
claim against or upon North Star or Transport America for any commission, fee or
other compensation as a finder or broker thereof.
6.6 Disclosure. No representation or warranty by such Shareholder in
this Agreement, and no information disclosed in the Schedules to this Agreement
supplied by any of them, contains any untrue statement of a material fact or
fails to state a material fact necessary to make the statements contained herein
or therein, in light of the circumstances in which they are made, not
misleading.
6.7 Investment Intent.
(a) Each Shareholder who will receive Transport America's
Common Stock has sufficient knowledge and experience in financial and business
matters to enable him, her or it to evaluate the merits and risks of the
transactions contemplated by this Agreement or has relied for advice on a
qualified purchaser representative as defined in Rule 501 under the Securities
Act of 1933, as amended (the "Securities Act"). However, nothing in this Section
6.7 shall have any bearing on or mitigate, dilute or compromise in any manner
any of the representations, warranties, indemnities, agreements or covenants
contained elsewhere in this Agreement or any of the agreements contemplated
hereby.
(b) Each Shareholder has been given access to information
requested by such Shareholder regarding Transport America, including the
opportunity to ask questions of and receive answers from the officers of
Transport America concerning the present and proposed activities of Transport
America and to obtain the information which such Shareholder deems necessary or
advisable in order to evaluate the merits and risks of the transactions
contemplated by this Agreement, and each Shareholder has made his, her or its
own independent investigation
<PAGE>
of Transport America and the merits and risks of the transactions contemplated
by this Agreement.
(c) Each Shareholder is acquiring Transport America's Common
Stock for his, her or its own account, for investment purposes, and not with a
present view to resell or distribute all or any portion of Transport America's
Common Stock.
(d) Each Shareholder understands that Transport America's
Common Stock has not been registered under the Securities Act as of the Closing
or under any state securities laws, is being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering,
and such certificates will bear a legend in substantially the following form, as
well as any other legend that may be required by applicable law:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE (THE "STATE
LAWS"), BUT HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS
THEREFROM. NO TRANSFER OF THESE SECURITIES OR ANY INTEREST
THEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT AND THE APPROPRIATE
STATE LAWS, UNLESS THE ISSUER HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE
SUCH REGISTRATION.
(e) Each Shareholder further represents that:
(i) Such Shareholder or his, her or its purchaser
representative is a sophisticated investor with knowledge and
experience in business and financial matters;
(ii) Such Shareholder has been provided with the information
specified in Rule 502(b)(2)(ii) under the Securities Act, as amended,
and has had the opportunity to obtain additional information as desired
in order to evaluate the merits and risks inherent in holding Transport
America's Common Stock;
(iii) such Shareholder has not been offered Transport
America's Common Stock by any form of general advertising or general
solicitation; and
(iv) such Shareholder is able to bear the economic risk and
lack of liquidity inherent in holding Transport America's Common Stock.
6.8 Beneficial Ownership of Transport America Stock. As of the date
hereof, the Shareholders in the aggregate are the Beneficial Owner of 3,000
shares of Transport America's Common Stock. At and after the Closing, no
Shareholder shall be a Beneficial Owner of seventeen percent (17%) or more of
outstanding shares of Transport America's Common Stock;
<PAGE>
provided, however, that this representation and warranty shall not be deemed
breached solely as a result of an acquisition by Transport America of its Common
Stock which, by reducing the number of outstanding shares, increases the
proportionate number of shares beneficially owned by a Shareholder to 17% or
more. For purposes of this Section 6.8, "Beneficial Owner" shall have the
meaning set forth in Section l(d) of the Rights Agreement (Section 1(d) is
attached hereto as Schedule 6.8), dated February 25, 1997, by and between
Transport America and Norwest Bank Minnesota, N.A., as the same may be amended
or modified from time to time (the "Rights Agreement"). Each Shareholder has
been provided with a copy of such definition and has had an opportunity to
review it with such Shareholder's legal counsel.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TRANSPORT AMERICA
Transport America represents and warrants to North Star and the
Shareholders as of the date hereof and as of the Closing Date (unless otherwise
stated herein) as follows:
7.1 Organization of Transport America. Transport America is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Minnesota and is qualified to do business as a foreign
corporation in all jurisdictions where such qualification is necessary and the
failure to be so qualified could reasonably be expected to have a Material
Adverse Effect upon Transport America. Transport America has all necessary power
and authority to own its properties and assets and conduct its business as
presently being conducted. Transport America has heretofore made available to
North Star complete and correct copies of its Articles of Incorporation, and all
amendments thereto, and of its Bylaws and any other governing documents or
instruments, in each case as in effect immediately prior to the Closing and
true, complete and correct copies of all minutes of meetings of the actions of
Transport America's Board of Directors and any committees thereof and of its
shareholders.
7.2 Ownership and Capitalization of Transport America. The authorized
Capital Stock of Transport America consists of 15,000,000 shares of Common
Stock, of which there are 6,713,144 shares issued and outstanding as of the date
hereof and 150,000 shares of Preferred Stock, of which there are no shares
issued and outstanding. All issued and outstanding shares of Capital Stock of
Transport America are validly issued, fully paid, and non-assessable and were
not issued in violation of any pre-emptive or similar rights. Except as set
forth on Schedule 7.2, there are no voting trust agreements or any other
contracts, agreements, arrangements, commitments, plans or understandings to
which Transport America is a party, restricting or otherwise relating to voting
or dividend rights with respect to any shares of Transport America's Capital
Stock or the transfer of any such shares. Except as set forth on Schedule 7.2 or
disclosed in the SEC Documents, there are no options, warrants, calls,
subscriptions, convertible or exchangeable securities, rights, agreements,
commitments or arrangements, obligating Transport America to redeem, purchase,
issue, transfer or sell any shares of its Capital Stock or any other securities
convertible into, exercisable or exchangeable for, or evidencing the right to
subscribe for, any shares of its Capital Stock. There are no declared or accrued
but unpaid dividends or distributions payable on any shares of Transport
America's issued and outstanding Capital Stock.
<PAGE>
7.3 Corporate Authority. The execution, delivery and performance by
Transport America of this Agreement and agreements contemplated hereby have been
duly and validly authorized and approved by all requisite corporate action on
the part of Transport America. Transport America has all requisite power and
authority to do and perform all acts and things required to be done by it under
this Agreement. This Agreement and the agreements contemplated hereby have been
or will be duly executed on or before the Closing Date and delivered by
Transport America and constitutes or will constitute the legal, valid and
binding obligation of Transport America enforceable in accordance with its
terms.
7.4 Consents Required; Violations. The execution and delivery of the
Transaction Documents and the consummation of the transactions contemplated by
the Transaction Documents will not:
(a) Conflict with, violate or result in a breach of the terms,
conditions or provisions of or constitute a default under the Articles of
Incorporation, Bylaws, or other governing instruments of Transport America, any
law or regulation, or any material agreement, debt instrument, mortgage, lease,
judgment, order, award, decree or other instrument or restriction to which
Transport America is a party or by which Transport America or any of its assets
is bound or affected;
(b) Require Transport America to obtain any affirmative
approval, consent, permit, authorization, or other order or action of any court,
governmental authority, regulatory body, creditor or any other Person, except as
have been obtained as of the Closing Date;
(c) Give any Person with rights under any contract, debt
instrument, mortgage, lease, judgment, order, award or decree (or under any
other agreement, instrument or restriction) to which Transport America is a
party or by which it is bound the right to accelerate, terminate, modify or
otherwise change the rights or obligations of such Person or of Transport
America thereunder; or
(d) Result in the creation or imposition of any Lien upon any
of the properties or assets of Transport America other than Liens by existing
security interest holders on the Business Assets following the Closing.
7.5 Transport America's Common Stock. As of the Closing Date, the
shares of Transport America's Common Stock issuable to the Shareholders as the
Stock Portion of the Purchase Price will be duly authorized and, upon issuance,
shall be validly issued, fully paid and nonassessable shares of Transport
America's Common Stock and will not be issued in violation of any pre-emptive or
similar rights. Provided that the representations and warranties of the
Shareholders contained in Section 6.8 hereof are and continue to be correct in
all respects, the shares of Transport America's Common Stock issuable to the
Shareholders pursuant to this Agreement shall be entitled to the rights issued
to the holders of Transport America's Common Stock under the Rights Agreement,
until the expiration or termination of the Rights Agreement.
<PAGE>
7.6 SEC Filings. Transport America has filed all reports required to be
filed by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including pursuant to Section 13(a) or 15(d) thereof, for the three years
preceding the date hereof (the foregoing materials being collectively referred
to herein as the "SEC Documents") on a timely basis, or has received a valid
extension of such time of filing and has filed any such SEC Documents prior to
the expiration of any such extension. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Securities and Exchange Commission (the "Commission") promulgated thereunder,
and none of the SEC Documents, when filed, 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. All material
agreements to which Transport America is a party or by which the property or
assets of Transport America is subject have been filed as exhibits to the SEC
Documents in accordance with applicable law; Transport America is not in
material breach of any such agreement filed as an exhibit to the SEC Documents
where such breach could reasonably be expected to have or result in a Material
Adverse Effect upon Transport America and, to the Knowledge of Transport
America, no other party to any such agreement is in breach of any of its
obligations thereunder. The financial statements of Transport America included
in the SEC Documents, including the notes thereto, (i) are true, complete and
correct in all material respects, (ii) comply in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, (iii) have been prepared in accordance with
GAAP consistently maintained and applied throughout the periods indicated and
consistent with past practices, except as may be otherwise indicated in such
financial statements or the notes thereto, and (iv) present fairly and
accurately in all material respects the financial position of Transport America
and its wholly-owned subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal year-end audit adjustments, (v) are in
accordance with the books and records of Transport America and its wholly-owned
subsidiaries for the respective periods indicated, and (vi) do not omit to state
or reflect any material fact concerning Transport America and its wholly-owned
subsidiaries required by GAAP to be stated or reflected therein. Since the date
of the financial statements included in Transport America's last filed Annual
Report on Form 10-K for the year ended December 31, 1997, there has been no
event, occurrence or development that has had a Material Adverse Effect upon
Transport America which has not been specifically disclosed in writing to North
Star by Transport America.
7.7 Absence of Certain Changes and Events. Since December 31, 1997,
there has been no material change in the assets, Liabilities, employee
relations, customer relations or vendor relations, prospects, operations or
condition, financial or otherwise, of Transport America or its business from
that reflected in Transport America's Consolidated Financial Statements for the
Year Ended December 31, 1997, other than changes in the ordinary course of
business consistent with past practices which have not materially adversely
affected Transport America's assets or business or materially decreased the TCA
Net Worth.
<PAGE>
7.8 Licenses; Compliance with Laws, Regulations, Etc. Transport America
possesses all material permits, licenses and other approvals and authorizations
which are necessary or required by law for the conduct of its business as
currently being conducted, and all of such licenses, permits and other approvals
and authorizations are, and will be as of the Closing Date, in good standing,
full force and effect and shall not be adversely affected by the consummation of
the transactions hereby contemplated. The operations of Transport America's
business have complied, and are in compliance, in all material respects, with
all such permits, licenses, approvals and authorizations and applicable laws
(including but not limited to, Environmental Laws and Regulations, common law,
federal and state regulations respecting driver records and compliance
practices, and safe and legal operation of a for-hire public carrier), statutes,
ordinances, orders, decrees, rules, regulations, interpretations and
requirements promulgated by governmental or other authorities binding on
Transport America. Transport America's safety rating, pursuant to the rules and
regulations of the U.S. Department of Transportation is satisfactory.
7.9 Litigation. Except as set forth on Schedule 7.9, there is no
action, lawsuit, claim, proceeding, arbitration, mediation or investigation of
any kind pending, or, to the Knowledge of Transport America, threatened against,
by, or affecting Transport America which if decided adversely against Transport
America could reasonably be expected to have a Material Adverse Effect upon
Transport America or the validity of the transactions contemplated by this
Agreement. Transport America is not in default with respect to any order, writ,
injunction, or decree of any court or of any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting or relating to Transport America. No suit, action
or other proceeding is pending or, to the Knowledge of Transport America,
threatened by or before any court or governmental agency in which it is sought
to restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might eventually result in any such suit, action or other
proceeding is pending or, to the Knowledge of Transport America, threatened.
7.10 Insurance Policies. All current insurance policies of Transport
America are in full force and effect, all premiums due thereon on or before the
Closing Date will have been paid and any unpaid premiums have been accrued.
Transport America has complied with the provisions of such policies in all
material respects. No notice of cancellation or nonrenewal with respect to any
insurance policy has been received by Transport America. Except as listed on
Schedule 7.10, there are no claims currently pending against Transport America's
insurance policies involving an amount in excess of $75,000. To the Knowledge of
Transport America, Transport America's insurance policies provide adequate
insurance coverage for its business of the kinds, in the amounts and against the
risks customarily maintained by organizations similarly situated. Transport
America has not received any notice from its insurance carrier disclaiming
coverage as to any claims pending against its insurance policies which would
otherwise be within the scope of such policies.
7.11 Labor Agreements. (i) Transport America is not a party to any
collective bargaining agreement with any labor organization; (ii) there is no
unfair labor practice claim
<PAGE>
pending or, to the Knowledge of Transport America, threatened against Transport
America and to the Knowledge of Transport America, there is no basis for any
such claim; (iii) there is not currently pending or, to the Knowledge of
Transport America, threatened any demand for recognition from any labor union
with respect to, and Transport America has no Knowledge of any attempt that has
been made or is being made to organize, any employees; and (iv) within the three
(3) year period preceding the date of this Agreement, Transport America has not
experienced any strike, slow-down, work stoppage or lockout, by or with respect
to any of its employees.
7.12 Employees.
(a) Each of Transport America's Employee Plans has been
consistently administered in substantial compliance with its terms and
provisions and with all applicable laws and regulations, including the Code and
ERISA; each Employee Plan of Transport America which is an employee pension plan
as defined in Section 3(2) of ERISA meets the applicable requirements for
qualification under Section 401 (a) and for exemption under Section 501 (a) of
the Code.
(b) Transport America is in substantial compliance with all
applicable federal, state, and local laws relating to the employment of labor,
including the provisions thereof relating to wages, hours, occupational health
and safety, health and welfare insurance, collective bargaining, discrimination,
and the payment of withholding and social security taxes, and Transport America
is not liable for any arrears of wages, or any tax or penalties, for failure to
comply with any of the foregoing. Transport America is not in receipt of any
complaint, demand letter or charge issued by any federal, state or local agency
alleging a violation of any law, regulation or ordinance respecting employment
or employment practices, nor has Transport America incurred any liability under
the Workers Adjustment and Retraining Notification Act or similar state law or
regulation, any of the foregoing of which could reasonably be expected to have a
Material Adverse Effect on Transport America.
(c) All material employment agreements of Transport America
have been filed as exhibits to the SEC Documents.
(d) Transport America does not have any material Liability
with respect to any of its employees or Employee Plans which have not been fully
and fairly disclosed in its SEC Documents.
7.13 Taxes. Transport America has timely filed all federal, state,
county, local and foreign income, excise, property, franchise, and other tax
returns which are required to be filed by it and has paid all taxes, if any,
which have become due so that Transport America will not have any material tax
deficiencies, including penalties and interest, assessed against Transport
America arising from any audit by any tax authority with respect to any period
ending on or prior to the Closing Date. Such returns are true, complete and
correct in all material respects. Transport America has not received notice of
any tax deficiency proposed or assessed against it,
<PAGE>
and it has not executed any waiver of any statute of limitations on the
assessment or collection of any tax. To the Knowledge of Transport America, none
of Transport America's tax returns is currently being audited by governmental
authorities. Transport America has received no notice of any impending audit by
any taxing authority. Transport America is not subject to or bound by any
agreement which imposes an actual or potential tax indemnification obligation on
Transport America.
7.14 Intellectual Property. Transport America owns or licenses all
Intellectual Property that is material or necessary to its business as it is
currently being conducted. The business of Transport America as currently
conducted does not infringe, misuse, misappropriate or conflict with the
Intellectual Property Rights of others in a way which is likely to have a
Material Adverse Effect on Transport America.
7.15 Environmental Matters.
(a) No above ground or underground tanks are located under, in
or on any Facility of Transport America, or have been located under, in or on
any such Facility and have subsequently been removed or filled, except for those
listed and described on Schedule 7.15. To the extent storage tanks exist on or
under any Facility of Transport America, such storage tanks have been duly
registered with all appropriate regulatory and governmental bodies and otherwise
are in compliance in all material respects with applicable Federal, state and
local statutes, regulations, ordinances and other regulatory requirements.
(b) Transport America has provided and disclosed to North Star
all reports, information, notices and communications, written or oral, in
Transport America's possession or of which Transport America has Knowledge
pertaining to the environmental condition of any Facility of Transport America
or the remediation of any contamination thereof. Transport America does not have
Knowledge of any material expenditures or other actions required to bring its
Facilities in compliance with the Environmental Laws or Regulations.
(c) Except as set forth in Schedule 7.15, no Facility of
Transport America has been used by Transport America or, to the Knowledge of
Transport America, any other Person to generate, manufacture, refine, transport,
treat, store, handle or dispose of any Regulated Substance in violation of any
Environmental Law or Regulation. To the Knowledge of Transport America,
Transport America's Facilities do not contain any condition which could
reasonably be expected to result in a material claim, right of action or
recovery by any Person or entity under any Environmental Laws or Regulations.
