Amendment 3 to Preliminary Proxy Filed April 17, 2006 for Central Freight Lines, Inc.

Annex A-1

__________________________________________________

AGREEMENT AND PLAN OF MERGER

by and among

CENTRAL FREIGHT LINES, INC.,

NORTH AMERICAN TRUCK LINES, LLC

and

GREEN ACQUISITION COMPANY

dated as of

January 30, 2006

__________________________________________________

TABLE OF CONTENTS

		Page
ARTICLE I THE MERGER		A-1

1.1	The Merger	A-1
1.2	Closing	A-1
1.3	Articles of Incorporation; Bylaws	A-2
1.4	Directors and Officers of the Surviving Corporation	A-2

ARTICLE II CONVERSION OF SHARES		A-2

2.1	Conversion of Capital Stock	A-2
2.2	Exchange of Certificates.	A-3
2.3	Change in Shares	A-4
2.4	Company Option Plans.	A-4

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY		A-5

3.1	Organization.	A-5
3.2	Capitalization.	A-5
3.3	Authorization; Validity of Agreement.	A-6
3.4	No Violations; Consents and Approvals.	A-7
3.5	SEC Reports and Financial Statements.	A-8
3.6	Restatement.	A-9
3.7	Absence of Certain Changes.	A-9
3.8	Absence of Undisclosed Liabilities.	A-10
3.9	Proxy Statement; Schedule 13E-3; Merger Documents.	A-10
3.10	Employee Benefit Plans; ERISA.	A-11
3.11	Litigation; Compliance with Law.	A-13
3.12	Intellectual Property.	A-14
3.13	Contracts.	A-15
3.14	Taxes.	A-15
3.15	Environmental Matters.	A-17
3.16	Assets.	A-18
3.17	Real Property.	A-18
3.18	Insurance.	A-19
3.19	Labor Matters.	A-19
3.20	Affiliate Transactions.	A-19
3.21	Brokers.	A-20
3.22	Opinion of Financial Advisor.	A-20

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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER		A-20

4.1	Organization.	A-20
4.2	Authorization; Validity of Agreement	A-20
4.3	Consents and Approvals; No Violations.	A-21
4.4	Information in Proxy Statement; Schedule 13E-3; Merger Documents	A-21
4.5	Broker	A-21

ARTICLE V COVENANTS		A-22

5.1	Interim Operations of the Company	A-22
5.2	Acquisition Proposals.	A-24
5.3	Takeover Statute	A-27
5.4	Access to Information and Properties.	A-27
5.5	Further Action; Reasonable Efforts.	A-27
5.6	Proxy Statement; Schedule 13E-3; Stockholders’ Meeting.	A-28
5.7	Notification of Certain Matters	A-29
5.8	Directors’ and Officers’ Insurance and Indemnification.	A-30
5.9	Publicity	A-30
5.10	Indemnity	A-31
5.11	Stockholders’ Agreement and Subscription Agreement	A-31

ARTICLE VI CONDITIONS		A-31

6.1	Conditions to Each Party’s Obligation to Effect the Merger	A-31
6.2	Conditions to the Obligation of the Company to Effect the Merger	A-32
6.3	Conditions to Obligations of Parent and the Purchaser to Effect the Merger	A-32

ARTICLE VII TERMINATION		A-33

7.1	Termination	A-33
7.2	Effect of Termination	A-35

ARTICLE VIII MISCELLANEOUS		A-35

8.1	Fees and Expenses.	A-35
8.2	Amendment; Waiver.	A-36
8.3	Notices	A-36
8.4	Interpretation; Definitions	A-37
8.5	Headings; Schedules	A-43
8.6	Counterparts	A-43
8.7	Entire Agreement	A-44
8.8	Severability	A-44
8.9	Governing Law	A-44
8.10	Assignment	A-44
8.11	Parties in Interest.	A-44
8.12	Specific Performance.	A-44

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TABLE OF DEFINED TERMS

Acceptable Confidentiality Agreement	A-25, A-38	Material Adverse Effect	A-40
Acquisition Proposal	A-26, A-38	Material Contract	A-15, A-41
Adverse Recommendation Change	A-25, A-38	Merger	A-1, A-41
Agreement	A-1, A-38	Merger Consideration	A-2, A-41
Alternative Definitive Agreement	A-38	Moyes Stockholders	A-41
Articles of Incorporation	A-2, A-38	Moyes Stockholders Shares	A-2, A-41
Articles of Merger	A-1, A-38	Notice of Superior Proposal	A-25, A-41
Assets	A-18, A-38	NRS	A-1, A-41
Balance Sheet	A-10, A-38	Outside Date	A-41
Board	A-1, A-38	Owned Real Property	A-41
Business Day	A-38	Parent	A-1, A-41
Bylaws	A-2, A-38	Paying Agent	A-3, A-41
Capital Budget	A-22, A-38	Permits	A-14, A-41
Certificates	A-3, A-38	Permitted Liens	A-41
Closing	A-1, A-38	Person	A-42
Closing Date	A-1, A-38	Plans	A-11, A-42
Code	A-38	Preferred Stock	A-5, A-42
Company	A-1, A-38	Proxy Statement	A-28, A-42
Company Common Stock	A-2, A-38	Public Stockholders	A-42
Company SEC Documents	A-8, A-38	Purchaser	A-1, A-42
Confidentiality Agreement	A-27, A-39	Purchaser Common Stock	A-2, A-42
Credit Agreement	A-22, A-39	Real Property	A-42
Disclosure Letter	A-5, A-39	Release	A-42
Effective Time	A-1, A-39	Required Vote	A-42
Employment and Withholding Taxes	A-39	Return	A-42
Environmental Claim	A-39	Schedule 13E-3	A-29, A-42
Environmental Laws	A-39	SEC	A-7, A-42
ERISA	A-11, A-39	Secretary of State	A-1, A-42
ERISA Affiliate	A-11, A-39	Securities Act	A-8, A-42
ERISA Plans	A-11, A-39	Shares	A-2, A-42
Exchange Act	A-8, A-39	SPD	A-11, A-42
Expenses	A-39	Special Committee	A-1, A-42
GAAP	A-8, A-40	Stock Option Plans	A-4, A-43
Governmental Entity	A-7, A-40	Stock Options	A-4, A-43
Hazardous Substance	A-40	Stockholders’ Agreement	A-42
Indemnified Merger Parties	A-31, A-40	Stockholders’ Meeting	A-29, A-43
Indemnified Merger Party	A-40	Subscription Agreement	A-43
Indemnified Parties	A-30, A-40	Subsidiary	A-43
Intellectual Property	A-14, A-40	Superior Proposal	A-26, A-43
Investing Stockholder	A-40	Surviving Corporation	A-1, A-43
Laws	A-7, A-40	Tax	A-43
Leased Real Property	A-40	Technology	A-14, A-43
Leases	A-40	Termination Fee	A-35, A-43
Liens	A-40	Transaction Litigation	A-31, A-43
Litigation	A-13, A-40	WARN Act	A-19, A-43