7.16 No Finders. No act of Transport America has given or will give
rise to any claim against North Star or the Shareholders for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated herein.
7.17 Disclosure. No representation or warranty by Transport America in
this Agreement, and no information disclosed in the Schedules supplied by it,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not misleading.
<PAGE>
7.18 Customers. Transport America has no Knowledge or information
indicating that any material customer of its business intends to cease doing
business with Transport America or decrease the amount of business it does with
Transport America in any material respect.
7.19 Corporate Records. The corporate minute books and related records
of Transport America are complete in all material respects and correctly reflect
all corporate actions taken by them at all meetings or through written action
and correctly record all resolutions.
7.20 Absence of Undisclosed Liabilities. Transport America has no
material Liabilities related to its business or assets nor, to the Knowledge of
Transport America, is there any legal basis therefor, except:
(a) Liabilities set forth or reserved against (which reserves
are adequate) in Transport America's audited consolidated balance sheet at
December 31, 1997, which is included in the SEC Documents;
(b) Normal Liabilities incurred in the ordinary course of
business consistent with past practice since December 31, 1997; and
(c) Liabilities such as contractual obligations which are not
required by GAAP to be disclosed in the financial statements referred to in
subsection (a) above.
7.21 Investment Intent.
(a) Transport America has sufficient knowledge and experience
in financial and business matters to enable it to evaluate the merits and risks
of the transactions contemplated by this Agreement. However, nothing in this
Section 7.21 shall have any bearing on or mitigate, dilute or compromise in any
manner any of the representations, warranties, indemnities, agreements or
covenants contained elsewhere in this Agreement or any of the agreements
contemplated hereby.
(b) Transport America has been given access to information
requested by Transport America regarding North Star including the opportunity to
ask questions of and receive answers from the officers of North Star concerning
the present and proposed activities of North Star and to obtain the information
which Transport America deems necessary or advisable in order to evaluate the
merits and risks of the transactions contemplated by this Agreement, and
Transport America has made its own independent investigation of North Star and
the merits and risks of the transactions contemplated by this Agreement.
(c) Transport America is acquiring North Star's Capital Stock
for its own account, for investment purposes, and not with a present view to
resale or for distribution of all or any portion of North Star's Capital Stock.
(d) Transport America understands that North Star's Capital
Stock has not been registered under the Securities Act as of the Closing or
under any state securities laws, is
<PAGE>
being sold in reliance upon federal and state exemptions for transactions not
involving any public offering, and such certificates will bear a legend in
substantially the following form, as well as any other legend that may be
required by applicable law:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE (THE "STATE
LAWS"), BUT HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS
THEREFROM. NO TRANSFER OF THESE SECURITIES OR ANY INTEREST
THEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT AND THE APPROPRIATE
STATE LAWS, UNLESS THE ISSUER HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE
SUCH REGISTRATION.
(e) Transport America further represents that:
(i) Transport America is a sophisticated investor with
knowledge and experience in business and financial matters;
(ii) Transport America has been provided with the information
specified in Rule 502(b)(2)(i)(A) and (B) under the Securities Act, as
amended, and has had the opportunity to obtain additional information
as desired in order to evaluate the merits and risks inherent in
holding North Star's Capital Stock;
(iii) Transport America has not been offered North Star's
Capital Stock by any form of general advertising or general
solicitation;
(iv) Transport America is able to bear the economic risk and
lack of liquidity inherent in holding North Star's Capital Stock; and
(v) Transport America is an "accredited investor" within the
meaning set forth in the rules and regulations promulgated under the
Securities Act, as amended.
ARTICLE VIII
AGREEMENTS AND COVENANTS
8.1 Additional Effects, Directors. Following the Closing, the
Shareholders of North Star listed on Schedule 5.2 shall provide the names of
three (3) individuals who have the qualifications and stature to be of benefit
to the shareholders of Transport America to serve on the Board of Directors of
Transport America (the "Director Candidates"). The Board of
<PAGE>
Directors of Transport America shall, in its sole discretion, choose one of the
Director Candidates and shall take all actions necessary (including, when
applicable, shareholder approval) and permissible under Minnesota Business
Corporation Act to cause that Director Candidate to be appointed as a director
of Transport America (the "North Star Director "). Prior to the Regular
Shareholders' Meeting of Transport America following the first appointment of
the North Star Director (for which the notice has not yet been mailed), the
Board of Directors of Transport America shall nominate the North Star Director
as a director to be voted on by the shareholders of Transport America at such
Regular Shareholders' Meeting, and shall nominate the North Star Director in
connection with subsequent Regular Shareholders' Meetings where directors are
elected until the expiration of the rights granted to the Shareholders pursuant
to this Section. The names of the Director Candidates shall be submitted to the
Board of Directors of Transport America in writing signed by each Shareholder.
If the Director Candidate chosen by Transport America's Board of Directors shall
ever be unable or unwilling to serve, Transport America's Board of Directors
shall, in its sole discretion, choose another Director Candidate to so serve.
The right of the Shareholders to have one director nominated to the Transport
America Board set forth in this Section shall expire at such time as the
Shareholders no longer own at least Nine Hundred Thousand (900,000) of the
number of shares issued as the Stock Portion of the Purchase Price. Following
the Closing and prior to the 1999 Regular Shareholders' Meeting of Transport
America, the North Star Director shall be entitled to receive notice of, attend
and observe, but not participate, in all meetings of Transport America's Board
of Directors.
8.2 Due Diligence and Confidentiality. Upon reasonable advance notice
until the Closing, North Star and Transport America shall each (and shall cause
each of their respective Affiliates to) afford to the other and their respective
counsel, accountants and representatives reasonable access during normal
business hours to all its properties, books, contracts, records, financial
information and other information for the purpose of examining the same solely
in connection with the transactions contemplated hereby and for no other purpose
("Due Diligence Investigation"). Each party shall conduct its Due Diligence
Investigation in a manner that does not interfere with the normal business of
the other party. All non-public and confidential information and documents
obtained by one party from the other in the course of the Due Diligence
Investigation shall be kept confidential and not used or disclosed by the party
receiving such information for purposes other than the transactions contemplated
hereby.
8.3 Operation of North Star's Business. From the date hereof to the
Closing, except to the extent (i) expressly permitted by this Agreement, (ii)
permitted in writing by Transport America, or (iii) as set forth on Schedule
8.3, North Star shall not (and shall cause its Affiliates not to) take any
action which constitutes a Material North Star Change nor make any Material
North Star Change to or the manner in which its business is conducted, and
without limiting the foregoing, North Star shall:
(a) Maintain the Business Assets in good operating condition
and repair, normal wear and tear excepted;
<PAGE>
(b) Not sell, lease or dispose of, or make any contract for
the sale, lease or disposition of, or subject to any Lien, any of the Business
Assets other than in the ordinary course of business (except as contemplated in
the Reorganization);
(c) Not increase the compensation or other payments or
remuneration payable or to become payable to its employees, consultants or
independent contractors, and not make any arrangements with newly hired
employees, consultants or newly engaged independent contractors outside of the
ordinary course of business or otherwise inconsistent with its past business
practices;
(d) Conduct its business in the ordinary course in
substantially the same manner as heretofore conducted and in conformity with all
applicable laws, rules and regulations and use of the Business Assets in the
usual, regular and ordinary course and in substantially the same manner as
heretofore used. Without limiting the generality of the foregoing, North Star
shall not enter into any agreement for the acquisition of software, goods or
services at prices higher than generally prevailing in the industry or enter
into any agreements for the sale of software, goods or services at prices lower
than generally prevailing in the industry. North Star will exercise commercially
reasonable efforts, without making any commitments on behalf of Transport
America, to preserve its Business and organization and its present relationships
with vendors, suppliers and customers and others having business relations with
it;
(e) Maintain in force existing hazard and liability insurance
policies, or comparable coverage, for the Acquired Business and the Business
Assets;
(f) Continue to make payments when due (or with sufficient
promptness so as not to jeopardize any sources of supply or providers of
service) and not delay such payments as compared to normal payment procedures
and to perform its obligations under the terms of any leases, license
agreements, contracts, commitments and other agreements to which North Star is a
party;
(g) Not incur any Liabilities or enter into any contracts not
in the ordinary course of business consistent with past practice, unless first
disclosed to and approved by Transport America, such approval not to be
unreasonably withheld, delayed or conditioned;
(h) Not knowingly engage in any course of action reasonably
likely to materially reduce the value of the Acquired Business to Transport
America without the prior written consent of Transport America, which consent
shall not be unreasonably withheld, delayed or conditioned.
(i) Cooperate fully with Transport America during this period
to facilitate the smooth and efficient transition of the Acquired Business under
this Agreement;
(j) Notify Transport America of any (i) claim, litigation or
administrative proceeding pending or to the Knowledge of North Star threatened
which challenges or otherwise
<PAGE>
affects the transactions contemplated hereby; (ii) material damage or
destruction of any of the Business Assets; or (iii) material adverse change in
the Business;
(k) Not propose or adopt any amendment to its Articles of
Incorporation or Bylaws other than in connection with and solely to facilitate
the Reorganization;
(l) Not issue, sell, deliver or pledge or authorize or propose
the issuance, sale, delivery or pledge of (i) additional shares of Capital Stock
of any class (including shares of Common Stock), or securities convertible into
shares of North Star's Capital Stock, or any rights, warrants or options to
acquire any such shares of North Star's Capital Stock or other convertible
securities; or (ii) any other securities in respect of, in lieu of, or in
substitution for shares of North Star's Capital Stock outstanding on the date
hereof, except in each case in connection with the Reorganization;
(m) Not split, combine or reclassify any shares of its Capital
Stock, or declare, set aside or pay any dividend or other distribution (whether
in cash, securities or property or any combination thereof) in respect of any
class or series of its Capital Stock except in each case in connection with and
solely to facilitate the Reorganization or as permitted by Section 8.7 hereof,
and further in each case as disclosed to Transport America by way of amendment
to the applicable Schedule to this Agreement, which amended Schedule must be
acceptable to Transport America;
(n) Not redeem, purchase or otherwise acquire or propose to
redeem or purchase or otherwise acquire, any of its securities;
(o) (i) Not incur, assume or prepay any long-term debt or
incur or assume any short-term debt (except that North Star may incur short-term
debt to trade creditors, accrued wages, taxes, health and welfare obligations in
the ordinary course of business consistent with past practices); (ii) not
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person; or
(iii) not make any loans, advances or capital contributions to, or investments
in, any other Person other than in the ordinary course of business;
(p) Not settle or compromise any suit or claim or threatened
suit or claim relating to the transactions contemplated hereby;
(q) Not enter into, adopt or amend any driver pay package,
owner operator remuneration, or any bonus, profit sharing, compensation,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, collective bargaining
agreements, trust, plans, funds or other arrangements for the benefit or welfare
of any director, officer, employee or independent contractor or consultant, or
increase in any manner the pay, compensation or fringe benefits of any director,
officer, employee or independent contractor or consultant or pay any benefit not
required by any existing plan and arrangement (except (i) for normal increases
in the ordinary course of business consistent with past practice and that, in
the
<PAGE>
aggregate, do not result in a material increase in benefits or compensation
expense to North Star, and (ii) North Star will on or before the Closing Date,
pay to its employees the cash value of any sick pay or accrued vacation which
exceeds the amounts which the employees of Transport America may carry over from
one year to the next under its policies and procedures);
(r) Not acquire, sell, lease or dispose of any assets, which
are material, in the aggregate, to North Star or the Business or enter into any
commitment to do any of the foregoing or enter into any material commitment or
transaction outside the ordinary course of business inconsistent with past
practice;
(s) Except in the ordinary course of business with respect to
contracts with customers, not enter into or commit to enter into any contract,
agreement, arrangement or understanding having a term longer than six months
unless such contract, agreement, arrangement or understanding may be canceled by
North Star without penalty on not more than 90 days' notice or does not require
the expenditure by North Star of more than $50,000;
(t) Except as may be required by law or to enable the
consummation of the transactions contemplated hereby, not take any action to
terminate or amend any of North Star's Employee Plans;
(u) Not authorize or make any capital expenditures in excess
of $50,000 in the aggregate, except for obligations incurred prior to the date
hereof;
(v) Not modify, amend or terminate any contract, or waive,
release, relinquish or assign any contract or other rights or claims or cancel
or forgive any indebtedness owed to North Star, other than in the ordinary
course of business consistent with past practice and which are not material to
North Star;
(w) Not make any tax election or settle or compromise any
income tax liability material to the business of North Star;
(x) Not change any of the accounting principles or practices
used by it;
(y) Not take any action that would, or would be reasonably
likely to, result in any of North Star's representations and warranties set
forth in this Agreement not being true in all material respects or, to the
extent dependent on an act or omission of North Star, in any of the conditions
set forth in Article XI not being satisfied; and
(z) Not agree orally, in writing or otherwise to take any of
the foregoing actions.
8.4 Reasonable Efforts. Subject to the terms and conditions herein
provided, each of the parties to this Agreement agrees to use commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done as promptly as practicable, all things reasonable, necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement.
<PAGE>
8.5 Solicitation Discussions by North Star. North Star agrees that,
during the period commencing on the date hereof and continuing until the Closing
or the earlier termination of this Agreement in accordance with Article XII
hereof, it shall not, directly or indirectly, through any officer, director,
Shareholder, Affiliate, agent or otherwise:
(a) solicit, initiate, encourage or assist in the submission
of any inquiry, proposal or offer from any Person relating to any form of
recapitalization transaction involving North Star or any sale, merger,
consolidation, business combination, spin-off, liquidation, or similar
transaction involving North Star (each, an "Alternative Transaction"); or
(b) participate in any discussion or negotiation involving an
Alternative Transaction or furnish to any Person any information concerning
North Star in connection with an Alternative Transaction; or
(c) otherwise cooperate in any manner with, or assist or
participate in, facilitate or encourage any effort or attempt by any Person
other than Transport America to make or enter into an Alternative Transaction.
North Star shall promptly notify Transport America of any possible
Alternative Transaction, the terms thereof and the identity of the other party
thereto. North Star and the Shareholders recognize that any of the activities
described in this Section 8.5 undertaken during the twelve months from the date
hereof may subject North Star to payment of the Termination Fee pursuant to
Section 12.3(b).
8.6 Announcements. Transport America and North Star shall cooperate and
mutually agree upon any press release or public announcements prior to the
Closing concerning the transactions contemplated by this Agreement; provided,
however, that Transport America may communicate with analysts, institutional
investors or similar individuals with regard to the substance of any items
disclosed in any press release mutually agreed upon by the parties; and,
provided further, that nothing contained herein shall prevent Transport America
or North Star, after giving reasonable advance notice to the other party hereto,
from making any announcement reasonably determined by it, upon advice of
counsel, to be required by law.
8.7 Certain Payments. North Star and each Shareholder shall pay prior
to the Closing all Taxes required to be paid by him or it on or before the
Closing Date. From the date hereof until the Closing, North Star may continue to
make regular tax distribution payments to its Shareholders consistent with past
practice, provided, however, that in no event shall North Star make any tax
distribution payments to its Shareholders with respect to the gain to be
recognized to North Star and the Shareholders as a result of the Section 338
Election. In addition, on or before the Closing Date, North Star shall have made
any such tax distribution payments so that Transport America or North Star shall
have no Liability for tax distributions to the Shareholders after the Closing.
North Star shall continue to accrue regular bonuses due to its Shareholders,
Wayne Czeh, Michael Kandris and Arve Moser and all such accrued bonuses shall be
paid in full on the Closing Date.
<PAGE>
8.8 Schedules. Each of Transport America and North Star shall promptly
notify the other parties hereto of any inaccuracies in their respective
representations, warranties, covenants and other agreements hereunder arising
after the date hereof. Each of Transport America and North Star shall update the
Schedules to this Agreement delivered by such party as of the date hereof to be
complete and correct in all respects as of the Closing Date.
8.9 Section 338(h)(10) Election. Transport America and North Star agree
to make or cause to be made a timely, effective and irrevocable election under
Section 338(h)(10) of the Code, in form and substance mutually acceptable to the
parties, with respect to the Stock Purchase and to file such election in the
manner required by applicable rules and regulations promulgated under the Code
("Treasury Regulations"). Transport America and North Star, jointly, will make
such other similar elections as may be necessary for state income tax purposes,
and for purposes of this Agreement, the term "election" shall be deemed to
include any such state income tax elections. Transport America and North Star
hereby mutually agree that the "Aggregate Deemed Sale Price" (as defined under
applicable Treasury Regulations) shall be allocated among the Business Assets in
the manner set forth on Schedule 8.9. The Shareholders and Transport America
shall mutually prepare a Form 8023, with assets valued as set forth in Schedule
8.9 and with all attachments, and all of the Shareholders and Transport America
shall sign such Form on or before the Closing. The Shareholders and Transport
America shall file such Form with the applicable governmental authority. North
Star and Transport America shall each provide information that may be required
for the purpose of preparing such Form. Transport America and North Star agree
that any income tax liability arising out of or in any way attributable to the
foregoing election pursuant to Section 338(h)(10) of the Code (and such
allocation) shall be for the sole account of North Star.
8.10 Regulatory Filings. As promptly as practicable after the execution
of the Agreement, Transport America and North Star shall make or cause to be
made all filings and submissions under the HSR Act and any other laws or
regulations applicable to Transport America or North Star for the consummation
of the transactions contemplated herein. Transport America and North Star will
provide each other such reasonable assistance as may be requested in connection
with such filings.
8.11 Tax Matters. The following provisions shall govern the allocation
of responsibility as between Transport America and each Shareholder for certain
tax matters following the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The
Shareholders shall prepare or cause to be prepared and file or cause to be filed
all tax returns for North Star for all periods ending on or prior to the Closing
Date which are filed after the Closing Date. The Shareholders shall permit
Transport America to review and comment on each such tax return described in the
preceding sentence prior to filing. To the extent permitted by applicable law,
each Shareholder shall include any income, gain, loss, deduction or other tax
items for such periods on their tax returns in a manner consistent with the
Schedule K-1s furnished by North
<PAGE>
Star to the Shareholder for such periods (which Schedule K-1 shall be subject to
the prior review of the Shareholders).
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. Transport America shall prepare or cause to be prepared and file or cause
to be filed any tax returns of North Star for tax periods which begin before the
Closing Date and end after the Closing Date. Transport America shall permit the
Shareholders to review and comment upon each such tax return described in the
preceding sentence prior to filing. For purposes of this Section, in the case of
any taxes that are imposed on a periodic basis and are payable for a taxable
period that includes (but does not end on) the Closing Date, the portion of such
tax which related to the portion of such taxable period ending on the Closing
Date shall (x) in the case of any taxes other than taxes based upon or related
to income or receipts, be deemed to be the amount of such tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire taxable period, and (y) in the case of
any tax based upon or related to income or receipts to be deemed equal to the
amount which would be payable if the relevant taxable period ended on the
Closing Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of North
Star.
(c) COOPERATION ON TAX MATTERS.
(i) Transport America, North Star and each
Shareholder shall cooperate fully, as and to
the extent reasonably requested by the other
party, in connection with the filing of tax
returns pursuant to this Section and any
audit, litigation or other proceedings with
respect to taxes. Such cooperation shall
include the retention and (upon the other
party's request) the provision of records
and information which are reasonably
necessary to any such audit, litigation or
other proceeding and making employees
available on a mutually convenient basis to
provide additional information and
explanation of any material provided
hereunder. Transport America shall cause
North Star to agree, and each Shareholder
agrees (a) to retain all books and records
with respect to tax matters pertinent to
North Star relating to any taxable period
beginning before the Closing Date until the
expiration of the statute of limitations
(and, to the extent notified by Transport
America or any Shareholder, any extensions
thereof) of the respective taxable periods,
and to abide by all record retention
agreements entered into with any taxing
authority, and (b) to give the other party
reasonable written notice prior to
transferring, destroying or discarding any
such books and records and, if the other
party so requests, North Star or the
Shareholder, as the case may be, shall allow
the other party to take possession of such
books and records.
(ii) Transport America and each Shareholder
further agree, upon request, to use
reasonable efforts to obtain any certificate
or other document from any
<PAGE>
governmental body or any other Person as may
be necessary to mitigate, reduce or
eliminate any tax that could be imposed
(including, but not limited to, with respect
to the transactions contemplated hereby).
8.12 Operation of Transport America's Business. From the date hereof to
the Closing, except to the extent expressly permitted by this Agreement or
otherwise permitted in writing by North Star, Transport America shall not (i)
take any action which will have a Material Adverse Effect on Transport America,
(ii) split, combine or reclassify any shares of its Capital Stock, or declare,
set aside or pay any dividend or other distribution (payable in securities or
property or any combination thereof) in respect of any class or series of its
Capital Stock, (iii) take any action that would, or would be reasonably likely
to, result in any of Transport America's representations and warranties set
forth in this Agreement not being true in all material respects or, to the
extent dependent on an act or omission of Transport America, in any of the
conditions set forth in Article XI not being satisfied, and (iv) agree orally,
in writing or otherwise to take any of the foregoing actions.
8.13 Roseau Diesel Service, Inc. On the Closing Date, Transport America
may, at its option, offer to employ all or any part of the trailer mechanic
employees of Roseau Diesel Service, Inc. currently involved in the maintenance
and repair of North Star's trailers on substantially the same terms and
conditions as they are currently employed by Roseau Diesel Service, Inc. North
Star and the Shareholders shall encourage such employees to accept employment by
Transport America.
ARTICLE IX
PUT RIGHT
9.1 Put. Each Shareholder shall have the right to sell to Transport
America, and Transport America shall be obligated to purchase from such
Shareholder, any or all shares of Transport America's Common Stock received by
the Shareholders pursuant to this Agreement at the put exercise price per share
(the "Exercise Price") equaling the greater of $16.00 per share or the Average
Closing Price (the "Put Right"). The Put Right is exercisable only during the
sixty-day period commencing on the third anniversary of the Closing Date, by the
Shareholder exercising the Put Right giving written notice of exercise to
Transport America within such sixty-day period. The written notice shall specify
the number of shares with respect to which the Put Right is being exercised,
accompanied by stock certificates, duly endorsed, evidencing the shares. Within
thirty (30) days of receiving any such notice of exercise and endorsed stock
certificates, Transport America shall deliver to the exercising Shareholder by
certified or bank cashier's check or wire transfer of immediately available
funds to the Shareholder's designated account the amount calculated by
multiplying the Exercise Price times the number of shares with respect to which
the Put Right is being exercised, together with a new certificate exercising
those shares of Transport America Common Stock as to which the Put Right is not
being exercised.
<PAGE>
ARTICLE X
NON-COMPETE AND NON-SOLICITATION
10.1 Non-Compete and Non-Solicitation. Without the prior written
consent of Transport America, for a period of three (3) years after the Closing,
no Shareholder (including the current income and principal beneficiaries of a
Shareholder that is a trust) shall, either directly or indirectly, (i) hire any
employee of North Star, except for Wayne Czeh, Arve Moser, Scott Grove or any
other employee mutually agreed upon by the parties, contract for the hauling of
freight with any driver for North Star or engage in the trucking business with
any customer of North Star where such person or entity was an employee, driver
or customer of or for North Star at any time during the twelve (12) months
preceding the Closing, or (ii) hire any of the former trailer mechanic employees
of Roseau Diesel Service, Inc. hired by Transport America on the Closing Date;
provided, however, that the foregoing restrictions shall not prevent a
Shareholder or beneficiary from continuing to own or operate Trans Eagan, Inc.,
a Minnesota corporation, Transport 21, Inc., a Minnesota corporation, Roseau
Transport, Inc., a Minnesota corporation, Roseau Diesel Service, Inc., a
Minnesota corporation, Transmanagement Insurance Agency, LLC, a Minnesota
limited liability company, 789 Company, a Minnesota general partnership, Miller
& Hagen Investments, LLP, a Minnesota limited liability partnership and/or Trans
Leasing, LLC, a Minnesota limited liability company, or from engaging in a
leasing or other business similar to that currently conducted by such entities;
provided, further that the foregoing restrictions shall not apply to Michael D.
Kandris who shall, together with North Star, continue to be bound by the
employment agreement dated July 12, 1995, by and between Mr. Kandris (the
"Kandris Employment Agreement"), which agreement has not been and will not be
amended or modified since its execution, and provided also that Mr. Kandris
shall acknowledge in writing at Closing that Section 20 of his employment
agreement has been satisfied at Closing and North Star has no further Liability
or obligation with respect to Section 20.
10.2 Reasonableness of Restrictions. The parties hereto acknowledge
that Transport America has legitimate business interests to protect and has paid
valuable consideration for the covenants in Section 10. 1. SHAREHOLDER HAS
CAREFULLY READ AND CONSIDERED THE PROVISIONS OF SECTION 10.1 HEREOF AND, HAVING
DONE SO, HEREBY AGREES THAT THE RESTRICTIONS SET FORTH IN SUCH SECTION ARE FAIR
AND REASONABLE AND ARE REASONABLY REQUIRED FOR THE PROTECTION OF THE INTERESTS
OF TRANSPORT AMERICA AND THAT SUCH RESTRAINTS ARE NOT UNDULY HARSH UPON
SHAREHOLDER'S ABILITY TO CONDUCT PROFITABLE BUSINESSES.
10.3 Remedies. The parties hereto agree that Transport America may
suffer irreparable harm from a breach by a Shareholder of any of the covenants
or agreements contained in Section 10.1 hereof, and that monetary damages may be
inadequate to compensate Transport America for any such breach. Accordingly,
each Shareholder agrees that in the event of any breach by the Shareholder of
any of the provisions of Section 10.1 hereof, Transport America or its
Affiliates, successors or assigns shall be entitled to temporary and permanent
injunctive relief to enforce or prevent any violations of the provisions of
Section 10.1 hereof and that such relief may be
<PAGE>
granted without the necessity of proving actual damages. Such injunctive or
equitable relief shall be in addition to and not in lieu of any right to recover
money damages for any such breach.
ARTICLE XI
CONDITIONS TO CLOSING
11.1 Conditions to Obligations of North Star and the Shareholders. The
obligations of North Star and the Shareholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or at
the Closing, of all of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Transport America contained in Article VII
must be true and correct as though made on and as of the Closing Date and
Transport America must, on or before the Closing, have each performed and
complied with all of its obligations, agreements and covenants under this
Agreement which are to be performed or complied with on or before the Closing.
(b) CERTIFICATE. At the Closing, North Star shall have
received a certificate of Transport America certifying a copy of the resolutions
of Transport America's board of directors which authorize the execution,
delivery and performance of this Agreement as having been duly adopted and as
being in full force and effect on the Closing Date.
(c) OPINION. At the Closing, North Star shall have received an
opinion of Lindquist & Vennum P.L.L.P. as to the matters set forth on Exhibit B.
(d) CONSENTS. All consents, approvals, authorizations or
orders of or filings with any governmental agency and/or any other Person
required for the consummation of the transactions contemplated herein,
including, but not limited to, those described in Schedule 5.5 shall have been
obtained or made.
(e) DUE DILIGENCE. North Star shall have completed its Due
Diligence Investigation to its reasonable satisfaction.
(f) HSR ACT. The waiting period applicable to the consummation
of the Stock Purchase under the HSR Act shall have expired or been terminated.
(g) GOVERNMENT ORDER; INJUNCTION. No court, domestic or
foreign, shall have entered and maintained in effect an injunction or other
similar order enjoining consummation of the transactions provided for herein,
and no action or proceeding shall have been instituted and remain pending before
a court or other governmental body by any governmental agency or public
authority to restrain or prohibit the transactions contemplated by this
Agreement, nor shall any governmental agency have notified any party to this
Agreement that consummation of the transactions contemplated hereby would
constitute a violation of the laws of the United States and that it intends to
commence proceedings to restrain the consummation of the transactions
contemplated hereby unless such agency shall have withdrawn such notice prior to
the Closing Date.
<PAGE>
(h) NO ADVERSE CHANGE. Since the date hereof, there shall not
have been any Material Adverse Effect upon Transport America other than changes
in the ordinary course of business which have not materially adversely affected
Transport America's assets or materially decreased the TCA Net Worth other than
borrowings incurred in connection with the transactions contemplated by this
Agreement.
(i) TRANSITION SERVICES AGREEMENT. Transport America, North
Star and certain of its Affiliates shall have entered into a Transition Services
Agreement with respect to the issues and matters identified in Schedule 11.1(i),
which Transition Services Agreement shall be reasonably acceptable to North Star
and its Affiliates affected thereby.
(j) LEASE AGREEMENTS. Transport America or North Star shall
have entered into three separate Lease Agreements, each in a form reasonably
acceptable to North Star, with 789 Company and Miller & Hagen Investments, LLP
with respect to certain facilities and real estate located in Eagan, Minnesota,
and in Roseau and Thief River Falls, Minnesota.
(k) REGISTRATION RIGHTS, AGREEMENT. Transport America and the
Shareholders shall have entered into the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit E.
(l) PURCHASE PRICE. The Shareholders shall have received the
Purchase Price in the amounts and forms provided for in Section 4.1.
(m) TERMINATION OF GUARANTEES. All guarantees of indebtedness
which any of the Shareholders or their Affiliates shall have executed with
respect to any Liability of North Star or Transco shall have been terminated.
(n) APPROVAL BY COUNSEL. All actions, proceedings, instruments
and documents required of Transport America to carry out the transactions
contemplated by this Agreement or incidental thereto in all other legal matters
shall have been reasonably satisfactory to and approved by counsel for the
Shareholders, and such counsel shall have been furnished with such certified
copies of actions and proceedings and such other instruments and documents as
they shall have reasonably requested.
(o) FAIRNESS OPINION. Transport America shall have received a
favorable fairness opinion of an investment banker selected by Transport America
in form and substance reasonably satisfactory to Transport America.
(p) MUTUAL RELEASE. Transport America shall have caused North
Star to execute and deliver to the Shareholders the Mutual Release in the form
of Exhibit C hereto.
11.2 Conditions to Obligations of Transport America. The obligations of
Transport America to consummate the transactions contemplated by this Agreement
are subject to the fulfillment, prior to or at the Closing, of all of the
following conditions:
<PAGE>
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of North Star and the Shareholders contained in
Articles V and VI, respectively, must be true and correct as though made on and
as of the Closing Date and North Star and the Shareholders must, on or before
the Closing, have performed and complied with all of their obligations,
covenants and agreements which are to be performed or complied with on or before
the Closing.
(b) CERTIFICATE. At the Closing, Transport America shall have
received a certificate or certificates of North Star certifying as to matters
reasonably requested by Transport America, including:
(1) a copy of the resolutions of North Star's
board of directors and Shareholders
authorizing the execution, delivery and
performance of this Agreement and the
Reorganization Documents as having been duly
adopted and as being in full force and
effect on the Closing Date; and
(2) a copy of the articles of incorporation and
bylaws of North Star as in effect on the
Closing Date.
(c) OPINION. At the Closing, Transport America shall have
received the opinion of Moss & Barnett, A Professional Association, as to the
matters set forth on Exhibit D.
(d) CONSENTS. All consents, approvals, authorizations or
orders of or filings with any governmental agency and/or any other Person
required for the consummation of the transactions contemplated herein,
including, but not limited to, those described in Schedule 5.5, shall have been
obtained or made.
(e) DUE DILIGENCE. Transport America shall have completed its
Due Diligence Investigation to its reasonable satisfaction.
(f) HSR ACT. The waiting period applicable to the consummation
of the Stock Purchase under the HSR Act shall have expired or been terminated.
(g) GOVERNMENT ORDER; INJUNCTION. No court, domestic or
foreign, shall have entered and maintained in effect an injunction or other
similar order enjoining consummation of the transactions provided for herein,
and no action or proceeding shall have been instituted and remain pending before
a court or other governmental body by any governmental agency or public
authority to restrain or prohibit the transactions contemplated by this
Agreement, nor shall any governmental agency have notified any party to this
Agreement that consummation of the transactions contemplated hereby would
constitute a violation of the laws of the United States and that it intends to
commence proceedings to restrain the consummation of the transactions
contemplated hereby unless such agency shall have withdrawn such notice prior to
the Closing Date.
<PAGE>
(h) NO ADVERSE CHANGE. Since the date hereof, there shall not
have been any Material Adverse Effect upon North Star or Material North Star
Change other than changes in the ordinary course of business consistent with
past practices which have not materially adversely affected North Star's assets
or materially increased the Liabilities of the Acquired Business other than
borrowings incurred in connection with the transactions contemplated by this
Agreement.
(i) TRANSITION SERVICES AGREEMENT. Transport America, North
Star and certain of its Affiliates shall have entered into a Transition Services
Agreement with respect to the issues and matters identified in Schedule 11.1(i),
which Transition Services Agreement shall be reasonably acceptable to Transport
America.
(j) LEASE AGREEMENTS. Transport America or North Star shall
have entered into three separate Lease Agreements, each in a form reasonably
acceptable to Transport America, with 789 Company and Miller & Hagen
Investments, LLP, with respect to certain facilities and real estate located in
Eagan, Minnesota and in Roseau and Thief River Falls, Minnesota. All other real
estate leases by and among North Star or Transco, on one hand, and any of their
respective Affiliates, on the other hand, shall have been terminated.
(k) REGISTRATION RIGHTS AGREEMENT. Transport America and the
Shareholders shall have entered into the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit E.
(l) FAIRNESS OPINION. Transport America shall have received a
favorable fairness opinion of an investment banker selected by Transport America
in form and substance reasonably satisfactory to Transport America.
(m) FINANCIAL INFORMATION. Transport America shall have
received the Financial Information in form and substance satisfactory to
Transport America.
(n) SECURITIES. Transport America shall have received (i)
stock certificates of each Shareholder evidencing all of the issued and
outstanding shares of North Star's Capital Stock, duly endorsed for transfer and
(ii) evidence that all options, warrants, agreements and other rights to
purchase or receive North Star's securities have been terminated or canceled.
(o) REORGANIZATION. The terms and conditions of the
Reorganization Documents and the transactions contemplated thereunder, as well
as the content of all Reorganization Documents, shall be acceptable to Transport
America and the Reorganization shall have been consummated in accordance with
the Reorganization Documents.
(p) TERMINATION OF GUARANTEES. All guarantees of indebtedness
which either North Star or Transco has executed in favor of an Affiliate or a
Shareholder shall have been terminated.
(q) APPROVAL BY COUNSEL. All actions, proceedings, instruments
and documents required of North Star to carry out the transactions contemplated
by this Agreement
<PAGE>
or incidental thereto in all other legal matters shall have been reasonably
satisfactory to and approved by counsel to Transport America and such counsel
shall have been furnished with certified copies of actions and proceedings and
such other instruments and documents as they shall have reasonably requested.