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of January 30, 2006 (the “Agreement”), by and among Central Freight Lines, Inc., a Nevada corporation (the “Company”), North American Truck Lines, LLC, a Nevada limited liability company (“Parent”) and Green Acquisition Company, a Nevada corporation and wholly owned subsidiary of Parent (the “Purchaser”).

WHEREAS, the special committee (the “Special Committee”) of the board of directors of the Company (the “Board”), at a meeting duly called and held, unanimously resolved to recommend adoption of this Agreement and the Merger (as defined herein) by the Board;

WHEREAS, the Board, at a meeting duly called and held and acting on the unanimous recommendation of the Special Committee, (i) adopted this Agreement, the Merger and the transactions contemplated hereby and (ii) resolved to recommend approval of this Agreement and the Merger by the stockholders of the Company; and

WHEREAS, Parent, Purchaser and the Company desire to make certain representations, warranties, covenants, agreements and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

THE MERGER

1.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the Nevada Revised Statutes, as amended (the “NRS”), at the Effective Time, the Purchaser shall be merged with and into the Company, the separate corporate existence of the Purchaser shall cease and the Company shall continue as the surviving corporation (sometimes hereinafter referred to as the “Surviving Corporation”) in the merger (the “Merger”). The Merger shall have the effect as provided in the applicable provisions of the NRS. Without limiting the generality of the foregoing, upon the Merger, all the rights, privileges, immunities, powers and franchises of the Company and the Purchaser shall vest in the Surviving Corporation and all obligations, duties, debts and liabilities of the Company and the Purchaser shall be the obligations, duties, debts and liabilities of the Surviving Corporation.

1.2 Closing. Unless this Agreement shall have been terminated and the transactions contemplated herein abandoned pursuant to Section 7.1 and subject to the satisfaction or waiver of the conditions set forth in Article VI, the closing of the Merger (the “Closing”) will take place at 10:00 a.m., New York City time, on a date to be specified by the parties hereto, which shall be no later than the third Business Day after satisfaction or waiver (by the party entitled to waive the condition) of all of the conditions set forth in Article VI hereof (except for those conditions that can by their nature be satisfied only at the time of the Closing) (the “Closing Date”), at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036, unless another date or place is agreed to in writing by the parties hereto. Subject to the provisions of this Agreement, on the Closing Date, the Purchaser and the Company will cause articles of merger (the “Articles of Merger”) to be executed and filed with the Secretary of State of the State of Nevada (the “Secretary of State”) in such form and executed as provided in the NRS. The Merger shall become effective on the date and at the time at which the Articles of Merger have been duly filed with the Secretary of State or such other time as is agreed upon by the parties hereto and specified in the Articles of Merger, and such time is hereinafter referred to as the “Effective Time.”

1.3 Articles of Incorporation; Bylaws. Pursuant to the Merger, (a) the Amended and Restated Articles of Incorporation of the Company shall be amended at the Effective Time to be in the form to be provided by Purchaser and, as so amended, such Amended and Restated Articles of Incorporation shall be the Articles of Incorporation of the Surviving Corporation (the “Articles of Incorporation”) until thereafter changed or amended as provided therein or by applicable Law (as defined in Section 3.4(a)) and (b) the Bylaws of the Company shall be amended at the Effective Time to be in the form to be provided by Purchaser and, as so amended, such Bylaws shall be the Bylaws of the Surviving Corporation (the “Bylaws”) until thereafter changed or amended as provided therein or by applicable Law.

1.4 Directors and Officers of the Surviving Corporation

(a) The directors of Purchaser shall be the directors of the Surviving Corporation until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles of Incorporation and the Bylaws. Immediately prior to the Closing, the Company shall deliver to Parent the notices of resignation of each of the then-current members of the Board, and each such resignation shall be effective as of the Effective Time.