(r) EMPLOYMENT MATTERS. Michael D. Kandris shall have executed
and delivered an acknowledgment pursuant to Section 10.1 hereof in a form
reasonably acceptable to Transport America. Arve Moser shall have executed a
release in favor of North Star and Transport America in a form reasonably
acceptable to Transport America, including, among other things, a release of Mr.
Moser's severance obligations and any claims against North Star or Transco
except with respect to Mr. Moser's accrued employee benefits under North Star's
written Employee Plans and Mr. Moser's accrued payroll and bonus up to the date
of Closing (which, unless paid on or before the Closing, shall be accrued on the
Audited Statement and remain an obligation of North Star). Jon L. Miller, Wayne
L. Czeh and William I. Hagen shall have resigned as directors, officers and
employees of North Star and Transco, as applicable. Dennis R. McCabe shall have
resigned as an officer and employee of North Star and shall have executed a
release in favor of North Star and Transport America in a form reasonably
acceptable to Transport America, except with respect to matters identified in
the Transition Services Agreement.
(s) EMPLOYEE BENEFIT MATTERS. The Employee Plans of North Star
and Transco shall have been transferred or otherwise assigned as provided in the
Transition Services Agreement.
(t) MUTUAL RELEASE. The Shareholders shall have executed and
delivered to Transport America the Mutual Release in the form of Exhibit C
hereto.
ARTICLE XII
TERMINATION AND FEES
12.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of North Star and Transport
America; or
(b) by either North Star or Transport America if the Stock
Purchase shall not have been consummate by July 31, 1998 (provided that the
right to terminate this Agreement under this Section 12.1(b) shall not be
available to a party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Stock Purchase
to occur on or before such date); or
(c) by either North Star or Transport America if a court of
competent jurisdiction, administrative agency, or commission or other
governmental authority or instrumentality shall have issued a nonappealable
final order, decree, or ruling or taken any other action, in each case having
the effect of permanently restraining, enjoining, or otherwise
<PAGE>
prohibiting the Stock Purchase, except, if the party relying on such order,
decree, or ruling or other action has not complied with its legal obligations
under this Agreement;
(d) by North Star or Transport America, if there has been a
material breach of any representation, warranty, covenant, or agreement on the
part of the other party set forth in this Agreement, which breach shall not have
been cured or waived prior to the Closing;
(e) by North Star, if the Average Closing Price is equal to or
less than $8.00 (assuming the Closing Date is July 31, 1998 for purposes of
measuring the Average Closing Price under this subsection); or
(f) by Transport America, if the Average Closing Price is
equal to or greater than $24.00 (assuming the Closing Date is July 31, 1998 for
purposes of measuring the Average Closing Price under this subsection).
12.2 Effect of Termination. In the event of termination of
this Agreement as provided in Section 12.1, this Agreement shall immediately
become void and there shall be no liability or obligation on the part of North
Star, Transport America or their respective officers directors, shareholders, or
Affiliates, except as set forth in Section 12.3; provided that the provisions of
Sections 12.3 and 8.2 (with respect to confidentiality) of this Agreement shall
remain in full force and effect and survive any termination of this Agreement,
provided, however, that in the event of the termination of this Agreement caused
by a breach of a party, the party whose breach was the basis for termination
will not be relieved from any Liability for its breach. If this Agreement is
terminated for any reason pursuant to Section 12.1 hereto, each party shall
return all documents and materials which shall have been furnished by or on
behalf of the other party, and each party hereto covenants that it will not,
directly or indirectly, use or disclose to any Person any confidential or
proprietary information about the other party or any information about the
transactions contemplated hereby except insofar as may be necessary to assert
its rights hereunder.
12.3 Fees and Expenses.
(a) Except as set forth in this Section 12.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Stock Purchase is consummated; provided, however, it is hereby
acknowledged and agreed that any and all attorney's fees, accounting fees and
disbursements incurred by North Star and/or the Shareholders may be paid by
North Star on or before the Closing Date.
(b) Except as provided in Section 12.3(d), North Star shall
pay Transport America a termination fee of One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Termination Fee") and shall reimburse Transport
America for its out-of-pocket costs and expenses (including reasonable
attorneys' fees) incurred in the preparation, negotiation and due diligence
performed in connection with this Agreement and the transactions contemplated
hereby if the Stock Purchase has not been consummated as contemplated by this
Agreement and North
<PAGE>
Star enters into or signs a proposal, term sheet, letter of intent, agreement or
similar written instrument, however titled, with respect to an Alternative
Transaction, in each case during the period commencing on the date hereof and
ending twelve months from the date hereof.
(c) The Termination Fee and fees payable pursuant to this
Article XII shall be paid within thirty (30) days after the event giving rise to
the obligation to pay such amount.
(d) North Star shall not be obligated to pay the Termination
Fee it would otherwise be obligated to pay pursuant to Section 12.3(b) if (i)
Transport America has elected not to proceed to Closing as a result of its Due
Diligence Investigation and all representations, warranties and covenants of
North Star are true and correct in all material respects; (ii) Transport
America's Board of Directors has been unable to obtain a favorable updated
fairness opinion; (iii) any of the conditions precedent to the obligations of
the Shareholders to proceed with the consummation of the Stock Purchase has not
been satisfied; or (iv) this Agreement is terminated pursuant to Section 12.1,
except for a termination by Transport America pursuant to Section 12.1(d).
ARTICLE XIII
INDEMNIFICATION
13.1 Survival of Representations and Warranties. The representations
and warranties of North Star and Transport America, contained in Sections 5.1,
5.2, 5.3, 5.4, 5.5, 5.6, 5.8, 5.25, 7.1, 7.2, 7.3, 7.4, 7.5, 7.13 and 7.15 of
this Agreement, shall survive the Closing hereunder (even if the damaged Party
knew or had reason to know of any misrepresentations or breach of warranty at
the time of Closing) and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations). All other representations,
warranties, covenants and agreements of Transport America, North Star and each
Shareholder contained in this Agreement or any agreement, certificate or
document executed and delivered in connection with the transactions contemplated
herein shall survive the Closing hereunder (even if the damaged Party knew or
had reason to know of any misrepresentation or breach) and continue in full
force and effect for a period of two (2) years thereafter, after which no claim
for the breach of any representation or warranty contained in this Agreement,
and no litigation with respect thereto may be commenced, and no party shall have
any Liability or obligation with respect thereto, unless the indemnified party
gave written notice to the indemnifying party specifying with particularity the
representation or warranty claimed to have been breached on or before the
expiration of such period.
13.2 Indemnification by North Star and Shareholders. In the event North
Star or any Shareholder breaches any of its representations, warranties,
covenants or agreements contained in any of the Transaction Documents, the
Shareholders, jointly and severally, agree to indemnify Transport America from
and against the entirety of any Adverse Consequences Transport America may
suffer through and after the date of the claim for indemnification resulting
from, arising out of or caused by the breach, subject to the limitations of
Section 13.4. In addition and without regard to the limitations in Sections 13.1
and 13.4 hereof, the Shareholders, jointly and severally, agree to indemnify and
hold Transport America, North Star, and Transco harmless
<PAGE>
from and against the entirety of any Adverse Consequences Transport America,
North Star or Transco may ever suffer after the Closing Date as a result of (i)
any failure of North Star, Transco or any other Affiliate of the Shareholders to
comply with the Environmental Laws or Regulations on or before the Closing Date
or (ii) the release by North Star, Transco or any other Affiliate of the
Shareholders of any Regulated Substance on any Facility of North Star or Transco
on or before the Closing Date.
13.3 Indemnification by Transport America. In the event Transport
America breaches any of its representations, warranties, covenants or agreements
contained in any of the Transaction Documents, Transport America agrees to
indemnify the Shareholders from and against the entirety of any Adverse
Consequences the Shareholders may suffer through and after the date of the claim
for indemnification resulting from, arising out of or caused by the breach,
subject to the limitations of Section 13.4.
13.4 Limitation on Indemnification. Neither North Star or the
Shareholders on the one hand, nor Transport America on the other, shall be
liable for indemnification for any breach of its representations and warranties
contained in this Agreement unless the aggregate amount of the Adverse
Consequences incurred by the other as a result of such breach exceed Two Hundred
Fifty Thousand Dollars ($250,000). Once the aggregate Adverse Consequences
exceed such amount, the indemnifying party shall provide indemnification for all
Adverse Consequences incurred by the other in excess of such amount. It is
hereby acknowledged and agreed that the Financial Information contains and the
Audited Statement will contain certain reserves for certain claims, proceedings
and other Liabilities which are pending or threatened against and/or have been
incurred by North Star. Historically, such claims, proceedings or other
Liabilities are settled or otherwise resolved through the payment of sums which
are either greater to, less than or equal to the amounts reserved in the
financial statements for North Star. Accordingly, notwithstanding any provision
of this Agreement to the contrary, the Shareholders shall not have any
indemnification obligations to Transport America with respect to any claims,
proceedings or other Liabilities pending or threatened against and/or incurred
by North Star so long as the aggregate amount of the reserves contained in the
Financial Information and/or Audited Statement with respect to such claims,
proceedings and other Liabilities exceeds the aggregate amounts paid in
settling, discharging or otherwise disposing of such claims, proceedings or
other Liabilities. Once the aggregate amounts paid exceeds the aggregate amount
of the reserves, the indemnification obligations of the Shareholders shall,
subject to the other provisions of this Section 13.4, be limited to Adverse
Consequences incurred in settling or otherwise disposing of such claims,
proceedings or other Liabilities in excess of the aggregate reserves.
13.5 Method of Asserting Claims. As used herein, an "Indemnified
Party," shall refer to Transport America or the Shareholders, as applicable, who
has suffered an Adverse Consequence subject to indemnification, the "Notifying
Party" shall refer to the party hereto whose Indemnified Parties are entitled to
indemnification hereunder, and the "Indemnifying Party" shall refer to the party
hereto obligated to indemnify such Notifying Party's Indemnified Parties.
<PAGE>
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party, the liability or the costs or expenses of which
are Adverse Consequences (any such third party action or proceeding being
referred to as a "Claim"), the Notifying Party shall give the Indemnifying Party
prompt notice thereof. The Indemnifying Party shall be entitled to contest and
defend such Claim; provided, that the Indemnifying Party (i) has a reasonable
basis for concluding that such defense may be successful in whole or in part and
(ii) diligently contests and defends such Claim. Notice of the intention so to
contest and defend shall be given by the Indemnifying Party to the Notifying
Party within 20 business days after the Notifying Party's notice of such Claim
(but, in all events, at least five business days prior to the date that an
answer to such Claim is due to be filed). Such contest and defense shall be
conducted by reputable attorneys employed by the Indemnifying Party. The
Notifying Party shall be entitled at any time, at its own cost and expense
(which expense shall not constitute an Adverse Consequence unless legal counsel
to the Indemnifying Party reasonably determines that because of a conflict of
interest, it may not adequately represent the material interests of the
Indemnified Parties, and only to the extent that such expenses are reasonable),
to participate in such contest and defense and to be represented by attorneys of
its or their own choosing. If the Notifying Party elects to participate in such
defense, the Notifying Party will cooperate with the Indemnifying Party in the
conduct of such defense. Neither the Notifying Party nor the Indemnifying Party
may concede, settle or compromise any Claim without the consent of the other
party, which consents will not be unreasonably withheld, delayed or conditioned.
Notwithstanding the foregoing, (i) if a Claim seeks equitable relief or (ii) if
the subject matter of a Claim relates to the ongoing business of any of the
Indemnified Parties, would materially adversely affect the ongoing business or
reputation of any of the Indemnified Parties, then, in each such case, the
Indemnified Parties alone shall be entitled to contest, defend and settle such
Claim in the first instance and, if the Indemnified Parties do not contest,
defend or settle such Claim, the Indemnifying Party shall then have the right to
contest, defend and settle such Claim.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party that does not involve a Claim, the Notifying
Party shall deliver a notice of such claim with reasonable promptness to the
Indemnifying Party. If the Indemnifying Party notifies the Notifying Party that
it does not dispute the claim described in such notice or fails to notify the
Notifying party within 30 days after receipt of such notice by the Indemnifying
Party whether the Indemnifying Party disputes the claim described in such
notice, an Adverse Consequence in the amount specified in the Notifying Party's
notice will be conclusively deemed a liability of the Indemnifying Party and the
Indemnifying Party shall pay the amount of such Adverse Consequence to the
Indemnified Party on demand. If the Indemnifying Party has timely disputed its
Liability with respect to such claim, representatives of each of the
Indemnifying Party and the Notifying Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through the
negotiations of such representatives within 60 days after the delivery of the
Notifying Party's notice of such claim, such dispute shall be resolved fully and
finally in Minneapolis, Minnesota by an arbitrator selected pursuant to, and an
arbitration governed by, the Commercial Arbitration Rules of the American
Arbitration Association. The arbitrator shall resolve the dispute within 30 days
after selection and judgment upon the award rendered by such arbitrator may be
entered in any court of competent jurisdiction.
<PAGE>
(c) Notwithstanding any of this Agreement to the contrary,
Transport America shall not concede, settle or compromise or permit North Star
to concede, settle or compromise any Claim which is pending or threatened
against North Star as of the Closing Date for an amount in excess of one hundred
five percent (105%) of the amount reserved by North Star with respect to such
Claim as of the Closing Date without the prior written consent of the
Shareholders' Representatives, which consent shall not be unreasonably withheld,
delayed or conditioned.
13.6 Limitation on Rights Against Transport America and North Star.
Subject to Section 13.4, with respect to any amounts for which Transport America
is entitled to indemnification pursuant to this Agreement, neither North Star
nor the Shareholders shall be entitled to indemnification or contribution from
Transport America, North Star or their successors or assigns, whether pursuant
to North Star's, Transport America's or their successor's or assign's Articles
of Incorporation, Bylaws, insurance policies or otherwise.
ARTICLE XIV
OTHER PROVISIONS
14.1 Further Assurances. At such time and from time to time on and
after the Closing Date upon request by any party, the other parties will
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances that may be required
or to otherwise carry out the purposes of this Agreement.
14.2 Complete Agreement. The Schedules and Exhibits to this Agreement
shall be construed as an integral part of this Agreement to the same extent as
if they had been set forth verbatim herein. The Transaction Documents constitute
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements whether written or oral
relating hereto.
14.3 Waiver, Discharge. The failure of any party hereto to enforce at
any time any of the provisions of this Agreement, and the Closing hereof, shall
in no way be construed to be a waiver of any such provision, nor in any way to
affect the validity of this Agreement or any part thereof or the right of the
party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to be a waiver of any other or subsequent
breach.
14.4 Notices. All notices or other communications to a party required
or permitted hereunder shall be in writing and shall be delivered personally or
by telecopy to such party (or, in the case of an entity, to an executive officer
of such party) or shall be given by certified mail, postage prepaid with return
receipt requested, addressed as follows:
if to Transport America: Transport Corporation of America, Inc.
1769 Yankee Doodle Road Eagan, MN 55121
Attention: Robert J. Meyers, President
Fax: (612) 686-2565
<PAGE>
with a copy to: Lindquist & Vennum PLLP
4200 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Attention: John R. Houston
Fax: (612) 371-3207
if to North Star or the Shareholders:
Jon L. Miller
Roseau Diesel Service, Inc.
112 2nd St. S.W.
P.O. 357
Roseau, MN 56751
Fax: (218) 463-1734
William I. Hagen
Roseau Diesel Service, Inc.
112 2nd St. S.W.
P.O. 357
Roseau, MN 56751
Fax: (218) 463-1734
with a copy to: Moss & Barnett
4800 Norwest Center
Minneapolis, MN 55402
Attention: Mitchell H. Cox, Esq.
Fax: (612) 339-6686
Any party may change the above specified recipient and/or mailing
address by notice to all other parties given in the manner herein prescribed.
All notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by mail).
14.5 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Minnesota, including all matters of
construction, validity, performance and enforcement, without giving effect to
principles of conflict of laws.
14.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or assigns of the
parties hereto; provided that no party may assign its rights herein or delegate
its duties hereunder without the prior written consent of the other parties.
14.7 Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
<PAGE>
14.8 Extension, Waiver. The parties hereto, may to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement of a party hereto to any such
extension or waiver with respect to another party shall be valid only if set
forth in a written instrument signed by such party.
14.9 Titles and Headings, Construction. The Table of Contents, titles
and headings to Sections herein are inserted for the convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. This Agreement shall be construed without
regard to any presumption or other rule requiring construction hereof against
the party causing this Agreement to be drafted.
14.10 Benefit. Nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together, when delivered, shall constitute one instrument.
14.12 Attorney-in-Fact for Shareholders. Each Shareholder appoints Jon
L. Miller and William I. Hagen as such Shareholder's true and lawful
attorney-in-fact and agent (each, a "Shareholders' Representative"), with full
power of substitution and resubstitution, for such Shareholder and in such
Shareholder's name, place and stead to act on behalf of such Shareholder to
resolve matters arising in connection with this Agreement. In furtherance of the
foregoing, each Shareholder grants to the Shareholders' Representatives, acting
jointly, full authority to amend the Agreement, waive any provision of the
Agreement, settle or compromise any claim, authorize any payment, and take any
action in connection with the Agreement. In the event of the death or incapacity
of either Jon L. Miller or William I. Hagen, each Shareholder appoints Wayne L.
Czeh to succeed either Shareholders' Representative as the Shareholders'
Representative hereunder with the full authority granted by this Section.
14.13 Cooperation. Transport America, Shareholders and North Star shall
cooperate with each other and shall cause their officers, employees, agents and
representatives to cooperate with each other for a period of 180 calendar days
after the Closing to ensure the orderly transition of the Acquired Business to
Transport America and to minimize the disruption of the Acquired Business
resulting from the transactions contemplated hereby. Without limiting the
generality of the foregoing, North Star and the Shareholders shall at all times
provide Transport America with such financial information as Transport America
may reasonably request for use in connection with the audits and reviews of
Transport America's financial statements.
14.14 Preservation of and Access to Records. All books and records of
North Star shall be preserved by Transport America for a period of six (6) years
after the Closing Date. Such
<PAGE>
records shall be made available to the Shareholders and their representatives at
all reasonable times during normal business hours of Transport America during
said six (6) year period with the right at their expense to make abstracts from
and copies thereof.
14.15 Sales Taxes. Transport America agrees to pay in full any and all
federal, state, local and foreign sales taxes, use taxes or other similar taxes
as and when the same may be due, which may be imposed upon or arise out of the
consummation of the transactions contemplated hereby, other than any Taxes
payable in connection with or as a result of the Reorganization.
<PAGE>
IN WITNESS WHEREOF, Transport America, North Star, and the
Shareholders have caused this Agreement to be signed by their respective duly
authorized officers on the date first above written.
TRANSPORT CORPORATION OF AMERICA,
INC.
By
----------------------------------------
Its
--------------------------------------
NORTH STAR TRANSPORT, INC.
By
----------------------------------------
Its
--------------------------------------
SHAREHOLDERS:
-------------------------------------------
Jon L. Miller
-------------------------------------------
William I. Hagen
-------------------------------------------
Michael D. Kandris
<PAGE>
THE WILLIAM M. HAGEN TRUST CREATED
UNDER AGREEMENT DATED APRIL 15, 1998
By
----------------------------------------
William I. Hagen
Its Trustee
THE MITCHELL A. MILLER TRUST CREATED
UNDER AGREEMENT DATED AUGUST 24,
1994
By
----------------------------------------
Jon L. Miller
Its Trustee
THE WILLIAM M. HAGEN QSST TRUST
CREATED UNDER AGREEMENT DATED
DECEMBER 30, 1994
By
----------------------------------------
Wayne L. Czeh
Its Trustee
THE SUSAN L. MILLER QSST TRUST
CREATED UNDER AGREEMENT DATED
DECEMBER 30, 1994
By
----------------------------------------
Vivian Y. Miller
Its Trustee
THE SALLY MILLER BROTEN QSST TRUST
CREATED UNDER AGREEMENT DATED
DECEMBER 30, 1994
By
----------------------------------------
Vivian Y. Miller
Its Trustee
<PAGE>
THE LISA D. BLEDSOE QSST TRUST
CREATED UNDER AGREEMENT DATED
DECEMBER 30, 1994
By
----------------------------------------
Vivian Y. Miller
Its Trustee
THE MICHAEL J. MILLER QSST TRUST
CREATED UNDER AGREEMENT DATED
DECEMBER 30, 1994
By
----------------------------------------
Vivian Y. Miller
Its Trustee
THE MITCHELL A. MILLER QSST TRUST
CREATED UNDER AGREEMENT DATED
DECEMBER 30, 1994
By
----------------------------------------
Vivian Y. Miller
Its Trustee
THE LORI ANN HAGEN MINARD QSST
TRUST CREATED UNDER AGREEMENT
DATED DECEMBER 30, 1994
By
----------------------------------------
Wayne L. Czeh
Its Trustee
<PAGE>
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
This Amendment No. 1 to Stock Purchase Agreement is made and entered
into this 30th day of June, 1998, by and among TRANSPORT CORPORATION OF AMERICA,
INC., a Minnesota corporation ("Transport America"), NORTH STAR TRANSPORT, INC.,
a Minnesota corporation ("North Star"), and the shareholders of North Star
listed on Schedule 5.2 to the Stock Purchase Agreement dated as of May 20, 1998
(referred to collectively as the "Shareholders").
WHEREAS, Transport America, North Star and the Shareholders are parties
to a Stock Purchase Agreement dated as of May 20, 1998 (the "Stock Purchase
Agreement"); and
WHEREAS, the parties hereto desire to amend the Stock Purchase
Agreement in certain respects; and
WHEREAS, the Shareholder Representatives are duly authorized to execute
and deliver this Amendment on behalf of the Shareholders pursuant to Section
14.12 of the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, conditions,
and agreements herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
Section 1. Definitions. Capitalized terms used herein and not otherwise
defined herein, but which are defined in the Stock Purchase Agreement, shall
have the meanings ascribed to such terms in the Stock Purchase Agreement unless
the context otherwise requires.
Section 2. Delivery of Schedule Amendments.
2.1 Transport America hereby acknowledges receipt of updates
to the Stock Purchase Agreement Schedules, attached hereto as Exhibit A, from
North Star, pursuant to Section 8.8 of the Stock Purchase Agreement.
2.2 North Star hereby acknowledges receipt of updates to the
Stock Purchase Agreement Schedules, attached hereto as Exhibit B, from Transport
America, pursuant to Section 8.8 of the Stock Purchase Agreement.
Section 3. Amendment to Stock Purchase Agreement. Transport, North Star
and the Shareholder Representatives hereby agree that the Stock Purchase
Agreement shall be amended to include the updates to the Schedules contained in
Exhibit A and Exhibit B.
Section 4. Further Amendment to Stock Purchase Agreement. Transport
America, North Star and the Shareholder Representatives hereby agree that the
Stock Purchase Agreement be further amended by adding the following to the end
of the definition of Transaction Documents contained in Section 1.1 of the Stock
Purchase Agreement:
<PAGE>
"..., and the Transition Services Agreement for Employee Benefits by
and among Transport America, North Star and certain Affiliates of North
Star."
Section 5. Further Amendment to Stock Purchase Agreement. Transport
America, North Star and the Shareholder Representatives hereby agree that the
Stock Purchase Agreement be further amended by revising the first sentence of
Section 13.2 of the Stock Purchase Agreement to read as follows:
"In the event North Star, any Shareholder or an Affiliate of a
Shareholder breaches any of its representations, warranties, covenants
or agreements contained in any of the Transaction Documents, the
Shareholders, jointly and severally, agree to indemnify Transport
America from and against the entirety of any Adverse Consequences
Transport America may suffer through and after the date of the claim
for indemnification resulting from, arising out of or caused by the
breach, subject to the limitations of Section 13.4."
Section 6. Further Amendment to Stock Purchase Agreement. Transport
America, North Star and the Shareholder Representatives hereby agree that the
Stock Purchase Agreement be further amended by adding the following language to
the end of Section 8.9:
"Transport America and the Shareholders agree that for purposes of
completing the Form 8023, the purchase price will be allocated among
North Star's assets in accordance with the regulations promulgated
under Section 338 of the Code. Further, for purposes of completing the
Form 8023, the purchase price shall be $35,000,000 less the value of
the Hold-Back Shares (calculated at $16.00 per share) retained by
Transport America, if any. If a change in the $16.00 value per share
were later determined as a result of a tax audit of the Shareholders,
Transport America or North Star, the Shareholders and Transport
America, as the case may be, agree promptly to notify the other party
hereto of such change. Furthermore, Transport America and the
Shareholders agree that the fair market value of the Tangible Property
and Covenant Not To Compete will be the fair market value as agreed to
and reflected on Schedule 8.9 to this Agreement, subject to any
reductions in the fair market value of the Tangible Property for any
assets that may have been disposed of prior to Closing. The method of
determining the fair market value of all other assets will be as
described on Schedule 8.9 to this Agreement. Transport America and the
Shareholders further agree that Transport America shall be responsible
for preparing the Form 8023 subsequent to the Closing and will obtain
information as required from North Star and the Shareholders necessary
to complete the Form. Transport America will provide the Shareholders
the opportunity to review and comment on the completed Form 8023 for a
period of up to thirty (30) days prior to its timely filing with the
Internal Revenue Service.
Section 7. Counterparts. This Amendment No. 1 to the Stock Purchase
Agreement may be executed in any number of counterparts, each of which shall be
deemed as original and all of which together, when delivered, shall constitute
one instrument.
<PAGE>
IN WITNESS WHEREOF, Transport America, North Star, and the Shareholders
have caused this Amendment No. 1 to the Stock Purchase Agreement to be signed by
their respective duly authorized officers or representatives on the date first
above written.
TRANSPORT CORPORATION OF AMERICA,
INC.
By
----------------------------------------
Its
--------------------------------------
NORTH STAR TRANSPORT, INC.
By
----------------------------------------
Its
--------------------------------------
SHAREHOLDER REPRESENTATIVES:
-------------------------------------------
Jon L. Miller
-------------------------------------------
William I. Hagen
EXHIBIT 2.2
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
among
TRANSPORT CORPORATION OF AMERICA, INC.,
and
THE SHAREHOLDERS NAMED HEREIN
---------------------------
Dated: June 30, 1998
----------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Definitions...............................................................1
2. General: Securities Subject to this Agreement.............................2
3. Demand Registration.......................................................3
(a) Request for Demand Registration..................................3
(b) Demand Registration Participation Rights.........................3
(c) Effective Demand Registration....................................4
(d) Expenses.........................................................4
(e) Underwriting.....................................................4
(f) Prior Registration Rights under the Conversion Agreement.........5
4. Incidental or "Piggy-Back" Registration...................................6
(a) Request for Incidental Registration..............................6
(b) Expenses.........................................................6
(c) Prior Registration Rights Under the Conversion Agreement.........7
5. Holdback Agreements.......................................................7
(a) Restrictions on Public Sale by Designated Holders................7
(b) Restrictions on Public Sale by the Company.......................7
6. Registration Procedures...................................................7
(a) Obligations of the Company.......................................7
(b) Obligations of the Designated Holders............................9
(c) Notice to Discontinue............................................9
7. Indemnification; Contribution............................................10
(a) Indemnification by the Company..................................10
(b) Indemnification by Designated Holders...........................10
(c) Conduct of Indemnification Proceedings..........................10
(d) Contribution....................................................11
(e) Limitations on Indemnification and Contribution.................12
8. Rule 144.................................................................12
9. Miscellaneous............................................................12
(a) Holder of Registrable Securities................................12
<PAGE>
(b) Amendments and Waivers..........................................12
(c) Notices.........................................................12
(d) Successors and Assigns, Third Party Beneficiaries...............13
(e) Counterparts....................................................13
(f) Headings........................................................14
(g) Governing Law...................................................14
(h) Severability....................................................14
(i) Entire Agreement................................................14
Schedule 1: North Star Shareholders
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated June 30, 1998 (this "Agreement"),
by and among Transport Corporation of America, Inc, a Minnesota corporation (the
"Company"), and the shareholders listed on Schedule 1 hereto (individually, a
"Shareholder" and collectively, the "Shareholders").
This Agreement is made in connection with the Stock Purchase Agreement,
dated as of May 20, 1998, by and among the Company, North Star Transport, Inc.,
a Minnesota corporation ("North Star"), and the Shareholders (the "Purchase
Agreement"), pursuant to which the Company will acquire all of the outstanding
capital stock of North Star and the Shareholders will receive Common Stock of
the Company as a portion of the consideration for their North Star shares. In
order to induce North Star and the Shareholders to enter into the Purchase
Agreement, the Company has agreed to grant registration rights with respect to
the Registrable Securities (as hereinafter defined) as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premise, mutual
promises and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement the following capitalized
terms have the meanings stated below, which shall be applicable equally to the
singular and plural forms of the terms so defined. Capitalized terms used and
not otherwise defined in this Agreement shall have the meanings provided in the
Purchase Agreement.
"Common Stock" means the Common Shares, par value $.01 per share, of
the Company or any other equity securities of the Company into which such
securities are converted, reclassified, reconstituted or exchanged.
"Company" has the meaning assigned to such term in the recital to this
Agreement.
"Conversion Agreement" means that certain Preferred Stock Conversion
Agreement by and among the Company and the investors named therein, dated March
24, 1992.
"Demand Registration" has the meaning set forth in Section 3(a) of this
Agreement.
"Designated Holder" means any Person or Persons to whom Registrable
Securities were originally issued or, subject to Section 9(d), Permitted
Transferees who hold Registrable Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
<PAGE>
"Incidental Registration" has the meaning set forth in Section 4(a) of
this Agreement.
"Indemnified Party" has the meaning set forth in Section 7(c) of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 7(c) of this
Agreement.
"Initiating Holder" has the meaning set forth in Section 3(a) of this
Agreement.
"Permitted Transferee" has the meaning set forth in Section 9(d) of
this Agreement.
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, limited liability company, government (or an
agency or political subdivision thereof) or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.
"Purchase Agreement" has the meaning assigned to such term in the
recital to this Agreement.
"Registrable Securities" means each of the following: (a) any and all
shares of Common Stock issued by the Company pursuant to the Purchase Agreement
and (b) any shares of Common Stock issued or issuable with respect to shares of
Common Stock referred to in clause (a) as a result of a stock dividend, stock
split, combination, recapitalization, merger, consolidation or other
reorganization or otherwise.
"Registration Statement" means a registration statement filed pursuant
to the Securities Act.
"SEC" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
2. General: Securities Subject to this Agreement.
(a) The Company hereby grants registration rights to the
Shareholders upon the terms and conditions set forth in this Agreement.
(b) For the purposes of this Agreement, Registrable Securities
will cease to be Registrable Securities when (i) a Registration Statement
covering such Registrable Securities has been declared effective under the
Securities Act by the SEC and such Registrable Securities have been disposed of
pursuant to such effective Registration Statement, (ii) the entire amount of
Registrable Securities proposed to be sold by a Designated Holder in a single
sale, in the opinion
<PAGE>
of counsel satisfactory to the Company and the Designated Holder, each in their
reasonable judgment, may be distributed to the public without any limitation as
to volume pursuant to Rule 144 (or any successor provision then in effect) under
the Securities Act, (iii) the Registrable Securities are proposed to be sold or
distributed by a Person not entitled to the registration rights granted by this
Agreement, or (iv) the Registrable Securities are, transferred, sold or
distributed to a Person that is not a Permitted Transferee.
3. Demand Registration.
(a) Request for Demand Registration. At any time after the
Closing Date until the fifth (5th) anniversary of the Closing Date, any holder
or holders of greater than twenty-five percent (25%) of the outstanding
Registrable Securities (the "Initiating Holder(s)") may make a written request
to the Company to register, under the Securities Act (other than pursuant to a
Registration Statement on Form S-4 or S-8 or any successor form thereto) and
under the securities or "blue sky" laws of any jurisdiction designated by such
holder or holders (a "Demand Registration"), the number of Registrable
Securities stated in such request; provided, however, that the Company shall not
be obligated to effect more than two (2) Demand Registrations pursuant to this
Section 3. If at the time of any request to register Registrable Securities
pursuant to this Section 3(a), the Company is engaged in, or has fixed plans to
engage in within ninety (90) days of the time of such request, a registered
public offering or is engaged in any other activity which, in the good faith
determination of the Board of Directors of the Company, would be adversely
affected by the requested registration to the serious detriment of the Company,
then the Company may at its option direct that such request be delayed for a
reasonable period not in excess of six (6) months from the effective date of
such offering or the date of completion of such other activity, as the case may
be, such right to delay a request to be exercised by the Company not more than
once in any one-year period. In addition, the Company shall not be required to
effect any registration within ninety (90) days after the effective date of any
other Registration Statement of the Company. Each request for a Demand
Registration by the Initiating Holder(s) shall state the amount of the
Registrable Securities proposed to be sold and the intended method of
disposition thereof. Upon a request for a Demand Registration, the Company shall
promptly take such steps as are necessary or appropriate to prepare for the
registration of the Registrable Securities to be registered.
(b) Demand Registration Participation Rights.
(i) Each of the Designated Holders may participate in any
Demand Registration pursuant to this Section 3. Within ten (10) days after the
date of the request for a Demand Registration from the Initiating Holder(s) to
the Company, the Company shall give written notice thereof to all of the
Designated Holders (other than the Initiating Holder(s)), with a copy of the
same sent to the Initiating Holder(s).
(ii) The Company shall include in the Demand Registration
all of the Registrable Securities held by those Designated Holders from whom the
Company has received a
<PAGE>
written request for inclusion therein within twenty (20) days of the date of the
written notice referred to clause (i) above. Each such request by such
Designated Holders shall specify the number of Registrable Securities proposed
to be registered and the intended method of disposition thereof; and
(iii) The failure of any Designated Holder to respond
within such 20- day period referred to in clause (ii) above shall be deemed to
be a waiver of such Designated Holder's rights to participate in the offering
which is the subject of the notice under this Section 3, provided that any
Designated Holder may waive its rights under this Section 3 with respect to such
offering prior to the expiration of such 20-day period by giving written notice
to the Company, with a copy to the Initiating Holder(s).
(c) Effective Demand Registration. The Company shall use its
best efforts to cause any Demand Registration to become and remain effective as
soon as practicable, but in any event not later than 120 days after it receives
a request under Section 3(a) hereof. At the request of the Initiating Holder(s),
the Demand Registration shall be a "Shelf" Registration under Rule 415
promulgated pursuant to the Securities Act. A registration shall not constitute
a Demand Registration until it has become effective and remains continuously
effective for the lesser of (i) the period during which all Registrable
Securities registered in the Demand Registration are sold and (ii) 180 days.