(b) The officers of the Company shall be the initial officers of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

ARTICLE II

CONVERSION OF SHARES

2.1 Conversion of Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of the holders of any shares of common stock, par value $0.001 per share, of the Company (referred to herein as “Shares” or “Company Common Stock”) or the common stock, par value $1.00 per share, of the Purchaser (the “Purchaser Common Stock”):

(a) Except as provided in Section 2.1(c) hereof, each issued and outstanding share of Company Common Stock, other than Company Common Stock held by the Moyes Stockholders who have entered into the Stockholders’ Agreement (as defined herein), shall be converted into the right to receive $2.25 per share in cash, payable to the holder thereof, without interest (the “Merger Consideration”). All such shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate or certificates representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefore upon the surrender of such certificate in accordance with Section 2.2. Payment of the Merger Consideration shall be made upon surrender of the certificate or certificates which immediately prior to the Effective Time represented issued and outstanding shares of Company Common Stock in the manner provided in Section 2.2. Any payment made pursuant to this Section 2.1(a) shall be subject to applicable withholding taxes to the extent such withholding is required by Law.

(b) Each issued and outstanding share of Company Common Stock held by the Moyes Stockholders who have entered into the Stockholders’ Agreement shall remain issued and outstanding shares of the Surviving Corporation (the “Moyes Stockholders Shares”).

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(c) Each issued and outstanding share of the Purchaser Common Stock shall be converted into the number of issued and outstanding shares of the Surviving Corporation equal to the quotient obtained by dividing (i) the difference between (A) all of the issued and outstanding shares of Company Common Stock immediately prior to the Effective Time and (B) the Moyes Stockholders Shares, by (ii) the number of issued and outstanding shares of the Purchaser Common Stock immediately prior to the Effective Time.

(d) All shares of Company Common Stock that are held by the Company or any of its Subsidiaries as treasury stock prior to the Effective Time shall be cancelled and retired and shall cease to exist and no Merger Consideration shall be delivered in exchange therefore.

2.2 Exchange of Certificates.

(a) Prior to the Effective Time, Parent shall designate the Company’s registrar and transfer agent or such other bank or trust company as may be selected by Parent, to act as paying agent for the holders of Shares in connection with the Merger (the “Paying Agent”), to receive the funds to which holders of Shares shall become entitled pursuant to Section 2.1(a). Upon the Effective Time, Parent and the Purchaser will cause to be deposited in trust with the Paying Agent for the benefit of holders of Company Common Stock the funds necessary to complete the payments contemplated by Section 2.1(a) with respect to shares of Company Common Stock.

(b) Promptly following the Effective Time, the Surviving Corporation will instruct the Paying Agent to mail to each holder of record of a certificate or certificates, which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the “Certificates”), whose Shares were converted pursuant to Section 2.1(a) into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by the Surviving Corporation, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefore the Merger Consideration for each share of Company Common Stock formerly represented by such Certificate, and the Certificate so surrendered shall forthwith be cancelled. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the Person requesting such payment shall have paid to the Paying Agent in advance any transfer and other taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2, each Certificate (other than Certificates representing Company Common Stock held by Parent, the Purchaser or any of their respective affiliates) shall be deemed at any time from and after the Effective Time to represent only the right to receive the Merger Consideration as contemplated by this Section 2.2. No interest or dividends shall be paid or will accrue on any Merger Consideration payable to holders of Certificates pursuant to the provisions of this Article II.

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(c) In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect thereof as determined in accordance with this Article II, provided that the Person to whom the Merger Consideration is paid shall, as a condition precedent to the payment thereof, give the Surviving Corporation a bond in such sum as the Surviving Corporation may reasonably request or otherwise indemnify the Surviving Corporation in a manner reasonably satisfactory to it against any claim that may be made against the Surviving Corporation with respect to the Certificate claimed to have been lost, stolen or destroyed.

(d) At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no transfers on the stock transfer books of the Surviving Corporation of Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented for transfer to the Surviving Corporation, they shall be cancelled and exchanged for the Merger Consideration as provided in this Article II, subject to the NRS.

(e) If any cash deposited with the Paying Agent for purposes of payment in exchange for Shares remains unclaimed for six months after the Effective Time, such cash, together with all interest and earnings thereon shall be returned to the Surviving Corporation, upon demand, and any such holder who has not theretofore complied with this Article II prior to that time shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration. Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the Paying Agent or any other Person shall be liable to any holder of Shares for any amount paid to a public official pursuant to applicable unclaimed property, escheat or similar Laws.

2.3 Change in Shares. If, between the date of this Agreement and the Effective Time, the Shares shall have been changed into, or exchanged for, a different number of shares or a different class, or if there has been any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Merger Consideration shall be correspondingly adjusted to provide the holders of Shares the same economic effect as contemplated by this Agreement prior to such event.

2.4 Company Option Plans.

(a) The Company, the Board and each relevant committee of the Board shall take any and all actions necessary or desirable (including, without limitation, obtaining consents) to provide that, effective immediately prior to the consummation of the Merger, each option to purchase shares of Company Common Stock (collectively, the “Stock Options”) held by or issued or granted to any current or former employee, consultant or director that is outstanding immediately prior to the consummation of the Merger granted under the Central Freight Lines, Inc. Incentive Stock Plan dated May 6, 1997, as amended (the “Stock Option Plans”), or otherwise, shall (i) become fully vested or exercisable and (ii) be cancelled in exchange for an amount in cash (less any applicable tax withholding), payable at the Effective Time, equal to (A) in the case of Stock Options with respect to which the Merger Consideration is greater than the per share exercise price of such Stock Option, the product of (x) (1) the excess of the Merger Consideration over (2) the per share exercise price of such Stock Option, and (y) the number of shares of Company Common Stock subject to such Stock Option; and (B) in the case of Stock Options with respect to which the per share exercise price of such Stock Option is equal to or greater than the Merger Consideration, the product of (x) $.01 and (y) the number of shares of Company Common Stock subject to such Stock Option.

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(b) The Company, the Board and each relevant committee of the Board shall take any and all actions necessary or desirable to provide that all Stock Option Plans shall terminate as of the Effective Time and the provisions in any Stock Option Plan or any other plan, agreement or arrangement providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of any capital stock of the Company shall be terminated as of the Effective Time, and the Company shall ensure that following the Effective Time no holder of a Stock Option or any participant in any Stock Option Plan or any other plan, agreement or arrangement shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation or any interest in respect of any capital stock of the Company or the Surviving Corporation.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and the Purchaser as follows:

3.1 Organization.

(a) The Company is a corporation and each of its Subsidiaries is a corporation or other entity, in each case, duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or organization, and has all requisite corporate power and authority to own, lease, use and operate its properties and to carry on its business as it is now being conducted. Except as set forth in Section 3.1(a) of the disclosure letter delivered by Company to Parent on or prior to the date hereof (the “Disclosure Letter”), each of the Company and each of its Subsidiaries (as defined in Section 8.4(eeee)) is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which such qualification or licensing is required except when the failure to be so qualified would not be reasonably expected, either individually or in the aggregate, to have a Material Adverse Effect on the Company. The Company has previously delivered to Parent a complete and correct copy of each of its articles of incorporation and bylaws in each case as amended (if so amended) to the date of this Agreement, and has delivered the articles of incorporation and bylaws of each of its Subsidiaries, in each case as amended (if so amended) to the date of this Agreement. Neither the Company nor any of its Subsidiaries is in violation of its articles of incor-poration or bylaws.

(b) Section 3.1(b) of the Disclosure Letter sets forth a true and correct list of all of the Subsidiaries of the Company and their respective jurisdictions of incorporation. Other than as set forth in Section 3.1(b) of the Disclosure Letter, the respective articles of incorporation and bylaws of the Subsidiaries of the Company do not contain any provision limiting or otherwise restricting the ability of the Company to control its Subsidiaries.

3.2 Capitalization.

(a) The authorized capital stock of the Company consists of 100,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”). As of the date hereof, (i) 18,263,450 shares of Company Common Stock are issued and outstanding and no shares of Company Common Stock are issued and held in the treasury of the Company, (ii) there are no shares of Preferred Stock issued and outstanding or held in treasury and (iii) 5,000,000 shares of Company Common Stock are reserved for issuance upon exercise of previously issued Stock Options under the Option Plans. No bonds, debentures, notes or other indebtedness having the right to vote (or convertible into or exchangeable for securities having the right to vote) on any matters on which stockholders of the Company may vote are issued or outstanding. All issued and outstanding shares of the Company’s capital stock are, and all shares that may be issued or granted pursuant to the exercise of Stock

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Options will be, when issued or granted in accordance with the terms thereof, duly authorized, validly issued, fully paid and non-assessable and free of preemptive rights. Except as set forth in Section 3.2(a) of the Disclosure Letter, there are no outstanding or authorized (i) options, warrants, preemptive rights, subscriptions, calls, or other rights, convertible securities, agreements, claims or commitments of any character obligating the Company or any of its Subsidiaries to issue, transfer or sell any shares of capital stock or other equity interest in, the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, (ii) obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the Company or any of its Subsidiary or any such securities or agreements listed in clause (i) of this sentence or (iii) voting trusts or similar agreements to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock of the Company or any of its Subsidiaries.

(b) Except as set forth in Section 3.2(b) of the Disclosure Letter (i) all of the issued and outstanding shares of capital stock of each of the Company’s Subsidiaries are owned, directly or indirectly, by the Company free and clear of any Liens, and all such shares have been duly authorized, validly issued and are fully paid and non-assessable and free of preemptive rights, and (ii) neither the Company nor any of its Subsidiaries owns any shares of capital stock or other securities of, or interest in, any other Person, or is obligated to make any capital contribution to or other investment in any other Person.

(c) Section 3.2(c) of the Disclosure Letter lists all indebtedness, and obligations to issue indebtedness of the Company and its Subsidiaries, having a principal amount outstanding in excess of $250,000, other than trade payables arising in the ordinary course of business consistent with past practice. Except as described in Section 3.2(c) of the Disclosure Letter, no indebtedness of the Company or any of its Subsidiaries contains any restriction upon (i) the prepayment of any indebtedness of the Company or any of its Subsidiaries, (ii) the incurrence of indebtedness by the Company or any of its Subsidiaries, (iii) the payment of dividends to its equity holders or (iv) the ability of the Company or any of its Subsidiaries to grant any Lien on the properties or assets of the Company or any of its Subsidiaries.

3.3 Authorization; Validity of Agreement.

(a) The Company has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby, subject to, in the case of consummation of the Merger, approvals of its stockholders as contemplated by Section 5.6 hereof. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby have been duly authorized by the Board (including the unanimous approval of the Special Committee). The Board and the Special Committee have directed that this Agreement and the transactions contemplated hereby be submitted to the Company’s stockholders for approval and adoption at a meeting of such stockholders and, except for (i) setting the record date and the meeting date for the Stockholder’s Meeting and (ii) the approval and adoption of this Agreement by the Required Vote (as defined herein), no other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery of this Agreement by Parent and the Purchaser, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law).

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(b) The Board has adopted all resolutions necessary so that the provisions of Section 78.438 of the NRS are inapplicable to the Merger or any of the other transactions contemplated by this Agreement. Except for Section 78.438 of the NRS (which has been rendered inapplicable), no “moratorium,” “control share,” “fair price” or other antitakeover laws are applicable to the Merger or any of the other transactions contemplated by this Agreement.