Except as may be required by Section 6(c), the Company shall not be required to
maintain the effectiveness of a Registration Statement under this Section 3 for
more than 180 days.
(d) Expenses. All fees, costs and expenses incurred by the
Company in connection with any Demand Registration pursuant to this Section 3,
including without limitation, all registration, filing and qualification fees,
printing expenses, accounting fees, and fees and disbursements of counsel for
the Company shall be born by the holders of Registrable Securities participating
in the registration whether or not such registration becomes effective. If any
holder of registrable securities under the Conversion Agreement (the "Conversion
Agreement Holders") participates in the Demand Registration pursuant to Section
3(f) hereof, the Company's obligations with respect to the payment of expenses
to the Conversion Agreement Holders shall be governed by the Conversion
Agreement. In such case and with respect to expenses that inure to the benefit
of both the holders of Registrable Securities and the Conversion Agreement
Holders, such as printing, registration and accounting fees (the "Shared
Expenses"), the holders of Registrable Securities shall only be obligated to pay
their pro rata share of such expenses, calculated by multiplying the total
amount of the Shared Expenses by a fraction, the numerator of which equals the
aggregate number of Registrable Securities included in such registration and the
denominator of which is the aggregate number of all securities included in such
registration.
(e) Underwriting. If the Initiating Holders holding a majority
of the Registrable Securities held by all of the Initiating Holders to which the
requested Demand Registration relates so elect and notify the Company of such
election as part of their request
<PAGE>
made pursuant to Section 3(a), the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of a firm commitment
underwritten offering and the managing underwriter or underwriters selected for
such offering shall be selected by the Company and concurred in by the
Initiating Holder(s), whose concurrence shall not be unreasonably withheld,
delayed or conditioned.(the "Approved Underwriter"). In connection with any
Demand Registration under this Section 3 involving an underwriting, none of the
Registrable Securities held by any Designated Holder making a request for
inclusion of such Registrable Securities pursuant to Section 3(b) hereof shall
be included in such underwriting unless such Designated Holder accepts the terms
of the underwriting as agreed upon by the Company, the Initiating Holders and
the Approved Underwriter. The Company shall (together with all holders of
Registrable Securities proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
Approved Underwriter, provided that such underwriting agreement shall not
provide for indemnification or contribution obligations of the Company toward
the holders of Registrable Securities greater than as set forth in Section 7(a).
Notwithstanding any other provision of this Section 3, if the Approved
Underwriter advises the Company that marketing factors require a limitation of
the number of shares to be underwritten or that the inclusion of all Registrable
Securities requested to be included in the Demand Registration would materially
adversely affect the offering, the Company shall so advise all holders of
Registrable Securities proposed to be sold in the offering, and the number of
shares of Registrable Securities that may be included in the Demand Registration
and underwriting shall be limited to the number advised by the Approved
Underwriters and shall be allocated among all holders of Registrable Securities
proposed to be included therein (and, if participating in the Demand
Registration, Conversion Agreement Holders) in proportion, as nearly as
practicable, to the respective amounts of such securities held by such holders.
In the event that such allocation causes the holders of Registrable Securities
desiring to participate in such distribution to be able to include less than 75%
of the Registrable Securities proposed to be included in such offering, such
offering will not be counted for purposes of the limitation on the number of
offerings under Section 3(a) above. If any Designated Holder disapproves of the
terms of the underwriting, such holder may elect to withdraw therefrom by
written notice to the Company, the Approved Underwriter and the Initiating
Holders but the offering shall be counted for purposes of the limitation of
offerings under Section 3(a). Any Registrable Securities which are excluded from
the underwriting by reason of the underwriter's marketing limitation or
withdrawn from such underwriting shall be withdrawn from such registration.
(f) Prior Registration Rights under the Conversion Agreement.
All holders of registrable securities under the Conversion Agreement shall have
the right to participate in any Demand Registration under this Section 3 on a
pro rata basis with all Designated Holders (including the Initiating Holders) in
accordance with the terms of the Conversion Agreement; provided, however, that
if the participation of the holders of registrable securities under the
Conversion Agreement causes the holders of Registrable Securities desiring to
participate in a Demand Registration under this Section 3 to be able to include
less than 75% of the Registrable
<PAGE>
Securities proposed to be included in such offering, such offering will not be
counted for purposes of the limitation on the number of offerings under Section
3(a) above.
4. Incidental or "Piggy-Back" Registration.
(a) Request for Incidental Registration. At any time after the
Closing Date until the fifth (5th) anniversary of the Closing Date, if the
Company proposes to file a Registration Statement under the Securities Act with
respect to an offering by the Company for its own account (other than a
Registration Statement on Form S-4 or S-8 or any successor form thereto or any
other similarly inapplicable form), then the Company shall give written notice
of such proposed filing to each Designated Holder at least twenty (20) days
before the anticipated filing date, and such notice shall describe the proposed
registration and distribution and offer the Designated Holder the opportunity to
register the number of Registrable Securities as each such holder may request
(an "Incidental Registration"). The Company shall permit each Designated Holder
who has requested in writing twenty (20) days of the date of the notice provided
for in the preceding sentence to include its or his Registrable Securities in
such offering on the same terms and conditions as the securities of the Company
included therein. In connection with any Incidental Registration under this
Section 4(a) involving an underwriting, the Company shall not be required to
include any Registrable Securities in such underwriting unless the holders
thereof accept the terms of the underwriting as agreed upon between the Company
and the underwriter, and then only in such quantity as will not, in the opinion
of the underwriter, jeopardize the success of the offering by the Company. If in
the opinion of the underwriter marketing factors require a limitation of the
number of shares of Registrable Securities to be underwritten or the
registration of all or part of the Registrable Securities which the holders have
requested to be included would materially adversely affect such offering, then
the Company shall be required to include in such Incidental Registration, to the
extent of the amount that the underwriter believes may be sold without causing
such adverse effect, (i) first, all of the securities to be offered for the
account of the Company; and (ii) second, all of the Registrable Securities to be
offered pursuant to this Section 4 and any other securities of the Company
having incidental or "piggy-back" rights to participate in the registration
which rights have been exercised. In the event not all of the securities
described in (ii) above can, in the opinion of the underwriter, be included in
such registration, the number to be so included shall be limited to the number
of shares in proportion, as nearly as practicable, to the respective amounts of
securities held by such holders.
(b) Expenses. The Company shall bear all reasonable expenses
(other than underwriting discounts and commissions with respect to the
Registrable Securities) incurred in connection with any Incidental Registration
pursuant to this Section 4, including without limitation, all registration,
filing and qualification fees, printing expenses, accounting fees, and fees and
disbursements of counsel for the Company whether or not such Incidental
Registration becomes effective; provided, however, that each holder of
Registrable Securities participating in the Incidental Registration shall bear
the costs of its own legal counsel and any applicable qualification or "blue
sky" fees in states in which the Company is not selling its securities.
<PAGE>
(c) Prior Registration Rights Under the Conversion Agreement.
The Incidental Registration rights under this Section 4 shall not apply to any
registration by the Company undertaken pursuant to Section 6.2 of the Conversion
Agreement.
5. Holdback Agreements.
(a) Restrictions on Public Sale by Designated Holders. Each of
the Designated Holders agrees not to effect any public sale or distribution of
any Registrable Securities being registered or of any securities convertible
into or exchangeable or exercisable for such Registrable Securities or of any
other securities of the Company held by the Designated Holder, including a sale
pursuant to Rule 144 under the Securities Act, during the 90-day period
beginning on the effective date of such Registration Statement (except as part
of such registration).
(b) Restrictions on Public Sale by the Company. The Company
agrees not to effect any public sale or distribution of any of its securities,
or any securities convertible into or exchangeable or exercisable for such
securities (except pursuant to such registration or registrations on Form S-4 or
S-8 or any successor form thereto), during the period beginning on the effective
date of any Registration Statement in which the Designated Holders are
participating and ending on the earlier of (i) the date on which all Registrable
Securities registered on such Registration Statement are sold and (ii) 90 days
after the effective date of such Registration Statement.
6. Registration Procedures.
(a) Obligations of the Company. Whenever registration of
Registrable Securities has been requested pursuant to Section 3 or Section 4 of
this Agreement, the Company shall use its best efforts to effect the
registration and sale of such Registrable Securities in accordance with the
intended method of distribution thereof as soon as practicable, and in
connection with any such request, the Company shall:
(i) use its best efforts to prepare and file with the SEC
a Registration Statement on any form for which the Company then qualifies or
which counsel for the Company shall deem appropriate and which form shall be
available for the sale of such Registrable Securities in accordance with the
intended method of distribution thereof, and use its best efforts to cause such
Registration Statement to become effective;
(ii) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
the lesser of (x) 180 days and (y) such shorter period which will terminate when
all Registrable Securities covered by such Registration Statement have been
sold, and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during such
<PAGE>
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement;
(iii) as soon as reasonably possible, furnish to each
seller of Registrable Securities, prior to filing a Registration Statement,
copies of such Registration Statement as is proposed to be filed, and thereafter
such number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the prospectus
included in such Registration Statement (including each preliminary prospectus)
and such other documents as each such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller;
(iv) use its best efforts to register or qualify such
Registrable Securities under such other securities or "blue sky" laws of such
jurisdictions as any seller of Registrable Securities may reasonably request,
and to continue such qualification in effect in such jurisdiction for 180 days
or for as long as any such seller requests or until all of such Registrable
Securities are sold, whichever is shortest, and do any and all other acts and
things which may be reasonably necessary or advisable to enable any such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, however, that the Company shall not
be required to (x) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 6(a)(iv), (y)
subject itself to taxation in any such jurisdiction or (z) consent to general
service of process in any such jurisdiction;
(v) notify each seller of Registrable Securities of the
happening of any event of which the Company has knowledge, as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made, and the
Company shall use its best efforts to promptly prepare a supplement or amendment
to such prospectus and furnish to each seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
after delivery to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made;
(vi) notify each seller of Registrable Securities of any
stop order issued or threatened by the SEC and take all reasonable action
required to prevent or remove the entry of such stop order;
(vii) if such sale is pursuant to an underwritten
offering, use its best efforts to obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by "cold comfort" letters as the
underwriter reasonably requests;
<PAGE>
(viii) cause all such Registrable Securities to be listed
on each securities exchange on which similar securities issued by the Company
are then listed, provided that the applicable listing requirements are
satisfied; and
(ix) cooperate with each seller of Registrable Securities
and each underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.
(b) Obligations of the Designated Holders.
(i) In connection with any registration in which a
Designated Holder is participating pursuant to Section 3 or Section 4 hereof,
each such Designated Holder shall furnish to the Company such information with
respect to such Designated Holder and the proposed method of distribution as the
Company may reasonably request or as may be required by law for use in
connection with the Registration Statement or prospectus;
(ii) Each Designated Holder participating in a Demand
Registration or an Incidental Registration shall notify the Company in writing
of the happening of any event of which the Designated Holder has knowledge, as a
result of which the prospectus included in the Registration Statement as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made;
and
(iii) Each Designated Holder participating in a Demand
Registration or an Incidental Registration shall cooperate with the Company and
each underwriter participating in the disposition of the Registrable Securities
and their respective counsel in connection with the registration.
(c) Notice to Discontinue. Each Designated Holder agrees that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 6(a)(v) or 6(a)(vi), such Designated Holder shall
forthwith discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such
Designated Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 6(a)(v), or until removal of the stop order,
and, if so directed by the Company, such Designated Holder shall deliver to the
Company all copies, other than permanent file copies then in such Designated
Holder's possession, of the prospectus covering such Registrable Securities
which is current at the time of receipt of such notice. If the Company shall
give any such notice, the Company shall extend the period during which such
Registration Statement shall be maintained effective pursuant to this Agreement
(including, without limitation, the period referred to in Section 6(a)(ii)) by
the number of days during the period from and including the date of the giving
of notice pursuant to this section to and including the date when the Designated
Holder shall have received the copies of the supplemented or amended
<PAGE>
prospectus contemplated by and meeting the requirements of Section 6(a)(v) or
the date on which the stop order was lifted, as applicable; provided, however,
that the Company shall not be obligated to extend the period if the events
described in Sections 6(a)(v) or 6(a)(vi) resulted from or were caused by an act
or omission of a Designated Holder or the breach by a Designated Holder of any
provision of this Agreement.
7. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each
Designated Holder, its officers, directors, trustees, partners, employees,
advisors and agents and each Person who controls (within the meaning of the
Securities Act or the Exchange Act) such Designated Holder from and against any
and all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) arising out of or based upon any untrue, or allegedly
untrue, statement of a material fact contained in any Registration Statement,
prospectus or preliminary prospectus or notification or offering circular (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information concerning such Designated
Holder furnished to the Company by such Designated Holder for use therein.
(b) Indemnification by Designated Holders. Each Designated
Holder, severally and not jointly, agrees to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, any underwriter retained by the
Company and their respective directors, officers, employees and each Person who
controls the Company or such underwriter (within the meaning of the Securities
Act and the Exchange Act) from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue, or allegedly untrue, statement of a material
fact contained in any Registration Statement, prospectus or preliminary
prospectus or notification or offering circular (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading as the same are caused by or contained in any information
concerning such Designated Holder furnished to the Company by such Designated
Holder for use therein.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder (the "Indemnified Party") agrees to give
prompt written notice to the indemnifying party (the "Indemnifying Party") after
the receipt by the Indemnified Party of any written notice of the commencement
of any action, suit, proceeding or investigation or threat thereof made in
writing for which the Indemnified Party intends to claim indemnification or
contribution pursuant to this Agreement. The failure of any Indemnified Party to
give notice as provided herein shall relieve the Indemnifying Party of its
obligations hereunder, but only to the
<PAGE>
extent that such failure results in actual detriment to the Indemnifying Party.
If notice of commencement of any such action is given to the Indemnifying Party
as above provided, the Indemnifying Party shall be entitled to participate in
and, to the extent it may wish, jointly with any other Indemnifying Party
similarly notified, to assume the defense of such action at its own expense,
with counsel chosen by it and reasonably satisfactory to such Indemnified Party.
The Indemnified Party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be paid by the
Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii)
the Indemnifying Party fails to assume the defense of such action with counsel
reasonably satisfactory to the Indemnified Party in its reasonable judgment or
(iii) the named parties to any such action (including any impleaded parties)
have been advised by such counsel that either (x) representation of such
Indemnified Party and the Indemnifying Party by the same counsel would be
inappropriate under applicable standards of professional conduct or (y) there
may be one or more legal defenses available to it which are different from or
additional to those available to the Indemnifying Party. In either of such
cases, the Indemnifying Party shall not have the right to assume the defense of
such action on behalf of such Indemnified Party. No Indemnifying Party shall be
liable for any settlement entered into without its written consent, which
consent shall not be unreasonably withheld, delayed or conditioned.
(d) Contribution. If the indemnification provided for in this
Section 7 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative faults of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Sections 7(a), 7(b) and 7(c), any legal
or other fees, charges or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person.
<PAGE>
(e) Limitations on Indemnification and Contribution. The
aggregate liability of each Designated Holder under this Section 7 shall be
limited to an amount equal to the gross proceeds received by such Designated
Holder in connection with the sale of Registrable Securities giving rise to a
claim for indemnification or contribution hereunder.
8. Rule 144. The Company covenants that it shall file (a) any reports
required to be filed by it under the Exchange Act and (b) take such further
action as each Designated Holder of Registrable Securities may reasonably
request (including providing any information necessary to comply with Rules 144
and 144A under the Securities Act), all to the extent required from time to time
to enable such Designated Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rules or regulations hereafter adopted by
the SEC.
9. Miscellaneous.
(a) Holder of Registrable Securities. A Person is deemed to be
a holder of Registrable Securities whenever such Person beneficially owns of
record such Registrable Securities and is either a Shareholder or a Permitted
Transferee. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company may act upon the basis of the instructions, notice or
election received from the registered owner of such Registrable Securities who
is also either a Shareholder or a Permitted Transferee.
(b) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless consented to in writing by the Company and the holders
of greater than 60% of the Registrable Securities (after giving effect to any
adjustments). Any such written consent shall be binding upon the Company and all
of the Designated Holders.
(c) Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be made
by registered or certified first-class mail, return receipt requested, facsimile
transmission, courier overnight mail or personal delivery, to the parties at the
addresses or facsimile numbers set forth below:
(i) if to the Company:
Transport Corporation of America, Inc.
1769 Yankee Doodle Road
Eagan, MN 55121
Facsimile: (612) 686-2565
Attention: Robert J. Meyers
<PAGE>
with a copy to:
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Facsimile: (612) 371-3207
Attention: John R. Houston, Esq.
(ii) if to any Designated Holder, at its address as it
appears on the record books of the Company with a
copy to:
Moss & Barnett, a Professional Association
4800 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Facsimile: (612)339-6686
Attention: Mitchell H. Cox, Esq.
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; when delivered by courier
or overnight mail, if delivered by commercial courier service or overnight mail;
five (5) Business Days after being deposited in the mail, postage prepaid, if
mailed; and when receipt is mechanically acknowledged, if by facsimile
transmission.