(c) Under applicable Law and this Agreement, with respect to the Merger, (i) the affirmative vote of the holders of a majority of the outstanding Shares entitled to vote hereon and (ii) the affirmative vote of a majority of the outstanding Shares beneficially owned by the Public Stockholders (clauses (i) and (ii) constituting, the “Required Vote”) are the only votes of the Company’s stockholders required to approve this Agreement and the transactions contemplated hereby.

(d) The Special Committee, at a meeting duly called and held, unanimously recommended adoption of this Agreement and the Merger by the Board. The Board, at a meeting duly called and held and acting on the unanimous recommendation of the Special Committee, (i) adopted this Agreement, the Merger and transactions contemplated hereby and (ii) recommended approval of this Agreement and the Merger by the stockholders of the Company.

3.4 No Violations; Consents and Approvals.

(a) Neither the execution, delivery and performance of this Agreement by the Company nor the consummation by the Company of the Merger or any other transactions contemplated hereby will (i) violate any provision of the articles of incorporation or the bylaws of the Company or the Company’s Subsidiaries, (ii) except as set forth in Section 3.4(a) of the Disclosure Letter, violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination, cancellation or amendment under, accelerate the performance required by, or result in the creation of any Lien (as defined in Section 8.4(rr)) upon any of the respective properties or assets of the Company or any of its Subsidiaries under, or result in the acceleration or trigger of any payment, time of payment, vesting or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, guarantee or other evidence of indebtedness, lease, license, contract, agreement, plan or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound or affected or (iii) conflict with or violate any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation (collectively, “Laws”) applicable to the Company, any of its Subsidiaries or any of their respective properties or assets; except in the case of clauses (ii) and (iii) for such conflicts, violations, breaches, defaults or Liens which individually or in the aggregate would not reasonably be likely to have or result in a Material Adverse Effect (as defined in Section 8.4(tt)) on the Company.

(b) Except as disclosed in Section 3.4(b) of the Disclosure Letter, no material filing or registration with, declaration or notification to, or order, authorization, consent or approval of, any federal, state, local or foreign court, arbitral, legislative, executive or regulatory authority or agency (a “Governmental Entity”) or any other Person is required in connection with the execution, delivery and performance of this Agreement by the Company or the consummation by the Company of the Merger or any other transactions contemplated hereby, except for (i) the filing with the Securities and Exchange Commission (the “SEC”) of the Schedule 13E-3 (as defined in Section 5.6(c)) and the Proxy Statement (as defined in Section 5.6(a)) relating to the meeting of the Company’s stockholders to be held in connection with this Agreement and the transactions contemplated hereby and (ii) the filing of the Articles of Merger with the Secretary of State.

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3.5 SEC Reports and Financial Statements.

(a) Except as set forth in Section 3.5(a) of the Disclosure Letter, the Company has timely filed with the SEC all forms and documents required to be filed by it since November 26, 2003 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including (i) its Annual Reports on Form 10-K for the years ended December 31, 2003 and December 31, 2004, respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended April 2, July 2, and October 1, 2005, (iii) all proxy statements relating to meetings of stockholders of the Company since January 1, 2004 (in the form mailed to stockholders) and (iv) all other forms, reports and registration statements required to be filed by the Company with the SEC since September 24, 2003; provided, however, that the Company makes no representation or warranty with respect to the timely filing of any forms or reports related to transactions involving the Company and its Subsidiaries, on the one hand, and Moyes, on the other hand. The documents described in clauses (i)-(iv) above, as amended (whether filed before, on or after the date hereof), are referred to in this Agreement collectively as the “Company SEC Documents.” As of their respective dates, the Company SEC Documents, including the financial statements and schedules provided therein or incorporated by reference therein, (x) did not contain any untrue statement of a material fact or omit 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 and (y) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act of 1933, as amended (the “Securities Act”), as the case may be, and the applicable rules and regulations of the SEC thereunder; provided, however, that the Company makes no representation or warranty with respect to compliance with respect to the reporting of any transactions involving the Company and its Subsidiaries, on the one hand, and Moyes, on the other hand.

(b) The December 31, 2003 and December 31, 2004 consolidated balance sheets of the Company and the related consolidated statements of operations, consolidated changes in stockholders’ equity and cash flows (including, in each case, the related notes, where applicable), as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and December 31, 2004 filed with the SEC under the Exchange Act, and the unaudited consolidated balance sheets of the Company and its Subsidiaries (including the related notes, where applicable) as of October 2, 2004 and October 1, 2005 and the related (i) unaudited consolidated statements of operations for the three and nine-month periods then ended and (ii) unaudited consolidated statements of cash flows and changes in stockholders’ equity for the nine-month periods then ended (in each case including the related notes, where applicable), as reported in the Company’s Quarterly Report on Form 10-Q for the period ended October 1, 2005 filed with the SEC under the Exchange Act, fairly present in all material respects, and the financial statements to be filed by the Company with the SEC after the date of this Agreement will fairly present in all material respects (subject, in the case of the unaudited statements, to recurring audit adjustments normal in nature and amount), the consolidated financial position and the results of the consolidated operations of the Company and its Subsidiaries as of the respective dates or for the respective fiscal periods therein set forth; each of such statements (including the related notes, where applicable) complies, and the financial statements to be filed by the Company with the SEC after the date of this Agreement will comply, with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto; and each of such statements (including the related notes, where applicable) has been, and the financial statements to be filed by the Company with the SEC after the date of this Agreement will be, prepared in accordance with generally accepted accounting principles (“GAAP”) consistently applied during the periods involved, except as indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q. The books and records of the Company and its Subsidiaries have been, and are being, maintained in accordance with GAAP and any other applicable legal and accounting requirements. KPMG LLP is an independent public accounting firm with respect to the Company and has not resigned or been dismissed as independent public accountants of the Company as a result of or in connection with any disagreements with the Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