(d) Successors and Assigns, Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company. The rights and obligations of the Designated Holders
contained in this Agreement shall be, with respect to any Registrable Security,
transferred by such Designated Holder only to a Person who is a Permitted
Transferee of such Designated Holder. No Person other than the parties hereto
and, with respect to the Company, its successors and assigns, and , with respect
to the Shareholders, their Permitted Transferees, is intended to be a
beneficiary of any of the rights granted hereunder. A "Permitted Transferee"
shall mean a Person to which any Registrable Security is transferred by a
Shareholder, provided, however, that such transferee is (i) one of the
Shareholders, (ii) the spouse or sibling or a member of the Shareholder's
immediate family, (iii) a trust established for the benefit of any person
identified in clauses (i) or (ii), (iv) the estate of any person or entity
described in clauses (i) or (ii), or (v) any entity controlled or under common
control with any one or more of the persons and/or entities described in clauses
(i), (ii), (iii) or (iv).
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed
<PAGE>
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
(h) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired.
(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and in the Purchase Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[SIGNATURE PAGE TO FOLLOW]
<PAGE>
[SIGNATURE PAGE TO THE REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Agreement on the date first written above.
TRANSPORT CORPORATION OF AMERICA, INC.
By:
---------------------------------------
Name:
Title:
SHAREHOLDERS:
-------------------------------------------
Jon L. Miller
-------------------------------------------
William I. Hagen
-------------------------------------------
Michael D. Kandris
THE MITCHELL A. MILLER TRUST CREATED
UNDER AGREEMENT DATED AUGUST 24, 1994
By:
---------------------------------------
Jon L. Miller
Its Trustee
THE WILLIAM M. HAGEN TRUST CREATED UNDER
AGREEMENT DATED APRIL 15, 1998
By:
---------------------------------------
William I. Hagen
Its Trustee
<PAGE>
THE WILLIAM M. HAGEN QSST TRUST CREATED
UNDER AGREEMENT DATED DECEMBER 30, 1994
By:
---------------------------------------
Wayne L. Czeh
Its Trustee
THE SUSAN L. MILLER QSST TRUST CREATED
UNDER AGREEMENT DATED DECEMBER 30, 1994.
By:
---------------------------------------
Vivian Y. Miller
Its Trustee
THE SALLY MILLER BROTEN QSST TRUST
CREATED UNDER AGREEMENT DATED
DECEMBER 30, 1994
By:
---------------------------------------
Vivian Y. Miller
Its Trustee
THE LISA D. BLEDSOE QSST TRUST CREATED
UNDER AGREEMENT DATED DECEMBER 30, 1994
By:
---------------------------------------
Vivian Y. Miller
Its Trustee
THE MICHAEL J. MILLER QSST TRUST CREATED
UNDER AGREEMENT DATED DECEMBER 30, 1994.
By:
---------------------------------------
Vivian Y. Miller
Its Trustee
<PAGE>
THE MITCHELL A. MILLER QSST TRUST CREATED
UNDER AGREEMENT DATED DECEMBER 30, 1994
By:
---------------------------------------
Vivian Y. Miller
Its Trustee
THE LORI ANN HAGEN MINARD QSST TRUST
CREATED UNDER AGREEMENT DATED
DECEMBER 30, 1994
By:
---------------------------------------
Wayne L. Czeh
Its Trustee
<PAGE>
SCHEDULE 1
Shareholders
Jon L. Miller
William I. Hagen
Michael D. Kandris
The Mitchell A. Miller Trust Created under Agreement Dated August 24, 1994
The William M. Hagen Trust Created under Agreement Dated April 15, 1998
The William M. Hagen QSST Trust Created under Agreement Dated December 30, 1994
The Susan L. Miller QSST Trust Created under Agreement Dated December 30, 1994
The Sally Miller Broten QSST Trust Created under Agreement Dated December 30,
1994
The Lisa D. Bledsoe QSST Trust Created under Agreement Dated December 30, 1994
The Michael J. Miller QSST Trust Created under Agreement Dated December 30, 1994
The Mitchell A. Miller QSST Trust Created under Agreement Dated December 30,
1994
The Lori Ann Hagen Minard QSST Trust Created under the Agreement Dated December
30, 1994
Exhibit 3
BYLAWS
OF
TRANSPORT CORPORATION OF AMERICA, INC.
ARTICLE I
OFFICES, CORPORATE SEAL
AND SHAREHOLDER CONTROL AGREEMENT
SECTION 1.01. REGISTERED AND OTHER OFFICES. The registered office of
the corporation in Minnesota shall be that set forth in the Articles of
Incorporation or statement of the Board of Directors filed with the Secretary of
State of Minnesota changing the registered office in the manner prescribed by
law. The corporation may have such other offices, within or without the state of
Minnesota, as the Board of Directors shall, from time to time, determine.
SECTION 1.02. CORPORATE SEAL. If so directed by the Board of Directors,
the corporation may use a corporate seal. The failure to use such seal, however,
shall not affect the validity of any documents executed on behalf of the
corporation. The seal need only include the word "seal," but it may also
include, at the discretion of the Board, such additional wording as is permitted
by law.
SECTION 1.03. SHAREHOLDER CONTROL AGREEMENT. In the event of any
conflict or inconsistency between these Bylaws, or any amendment thereto, and
any shareholder control agreement, whenever adopted, such shareholder control
agreement shall govern.
<PAGE>
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.01. TIME AND PLACE OF MEETINGS. Regular or special meetings
of the shareholders, if any, shall be held on the date and at the time and place
fixed by the President in the absence of Board of Director action, except that a
special meeting called by, or at the demand of a shareholder or shareholders,
pursuant to Minnesota Statutes, Section 302A.431, Subd. 2, shall be held in the
county where the principal executive office is located.
SECTION 2.02. REGULAR MEETINGS. At any regular meeting of the
shareholders there shall be an election of qualified successors for directors
who serve for an indefinite term or whose terms have expired or are due to
expire within six (6) months after the date of the meeting. Any business
appropriate for action by the shareholders may be transacted at a regular
meeting. No meeting shall be considered a regular meeting unless specifically
designated as such in the notice of meeting or unless all the shareholders are
present in person or by proxy and none of them objects to such designation.
Regular meetings may be held no more frequently than once per year.
SECTION 2.03. DEMAND BY SHAREHOLDERS. Regular or special meetings may
be demanded by a shareholder or shareholders, pursuant to the provisions of
Minnesota Statutes, Section 302A.431, Subd. 2, and 302A.433, Subd. 2,
respectively.
SECTION 2.03. QUORUM; ADJOURNED MEETINGS. The holders of a majority of
the voting power of the shares entitled to vote at a meeting constitute a quorum
for the transaction of business; said holders may be present at the meeting
either in person or by proxy. If a quorum is present when a duly called or held
meeting is convened, the shareholders present may continue to transact business
until adjournment, even though withdrawal of shareholders originally present
leaves less than the
<PAGE>
proportion or number otherwise required for a quorum. In case a quorum shall not
be present in person or by proxy at a meeting, those present in person or by
proxy may adjourn to such day as they shall, by majority vote, agree upon, and a
notice of such adjournment shall be mailed to each shareholder entitled to vote
at least five (5) days before such adjourned meeting. If a quorum is present in
person or by proxy, a meeting may be adjourned from time to time without notice,
other than announcement at the meeting. At adjourned meetings at which a quorum
is present in person or by proxy, any business may be transacted at the meeting
as originally noticed.
SECTION 2.05. VOTING. At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Unless otherwise provided by the Articles of Incorporation or a
resolution of the Board of Directors filed with the Secretary of State, each
shareholder shall have one vote for each share held. Upon demand of any
shareholder the vote upon any question before the meeting shall be by ballot.
SECTION 2.06. CLOSING OF BOOKS. The Board of Directors may fix a time,
not exceeding sixty (60) days preceding the date of any meeting of shareholders,
as a record date for the determination of the shareholders entitled to notice
of, and to vote at, such meeting, notwithstanding any transfer of shares on the
books of the corporation after any record date so fixed. The Board of Directors
may close the books of the corporation against the transfer of shares during the
whole or any part of such period. If the Board of Directors fail to fix a record
date for determination of the shareholders entitled to notice of, and to vote
at, any meeting of shareholders, the record date shall be the fiftieth (50th)
day preceding the date of such meeting.
SECTION 2.07. NOTICE OF MEETINGS. Notice of all meetings of
shareholders shall be given to every holder of voting shares, except where the
meeting is an adjourned meeting and the date, time
<PAGE>
and place of the meeting was announced at the time of adjournment. The notice
shall be given at least ten (10) days, but not more than sixty (60) days, before
the date of the meeting, except that written notice of a meeting at which an
agreement of merger is to be considered shall be given to all shareholders,
whether entitled to vote or not, at least fourteen (14) days prior thereto.
Every notice of any special meeting shall state the purpose or purposes for
which the meeting has been called, and the business transacted at all special
meetings shall be confined to the purpose stated in the call, unless all of the
shareholders are present in person or by proxy and none of them object to
consideration of a particular item of business.
SECTION 2.08. WAIVER OF NOTICE. A shareholder may waive notice of any
meeting of shareholders. A waiver of notice by a shareholder entitled to notice
is effective whether given before, at or after the meeting and whether given in
writing, orally or by attendance.
SECTION 2.09. AUTHORIZATION WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting as authorized by law.
ARTICLE III
DIRECTORS
SECTION 3.01. GENERAL PURPOSES. Except as authorized by the
shareholders pursuant to a shareholder control agreement or unanimous
affirmative vote, the business and affairs of the corporation shall be managed
by or shall be under the direction of the Board of Directors.
SECTION 3.02. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The Board of
Directors shall consist of six (6) directors, which number may be increased at
any time without shareholder approval by amendment of these Bylaws. Directors
need not be shareholders. The Board of Directors, in its discretion, may elect a
Chairman of the Board of Directors, who, when present, shall preside at all
<PAGE>
meetings of the Board of Directors, and who shall have such powers as the Board
shall prescribe. Each of the directors shall hold office until the regular
meeting of the shareholders next held after his election, until his successor
shall have been elected, or until he shall resign or shall have been removed as
provided by law.
SECTION 3.03. BOARD MEETINGS; PLACE AND NOTICE. Meetings of the Board
of Directors may be held from time to time at any place within or without the
state of Minnesota that the Board of Directors may designate. In the absence of
designation by the Board of Directors, Board meetings shall be held at the
principal executive office of the corporation, except as may be otherwise
unanimously agreed orally or in writing or by attendance. Any director may call
a Board meeting by giving twenty-four (24) hours' notice to all directors of the
date and time of the meeting. The notice need not state the purpose of the
meeting. Notice may be given by mail, telephone, telegram, or in person. If a
meeting schedule is adopted by the Board of Directors, or if the date and time
of a Board meeting has been announced at a previous meeting, no notice is
required.
SECTION 3.04. WAIVER OF NOTICE. A director may waive notice of a
meeting of the Board of Directors. A waiver of notice by a director is
effective, whether given before, at or after the meeting and whether given in
writing, orally or by attendance.
SECTION 3.05. QUORUM. A majority of the whole Board is a quorum for the
transaction of business, except that when a vacancy or vacancies exist, a
majority of the remaining directors shall constitute a quorum.
SECTION 3.06. VACANCIES. Vacancies on the Board of Directors resulting
from the death, resignation or removal of a director may be filled by the
affirmative voting of a majority of the remaining directors, even though less
than a quorum. Each director elected under this Section to fill
<PAGE>
a vacancy holds office until a qualified successor is elected by the
shareholders at their next regular meeting or at any meeting duly called for
that purpose.
SECTION 3.07. COMMITTEES. The Board may, by resolution, establish
committees in the manner provided by law. Committee members need not be
directors.
SECTION 3.08. COMPENSATION. Directors shall not receive any stated
salary for their services in such capacity, but by resolution of the Board may
receive a fixed fee and expenses for attending meetings. Nothing herein
precludes any director from serving in another capacity and receiving
compensation for such other capacity.
SECTION 3.09. ABSENT DIRECTORS. A director may give advance written
consent or opposition to a proposal to be acted on at a Board of Directors'
meeting.
SECTION 3.10. AUTHORIZATION WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of the Board or any committee may be taken
without a meeting as authorized by law.
ARTICLE IV
OFFICERS
SECTION 4.01. NUMBER. The officers of the corporation shall consist of
a President and may also consist of one or more Vice Presidents, a Secretary and
a Treasurer. The Board may elect or appoint any other officers it deems
necessary for the operation and management of the corporation, each of whom
shall have the powers, rights, duties, responsibilities and terms of office
determined by the Board from time to time. Any number of offices or functions of
those offices may be held or exercised by the same person.
<PAGE>
SECTION 4.02. ELECTION AND TERM OF OFFICE. The Board of Directors shall
from time to time elect a President and may elect one or more Vice Presidents, a
Secretary and a Treasurer and any other officers or agents the Board deems
necessary. Such officers shall hold their offices until their successors are
elected and qualified.
SECTION 4.03. PRESIDENT. Unless otherwise stipulated, the President
shall be the chief executive officer and the chief financial officer of the
corporation and shall have responsibility for the general active management of
the corporation. When present, he shall preside at all meetings of the
shareholders and, unless a Chairman of the Board of Directors has been elected
and is present, shall preside at meetings of the Board of Directors and see that
all orders and resolutions of the Board of Directors are carried into effect.
The President, unless some other person is specifically authorized by vote of
the Board of Directors, shall sign all certificates of stock, bonds, deeds,
mortgages, agreements, modification of mortgage agreements, leases, and
contracts of the corporation. The President, if no Secretary has been elected,
shall maintain records of and, whenever necessary, certify all proceedings of
the Board of Directors and the shareholders. As chief financial officer, the
President shall keep accurate financial records of the corporation; deposit all
money, drafts and checks in the name of and to the credit of the corporation in
the banks and depositories designated by the Board of Directors; endorse for
deposit all notes, checks, and drafts received by the corporation as ordered by
the Board of Directors, making proper vouchers therefor; and disburse corporate
funds and issue checks and drafts in the name of the corporation, as ordered by
the Board of Directors. The President shall perform such other duties as the
Board of Directors shall designate.
<PAGE>
SECTION 4.04. VICE PRESIDENT. If a Vice President or Vice Presidents
have been elected, they shall have such powers and perform such duties as may be
prescribed by the Board of Directors or by the President. In the event of
absence or disability of the President, Vice Presidents shall succeed to the
President's power and duties in the order designated by the Board of Directors.
SECTION 4.05. SECRETARY. If a Secretary has been elected, the Secretary
shall keep accurate minutes of all meetings of the shareholders and the Board of
Directors, shall give proper notice of meetings of shareholders and directors,
shall certify all proceedings of the Board of Directors and the shareholders,
and shall perform such other duties and have such other powers as the Board of
Directors or the President may from time to time prescribe. In the Secretary's
absence at any meeting an Assistant Secretary or a Secretary Pro Tempore shall
perform the Secretary's duties.
SECTION 4.06. TREASURER. If a Treasurer has been elected, the Treasurer
shall assist the President in carrying out the President's duties as chief
financial officer and perform such other duties and have such other powers as
the Board of Directors or the President may from time to time prescribe.
SECTION 4.07. REMOVAL AND VACANCIES. Any officer may be removed from
his office by a majority of the whole Board of Directors, with or without cause.
Such removal, however, shall be without prejudice to the contract rights of the
person so removed. If a vacancy develops among the officers of the corporation
by reason of death, resignation or otherwise, such vacancy may be filled for the
unexpired term by the Board of Directors.
SECTION 4.08. DELEGATION OF AUTHORITY. An officer elected or appointed
by the Board may delegate some or all of the duties or powers of his office to
other persons, provided that such delegation is in writing.
<PAGE>
ARTICLE V
SHARES AND THEIR TRANSFER
SECTION 5.01. CERTIFICATES FOR SHARES. Every shareholder of this
corporation shall be entitled to a certificate, to be in such form as prescribed
by law and adopted by the Board of Directors, certifying the number of shares of
the corporation owned by him. The certificates shall be numbered in the order in
which they are issued and shall be signed by the President (or such other
officer or officers as the Board of Directors may designate) and shall have
typed or printed thereon such legend as may be required by any shareholder
control agreement or stock repurchase or redemption agreement. Such signatures
may be by facsimile if authorized by the Board of Directors. Every certificate
surrendered to the corporation for exchange or transfer shall be canceled, and
no new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled.
SECTION 5.02. ISSUANCE OF SHARES. The Board of Directors is authorized
to cause to be issued shares of the corporation up to the full amount authorized
by the Articles of Incorporation in such amounts as may be determined by the
Board of Directors and as may be permitted by applicable law. Shares shall be
allotted only in exchange for consideration in such forms as may be permitted by
applicable law. At the time of any such allotment of shares, the Board of
Directors making such allotment shall state, by resolution, their determination
of the fair value of the corporation in monetary terms of any consideration
other than cash for which shares are allotted. The amount of consideration to be
received in cash or otherwise shall not be less than the par value of the shares
so allotted.
<PAGE>
SECTION 5.03. TRANSFER OF SHARES. Transfer of shares on the books of
the corporation may be authorized only by the shareholder named in the
certificate, or the shareholder's legal representative, or the shareholder's
duly authorized attorney-in-fact, and upon surrender of the certificate or the
certificates for such shares. The corporation may treat as the absolute owner of
shares of the corporation the person or persons in whose name or names the
shares are registered on the books of the corporation.