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(c) Except as provided in Section 3.5(c) of the Disclosure Letter, since November 26, 2003, the Company and each of its Subsidiaries has had in place “disclosure controls and procedures” (as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act) designed and maintained to ensure that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principals and to maintain accountability for assets, (c) access to assets is permitted only in accordance with management’s general or specific authorization, (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, (e) all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and (f) all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports. Except as provided in Section 3.5(c) of the Disclosure Letter, the Company’s disclosure controls and procedures ensure that information required to be disclosed by the Company in the reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The Company’s and its Subsidiaries’ financial records, data or information are maintained under the direct control of the Company or its Subsidiaries.

3.6 Restatement. There has not been any written notice from the SEC in connection with any investigation or action by the SEC which investigation or action seeks to, or could reasonably be expected to result in, the restatement by the Company of any of its current or previously disclosed financial statements, and to the knowledge of the Company, no such investigation or action has been threatened by, or is being considered by, the SEC and, to the knowledge of the Company, no facts or circumstances exist that could reasonably be expected to result in any such investigation, action or restatement of financial statements.

3.7 Absence of Certain Changes.

(a) Except as disclosed in Section 3.7(a) of the Disclosure Letter, since December 31, 2004, (i) the Company and its Subsidiaries have conducted their respective operations only in the ordinary course consistent with past practice, (ii) there has not occurred or continued to exist any event, change, occurrence, effect, fact, circumstance or condition which, individually or in the aggregate, has had, or is reasonably likely to have, a Material Adverse Effect on the Company, and (iii) neither the Company nor any of its Subsidiaries has taken any action that if taken after the date hereof would constitute a violation of Section 5.1 (other than clause (a) thereof).

(b) Except as set forth in Section 3.7(b) of the Disclosure Letter, since December 31, 2004, neither the Company nor any of its Subsidiaries has (1) increased or agreed to increase the wages, salaries, compensation, pension, or other fringe benefits or perquisites payable to any officer or director from the amount thereof in effect as of December 31, 2004 (which amounts have been previously disclosed to Parent), granted any severance or termination pay, entered into any contract to make or grant any severance or termination pay, entered into or made any loans to any of its officers, directors, employees, affiliates, agents or consultants other than advances of expenses in the ordinary course of business consistent with past practice and not material in the aggregate or made any change in its borrowing or lending arrangements for or on behalf of any of such Persons, whether pursuant to an employee benefit plan or otherwise, or granted, issued, accelerated, paid, accrued or agreed to pay or make

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any accrual or arrangement for payment of salary or other payments or benefits pursuant to, or adopt or amend; any new or existing Plan (as defined in Section 3.10(a)), (ii) declared, set aside or paid any dividend or other distribution (whether in cash, stock or property) with respect to any of the Company’s capital stock, (iii) effected or authorized any split, combination or reclassification of any of the Company’s capital stock or any issuance thereof or issued any other securities in respect of, in lieu of or in substitution for shares of the Company’s capital stock, except for issuances of Company Common Stock upon the exercise of Company Stock Options, in each case awarded prior to the date hereof in accordance with their present terms, (iv) changed, or has knowledge of any reason that would have required or would require changing, any accounting methods (or underlying assumptions), principles or practices of the Company or its Subsidiaries, including any reserving, renewal or residual method, practice or policy,(v) made any tax election or settled or compromised any income tax liability, (vi) to the Company’s knowledge, had any union organizing activities, (vii) sold, leased, exchanged, transferred or otherwise disposed of any of its Assets other than in the ordinary course consistent with past practices, (viii) revalued, or has knowledge of any reason that would have required or would require revaluing, any of the Assets, including writing down the value of any Assets or writing off notes or accounts receivable other than in the ordinary course of business consistent with past practices, or (ix) made any agreement or commitment (contingent or otherwise) to do any of the foregoing.

3.8 Absence of Undisclosed Liabilities. Except as and to the extent reflected or reserved against in the balance sheet dated as of December 31, 2004 included in the Company’s Annual Report on Form 10-K for the term ended December 31, 2004 (the “Balance Sheet”) or in the notes thereto, neither the Company nor any of its Subsidiaries had as of that date any liabilities or obligations (accrued, contingent or otherwise) that would be material to the Company and its Subsidiaries taken as a whole. Except as set forth in the Balance Sheet or in Section 3.8 of the Disclosure Letter, since the date of the Balance Sheet, neither the Company nor any of its Subsidiaries has incurred any material liabilities or obligations (accrued, contingent or otherwise) that would be required to be reflected or reserved against in an audited consolidated balance sheet of the Company and its Subsidiaries or the notes thereto prepared in accordance with GAAP, or that would be material to the Company and its Subsidiaries taken as a whole, except for liabilities and obligations (i) arising in the ordinary course of business consistent with past practice, or (ii) resulting from the execution and delivery of this Agreement. Neither the Company nor any of its Subsidiaries is in default in respect of the terms and conditions of any indebtedness or other agreement which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

3.9 Proxy Statement; Schedule 13E-3; Merger Documents.

(a) The Proxy Statement (and any amendment thereof or supplement thereto) at the date mailed to Company stockholders and at the time of the Stockholders’ Meeting), (i) will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading and (ii) will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder.

(b) The Schedule 13E-3 required to be filed with the SEC under the Exchange Act or mailed to the stockholders of the Company in connection with the Merger at the time the Schedule 13E-3 or any amendments thereto are so filed or mailed, (i) will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading and (ii) will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder.

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3.10 Employee Benefit Plans; ERISA.

(a) Section 3.10(a) of the Disclosure Letter contains a true and complete list of each bonus, deferred compensation, incentive compensation, stock purchase, stock option, stock appreciation right or other equity-based incentive, severance, termination, change in control, retention, employment, hospitalization or other medical, life or insurance, disability, other welfare, supplemental unemployment benefits, profit-sharing, pension, or retirement plan, program, agreement or arrangement, and each other employee compensation or benefit plan, program, agreement or arrangement, sponsored, maintained or contributed to by the Company, any of its Subsidiaries or by any trade or business, whether or not incorporated (an “ERISA Affiliate”), since January 1, 2003 that together with the Company or any of its Subsidiaries would be deemed a “single employer” within the meaning of section 4001 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for the benefit of any current or former employee or director of the Company, any of its Subsidiaries or any ERISA Affiliate or with respect to which the Company or any of its Subsidiaries has or could reasonably be expected to have any material liability (matured or unmatured, absolute or contingent) (the “Plans”). Section 3.10(a) of the Disclosure Letter identifies each of the Plans that is an “employee benefit plan,” subject to ERISA (the “ERISA Plans”).

(b) With respect to each Plan, the Company has heretofore delivered or made available to Parent true and complete copies of each of the following documents (including all amendments to such documents):

(i) the Plans or a written description of any Plans not in writing;

(ii) a copy of the annual report or Internal Revenue Service Form 5500 Series, if required under ERISA, with respect to each ERISA Plan for the last three Plan years ending prior to the date of this Agreement for which such a report was filed;

(iii) a copy of the actuarial report, if required under ERISA, with respect to each ERISA Plan for the last three Plan years ending prior to the date of this Agreement;

(iv) a copy of the most recent Summary Plan Description (“SPD”), together with all Summaries of Material Modification issued with respect to such SPD, if required under ERISA, with respect to each ERISA Plan, and all other material employee communications relating to each ERISA Plan;

(v) if the Plan or any obligations thereunder are funded through a trust or any other funding vehicle, the trust or other funding agreement and the latest financial statements thereof;

(vi) all contracts relating to the Plans with respect to which the Company, any of its Subsidiaries or any ERISA Affiliate may have any liability, including insurance contracts, investment management agreements, subscription and participation agreements and record keeping agreements;

(vii) the most recent determination letter received from the Internal Revenue Service with respect to each Plan intended to qualify under section 401(a) of the Code; and

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(viii) material communications that the Company or any of its ERISA affiliates or Subsidiaries has received from or sent to the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any comparable agency of any foreign Governmental Entity concerning any termination of, withdrawal from or appointment of a trustee to administer any plan or the failure or alleged failure to comply with any provision of ERISA, the Code or comparable legislation of a foreign jurisdiction with respect to any plan, including any existing written description of any such oral communication.

(c) At no time has the Company, any of its Subsidiaries or any ERISA Affiliate ever, maintained, established, sponsored, participated in or contributed to any ERISA Plan that is subject to Title IV of ERISA. Except as disclosed in Section 3.10(c) of the Disclosure Letter, no ERISA Plan is a “multiemployer plan,” as defined in section 3(37) of ERISA, nor is any ERISA Plan a plan described in section 4063(a) of ERISA.

(d) None of the Company, any of its Subsidiaries, any ERISA Affiliate, any of the ERISA Plans, any trust created thereunder, nor, to the knowledge of the Company, any trustee or administrator thereof has engaged in a transaction or has taken or failed to take any action in connection with which the Company, any of its Subsidiaries or any ERISA Affiliate could be subject to any material liability for either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975(a) or (b), 4976 or 4980B of the Code.

(e) All contributions and premiums that the Company, any of its Subsidiaries or any ERISA Affiliate is required to pay under the terms of each of the ERISA Plans and Section 412 of the Code, have, to the extent due, been paid in full or properly recorded on the financial statements or records of the Company or its Subsidiaries. None of the ERISA Plans or any trust established thereunder has incurred any “accumulated funding deficiency” (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the date of this Agreement. No Lien has been imposed under Section 412(n) of the Code or Section 302(f) of ERISA on the Assets or any assets of an ERISA Affiliate. No event or circumstance has occurred that is reasonably likely to result in the imposition of any such Lien on any such assets on account of any ERISA Plan.

(f) Each of the Plans has been operated and administered in all material respects in accordance with applicable laws, including ERISA and the Code.

(g) Each of the ERISA Plans that is intended to be “qualified” within the meaning of Section 401(a) of the Code is so qualified. The Company has applied for and received a currently effective determination letter from the IRS stating that it is so qualified, and no event has occurred which would reasonably be expected to affect such qualified status. Any fund established under an ERISA Plan that is intended to satisfy the requirements of Section 501(c)(9) of the Code has so satisfied such requirements.

(h) Except as disclosed in Section 3.10(h) of the Disclosure Letter, no amounts payable under any of the Plans or any other contract, agreement or arrangement with respect to which the Company or any of its Subsidiaries may have any liability could fail to be deductible for federal income tax purposes by virtue of Sections 280G or 162(m) of the Code.