SECTION 5.04. LOST CERTIFICATES. Any shareholder claiming that a
certificate for shares has been lost, destroyed or stolen shall make an
affidavit of the fact in such form as the Board of Directors shall require and
shall, if the Board of Directors so requires, give the corporation a sufficient
indemnity bond, in form, in an amount, and with one or more sureties
satisfactory to the Board of Directors, to indemnify the corporation against any
claims which may be made against it on account of the reissue of such
certificate. A new certificate shall then be issued to said shareholder for the
same number of shares as the one alleged to have been destroyed, lost or stolen.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.01. DISTRIBUTIONS. Subject to the provisions of the Articles
of Incorporation, the Board of Directors may cause the corporation to make
distributions pursuant to the provisions of the Minnesota Statutes, Section
302A.551.
SECTION 6.02. RECORD DATE. Subject to any provisions of the Articles of
Incorporation, the Board of Directors may fix a date preceding the date fixed
for the payment of any distribution or allotment of other rights as the record
date for the determination of the shareholders entitled to receive payment of
such distribution or allotment of such rights; and in such case only
shareholders
<PAGE>
of record on the date so fixed shall be entitled to receive such payment or
allotment notwithstanding any transfer of shares on the books of the corporation
after such record date. The Board of Directors may close the books of the
corporation against the transfer of shares during the whole or any part of such
period.
ARTICLE VII
BOOKS AND RECORDS; FISCAL YEAR
SECTION 7.01. BOOKS AND RECORDS. The Board of Directors of the
corporation shall cause to be kept in such place as it may designate:
(a) a share register, giving the names and addresses of the
shareholders, the number and classes of shares held by each,
and the dates on which the certificates therefor were issued;
(b) records of all proceedings of shareholders and directors;
(c) such other records and books of account as shall be necessary
and appropriate to the conduct of corporate business; and
(d) Bylaws of the corporation and all amendments thereto.
SECTION 7.02. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
ARTICLE VIII
INSPECTION OF BOOKS
SECTION 8.01. EXAMINATION BY SHAREHOLDERS. Subject to the provisions of
Section 302A.461 of the Minnesota Business Corporation Act, every shareholder of
the corporation and every holder of a voting trust certificate shall have the
right to examine, in person or by agent or attorney authorized in writing to
represent the shareholder, at any reasonable time or times, for any
<PAGE>
proper purpose, and at the place or places where usually kept, the share
register, books of account and records of the proceedings of the shareholders
and directors and to make extracts therefrom.
SECTION 8.02. INFORMATION TO SHAREHOLDERS. Upon written request by a
shareholder of the corporation, the Board of Directors shall furnish to him a
statement of profit and loss for the last fiscal year and a balance sheet
containing a summary of the assets and liabilities as of the close of such
fiscal year.
ARTICLE IX
INDEMNIFICATION
Any person who at any time shall serve or shall have served as a
director, officer, or employee of the corporation, or of any other enterprise at
the request of the corporation, and the heirs, executors and administrators of
such person shall be indemnified by the corporation in accordance with, and to
the fullest extent permitted by, the provisions of the Minnesota Business
Corporation Act, as it may be amended from time to time.
ARTICLE X
AMENDMENTS
SECTION 10.01. AMENDMENTS BY DIRECTORS. Subject to Section 10.02, these
Bylaws may be amended by a vote of the majority of the whole Board of Directors
at any meeting, provided that notice of such proposed amendment shall have been
included in the notice of such meeting given to the directors. The Board of
Directors shall not adopt, amend or repeal any Bylaw fixing a quorum for
meetings of shareholders, prescribing procedures for removing directors or
filling vacancies in the Board, or fixing the number of directors or their
qualifications, classifications or terms of office, but may amend the Bylaws to
increase the number of directors.
<PAGE>
SECTION 10.02. AMENDMENTS BY SHAREHOLDERS. Notwithstanding the
provisions of Section 10.01, the shareholders may amend or repeal any Bylaw by a
vote of the shareholders necessary to amend the Articles of Incorporation,
present or represented at any regular meeting or at any special meeting of
shareholders called for such purpose.
EXHIBIT 10
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS AMENDMENT amends that certain Credit Agreement dated as of May 15,
1997 (the "AGREEMENT"), by and between Transport Corporation of America, Inc., a
Minnesota corporation ("BORROWER") and Firstar Bank of Minnesota, National
Association (the "BANK"). All capitalized terms not otherwise defined herein
shall have the meanings set forth in the Agreement.
1. DEFINITIONS. The following definitions are hereby deleted and
replaced with the following:
"ADJUSTED LIBOR RATE" shall mean, for any Interest Period and
the applicable LIBOR Rate Advance, the per annum rate of interest equal
to the sum of (a) one hundred twenty-five basis points (1.25%), plus
(b) the per annum rate (rounded up, if necessary, to the nearest
one-sixteenth of one percent (1/16%)) determined by dividing (i) the
LIBOR Rate for such LIBOR Rate Advance and related Interest Period, by
(ii) an amount equal to one minus the stated maximum rate (expressed as
a decimal) of all reserve requirements (including any basic, marginal,
emergency, supplemental, special or other reserves) that is specified
from time to time during an Interest Period by the Board of Governors
of the Federal Reserve System (or any successor agency) for funding
"Eurocurrency Liabilities" pursuant to Regulation D of such Board or
any other then applicable successor regulation, without benefit of
credit or prorations, exemptions or offsets which might otherwise be
available to the Bank from time to time under Regulation D.
"BORROWING BASE" shall mean an amount equal to the sum of (a)
eighty-five percent (85%) of all Eligible Accounts, plus (b)
seventy-five percent (75%) of the net book value of Eligible Equipment,
each as determined as of the last day of the most recent calendar month
and at such other times as may be required by the Bank.
"BORROWING BASE CERTIFICATE" shall mean the certificate in the
form of Exhibit A to this First Amendment, or such other form
prescribed by the Lender from time-to-time pursuant to Section 6.18 of
the Credit Agreement.
"ELIGIBLE EQUIPMENT" shall mean all certificated tractors and
trailers owned by the Borrower as equipment and used for transport in
the ordinary course of the Borrower's business and listed on Schedule B
to the Security Agreement or any schedule of pledged equipment
delivered by the Borrower to the Bank pursuant to Section 6.18(h) of
the Credit Agreement, provided such trucks and trailers:
(a) (i) are subject to a perfected, first priority
security interest in favor of the Bank in accordance
with all applicable state titling statutes and are
free and clear of all other Liens, or (ii) between
the Closing Date (as defined in the North Star
Acquisition Agreement) and August 31, 1998, are
subject to a negative pledge granted in accordance to
Section 5 of the First Amendment to Credit Agreement;
<PAGE>
(b) are in good condition free from any defects that
would negatively affect the market value thereof in a
material way;
(c) are not, as reasonably determined by the Bank,
unusable in the ordinary course of Borrower's
business; and
(d) are insured against loss or damage in accordance with
the provisions of the Security Agreement.
"NORTH STAR ACQUISITION AGREEMENT" shall mean that certain
Stock Purchase Agreement By and Among Transport Corporation of America,
Inc., North Star Transport, Inc. and The Shareholders of North Star
Transport, Inc. dated as of May 20, 1998, a true copy of which has been
delivered to the Bank.
"REVOLVING NOTE" shall mean the Revolving Credit Note dated
May 15, 1998, made payable by the Borrower to the order of the Bank in
the original principal amount of $25,000,000.
"TERMINATION DATE" shall mean the earlier of August 31, 1998
or the date on which an Event of Default has occurred and the Bank
determines to extinguish its commitment hereunder.
2. REVOLVING LOAN. Article III of the Loan Agreement is hereby deleted
in its entirety and replaced with the following:
"ARTICLE III. REVOLVING LOAN
3.1 NATURE OF LOAN COMMITMENT/MAXIMUM OF ADVANCES. Subject to the terms
and conditions of this Agreement, the Bank shall make Advances to the
Borrower from time to time from the date hereof to the Termination Date
in an aggregate principal amount not to exceed at any time the lesser
of (i) Twenty-Five Million Dollars ($25,000,000) less the sum of (a)
the L/C Amount and (b) the Obligation of Reimbursement or (ii) the
Borrowing Base less the sum of (a) the L/C Amount and (b) the
Obligation of Reimbursement (the "Revolving Credit Commitment"). All
Advances pursuant to the Revolving Credit Commitment, including
Advances made by the Bank pursuant to Section 2.1 for Borrower's
Obligation of Reimbursement, shall be evidenced by the Revolving Note;
provided that the Borrower shall be obligated to pay only the amount
that is actually disbursed hereunder, together with accrued interest on
the outstanding balance at the rates provided in Section 3.4 hereof.
The Borrower may borrow, prepay and reborrow within such limit pursuant
to this Agreement and the Revolving Note.
3.2 TYPES OF ADVANCES; CERTAIN LIMITATIONS. Each Advance by the Bank
under the Revolving Credit Commitment may be either a LIBOR Rate
Advance or a Prime Rate Floating Advance. LIBOR Rate Advances and Prime
Rate Floating Rate Advances may be outstanding at the same time;
provided, however, that no more than eight (8) LIBOR Rate Advances may
be outstanding at any one time. The principal amount of each LIBOR Rate
Advance shall be not less than $100,000 or an integral multiple
thereof.
<PAGE>
3.3 PURPOSE FOR ADVANCES. Except with the prior written consent of the
Bank, all Advances under Article III shall be used exclusively for the
Borrower's working capital and other general business purposes;
provided that up to $15,800,000 of Advances under Article III may be
used for acquisition financing for the purpose of acquiring North Star
Transport.
3.4 COMPUTATION OF INTEREST. The Advances under the Revolving Credit
Commitment shall bear interest on the unpaid principal amount thereof
as follows:
(i) For LIBOR Rate Advances, at a fluctuating rate
per annum equal to the Adjusted LIBOR Rate, and
(ii) For Floating Rate Advances, at a fluctuating
rate per annum equal to the Prime Rate Floating Rate less one
hundred forty basis points (1.40%) per annum.
All interest payable on Advances shall be computed on the
basis of actual days elapsed and a year of 360 days. Interest shall be
payable monthly in arrears on the last business day of each month
commencing on June 30, 1998, and at maturity.
3.5 MATURITY. The Revolving Note shall be expressed to mature on the
earlier of: (i) August 31, 1998 or (ii) upon the occurrence of an Event
of Default. All amounts outstanding under the Revolving Note shall be
immediately due and payable at maturity (whether by acceleration or
otherwise).
3.6 RECORDKEEPING. Bank shall record in its records, the date and
amount of each Advance made thereon by Bank, and each repayment
thereof. The aggregate unpaid principal amount so recorded shall be
presumptive evidence of the principal amount of the Advances owing and
unpaid by the Borrower thereon. The failure to so record any such
amount or any error in so recording any such amount shall not, however,
limit or otherwise affect the Obligations of the Borrower hereunder or
under the Revolving Note to repay the principal amount of the Advances
together with all interest accrued thereon.
3.7 NON-USE FEES. The Borrower agrees to pay the Bank, not later than
ten (10) days after receipt of a statement therefor, a fee equal to
one-quarter of one percent (1/4%) per annum times the average daily
unused portion of the Revolving Credit Commitment, payable quarterly in
arrears commencing July 1, 1998, and as of the maturity date of the
Revolving Note."
3. Section 5.6(b) is hereby deleted in its entirety and replaced with
the following:
"CONVERSION OF LIBOR RATE ADVANCES TO FLOATING RATE ADVANCES.
Notwithstanding Section 5.6(a), if such Section would otherwise be
applicable but the Bank could lawfully maintain the LIBOR Rate Advances
at the Prime Rate less 1.40% per annum then, during such period as the
Bank cannot maintain the LIBOR Rate Advances at the Adjusted LIBOR
Rate, the LIBOR Rate Advances shall bear interest at a per rate equal
to Prime Rate less 1.40% per annum in effect from time to time. If the
Bank determines that all events or conditions making it unlawful or
impossible for the Bank to maintain the LIBOR Rate Advances at the
Adjusted LIBOR Rate cease to exist, then Advances may again bear
interest at the Adjusted LIBOR Rate, subject to the other terms and
conditions of this Agreement."
<PAGE>
4. MANDATORY PREPAYMENT. Section 5.1 is deleted in its entirety and
replaced with the following:
"if at any time the outstanding Obligations of the Borrower exceeds the
Revolving Credit Commitment, the Borrower shall immediately repay the
excess."
5. NEGATIVE PLEDGE OF EQUIPMENT. The Borrower agrees that it shall not
create or permit to exist any security interest on any of its trucks and
trailers that have not previously been pledged to any other party, whether now
owned or hereafter acquired. Simultaneously with the execution of this
Amendment, the Borrower shall deliver to the Lender a schedule of such
previously unpledged trucks and trailers, setting forth the net depreciated book
value of each such truck or trailer, certified as correct by the Borrower's
chief financial officer. Borrower agrees that, at the request of the Lender, it
shall promptly deliver certificates of title and completed applications for
notation of the Lender's lien for each such truck and trailer.
6. PRECONDITIONS TO EFFECTIVENESS. This Amendment shall only become
effective upon (a) the execution of the Amendment and the Revolving Credit Note
by the Borrower and the Bank, and (b) execution and delivery by the Borrower of
(i) the items described in Paragraph 3 above; (ii) a current Borrowing Base
Certificate; (iii) an opinion of Borrower's counsel satisfactory to the Lender's
counsel; and (iv) any and all additional related documents referred to in this
Amendment or as otherwise may be required by the Lender.
7. CONSENT AND ACKNOWLEDGMENT OF CORPORATE GUARANTORS. By executing the
acknowledgment below, TCA of Ohio, Inc. and Transport International Express,
Inc. (each a "Corporate Guarantor" and collectively, the "Corporate Guarantors")
each hereby (a) consents to each and all of the provisions of this Amendment,
and (b) acknowledges and agrees that the Guaranty executed by it and delivered
to the Lender remains in full force and effect in accordance with its original
terms, not subject to any defense, counterclaim or right of setoff.
8. REPRESENTATIONS REAFFIRMED. The Borrower and each Corporate
Guarantor hereby warrants and represents to the Lender that (a) each and all of
the representations and warranties set forth and contained in the Loan Agreement
and the other Loan Documents are true, correct and complete in all respects as
of the date hereof, and (b) no Default or Event of Default has occurred and is
continuing as of the date hereof.
9. NO WAIVERS. The Borrower and each Corporate Guarantor hereby
acknowledges and agrees that by executing and delivering this Agreement to the
Lender it is not waiving any existing Defaults or Event of Default, whether
known or unknown, nor is the Lender waiving any of its rights or remedies under
the Loan Agreement or any of the Loan Documents, provided, however that the Bank
does consent to Borrower entering into and consummating the transaction
contemplated by the North Star Acquisition Agreement in accordance with the
terms thereof, and the Bank hereby waives any Event of Default under Section
6.23 of the Agreement for doing so.
10. NO SET-OFF. The Borrower and each Corporate Guarantor acknowledges
to and agrees with the Lender that no events, conditions or circumstances have
arisen or exist as of the date hereof which would give the Borrower the right to
assert a defense, counterclaim and/or setoff to any claim by
<PAGE>
the Lender for payment of the Obligations, and if any so exist as of the date
hereof, whether known or unknown, absolute or contingent, liquidated or
unliquidated, the same are hereby waived.
11. RELEASE. The Borrower and each Corporate Guarantor hereby releases
the Lender and each of its officers, directors, agents, employees, legal counsel
and other representatives from any and all claims, demands, causes of action,
liability, damage, loss, cost and expense arising from and/or which it has paid,
incurred or sustained or believe it has paid, incurred or sustained, known or
unknown, absolute or contingent, liquidated or unliquidated, as a result of or
related to (a) the transactions evidenced by or related to the Loan Documents
and any and all other documents, agreements or instruments related thereto, or
(b) any acts or omissions of the Lender or any of its officers, directors,
agents, employees, legal counsel or other representatives in connection
therewith or related thereto, or (c) the extension or denial of credit.
12. MERGER. All prior oral and written communications, commitments,
alleged commitments, promises, alleged promises, agreements and alleged
agreements by or between the Lender and the Borrower are hereby merged into this
Agreement and the Loan Documents, and shall not be enforceable unless expressly
set forth in this Agreement and the Loan Documents.
13. NO OTHER AMENDMENTS. Except as expressly amended hereby or as
previously amended in writing, each of the Loan Agreement and the other Loan
Documents shall remain in full force and effect in accordance with their
original terms.
14. LEGAL EXPENSES. The Borrower shall pay and will reimburse the Bank
on demand for all reasonable out-of-pocket expenses incurred by the Bank
relating to this Amendment, including without limitation reasonable attorneys'
fees and legal expenses incurred for the preparation of this Amendment.
15. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be considered as an original, but when taken
together shall constitute one document.
16. AUTHORIZATION. The Borrower and each Corporate Guarantor represents
and warrants that the execution, delivery and performance of this Amendment and
the documents referenced herein are within the corporate powers of the Borrower
and have been duly authorized by all necessary corporate action.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of this
24th day of June, 1998.
FIRSTAR BANK OF MINNESOTA, NATIONAL
ASSOCIATION
By
-------------------------------------
Its
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TRANSPORT CORPORATION OF AMERICA, INC.
By
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Its
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ACKNOWLEDGEMENT OF CORPORATE GUARANTORS:
TCA OF OHIO, INC. TRANSPORT INTERNATIONAL EXPRESS, INC.
By By
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Its Its
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