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(i) No Plan provides benefits, including death or medical benefits (whether or not insured), with respect to current or former employees of the Company, its Subsidiaries or any ERISA Affiliate after retirement or other termination of service (other than (i) coverage mandated by applicable laws, (ii) death benefits or retirement benefits under any “employee pension plan,” as that term is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on the books of the Company, any of its Subsidiaries or an ERISA Affiliate, or (iv) benefits, the full direct cost of which is borne by the current or former employee (or beneficiary thereof)).

(j) Except as disclosed in Section 3.10(j) of the Disclosure Letter, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with any other event, (i) entitle any current or former employee, officer or director of the Company, any of its Subsidiaries or any ERISA Affiliate to severance pay, unemployment compensation or any other similar termination payment, or (ii) accelerate the time of payment or vesting, or increase the amount of or otherwise enhance any benefit due any such employee, officer or director.

(k) There are no pending or, to the knowledge of the Company, threatened claims by or on behalf of any Plan, by any employee or beneficiary under any such Plan or otherwise involving any such Plan (other than routine claims for benefits).

3.11 Litigation; Compliance with Law.

(a) Except as set forth in Section 3.11(a) of the Disclosure Letter, there is no Litigation (as hereinafter defined) pending or, to the knowledge of the Company, threatened against, relating to or naming as a party thereto the Company or any of its Subsidiaries, any of their respective properties or assets or any of the Company’s officers or directors (in their capacities as such), (i) that if determined in a manner adverse to the Company or its Subsidiaries would reasonably be expected to have a Material Adverse Effect on the Company, or (ii) seeking to restrain, enjoin, alter or delay the consummation of the Merger or any of the other transactions contemplated by this Agreement. There is no agreement, order, judgment, decree, injunction or award of any Governmental Entity against or binding upon the Company, any of its Subsidiaries or any of the Company’s officers or directors (in their capacities as such) that could prevent, enjoin, alter or delay the consummation of the Merger or any of the other transactions contemplated by this Agreement or that would have a Material Adverse Effect on the Company. There is no material Litigation that the Company or any of its Subsidiaries has pending against other parties. “Litigation” means any action, claim, suit, proceeding, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal or regulatory, in law or in equity, by or before any Governmental Entity or arbitrator (including worker’s compensation claims).

(b) Except as set forth in Section 3.11(b) of the Disclosure Letter, each of the Company and its Subsidiaries has complied, and is in compliance, in all material respects with all Laws and Permits which affect the respective businesses of the Company or any of its Subsidiaries, the Real Property or the Assets, and the Company and its Subsidiaries have not been and are not in violation of any such Law or Permit; except where the failure to so comply would have a Material Adverse Effect on the Company. Nor has any notice, charge, claim or action been received by the Company or any of its Subsidiaries or been filed, commenced, or to the knowledge of the Company, threatened against the Company or any of its Subsidiaries alleging any material violation of the foregoing.

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(c) The Company and its Subsidiaries hold all material licenses, permits, variances, consents, authorizations, waivers, grants, franchises, concessions, exemptions, orders, registrations and approvals of Governmental Entities or other Persons necessary for the ownership, leasing, operation, occupancy and use of the Real Property, the Assets and the conduct of their respective businesses as currently conducted (“Permits”). Neither the Company nor any of its Subsidiaries has received notice that any Permit will be terminated or modified or cannot be renewed in the ordinary course of business, and the Company has no knowledge of any reasonable basis for any such termination, modification or nonrenewal. The execution, delivery and performance of this Agreement and the consummation of the Merger or any other transactions contemplated hereby do not and will not violate any Permit, or result in any termination, modification or nonrenewals thereof.

3.12 Intellectual Property.

(a) The Company and its Subsidiaries own, or possess sufficient and legally enforceable licenses or other sufficient and legally enforceable rights to use, any and all United States and foreign patents, patent applications, patent disclosures, mask works, computer software, trademarks, trade dress, trade names, logos, Internet domain names, copyrights and service marks, including applications to register and registrations for any of the foregoing, as well as trade secrets, know-how, data and other proprietary rights and information (all of the foregoing, referred to as “Technology” and together with trademarks, trade names and service marks, referred to as “Intellectual Property”) necessary for the conduct of, or otherwise material to, the business and operations of the Company and its Subsidiaries as currently conducted, free and clear of any Liens (except for any Permitted Liens (as defined in Section 8.4(ggg))) except where the failure to own or possess such rights would not have a Material Adverse Effect on the Company. Section 3.12(a) of the Disclosure Letter lists as of the date hereof, (i) all material patents, patent applications, patent disclosures, trademarks, trade dress, service marks, trade names, logos, Internet domain names, copyrights, mask works, any applications or registrations of the foregoing, and computer software owned or used by the Company or any of its Subsidiaries, (ii) any agreements to which the Company or any of its Subsidiaries are a party granting or obtaining any right to use or practice any rights under any material Intellectual Property or restricting the Company’s or any of its Subsidiaries’ right to use any material Intellectual Property. The material Intellectual Property owned by the Company or any of its Subsidiaries, and to the knowledge of the Company, used by the Company or any of its Subsidiaries, is valid and enforceable, in full force and effect, and has not been cancelled, expired or abandoned.

(b) Except as disclosed in Section 3.12(b) of the Disclosure Letter, the conduct of the business of the Company and its Subsidiaries as currently or previously conducted does not infringe, conflict with or otherwise violate any Intellectual Property of any Person except for such conduct that would not have a Material Adverse Effect on the Company, and none of the Company or any of its Subsidiaries has received notice or has knowledge of any such infringement, conflict or other violation.

(c) Except as set forth on Section 3.12(c) of the Disclosure Letter, to the knowledge of the Company, no Person is infringing, conflicting with or otherwise violating any Intellectual Property owned or used by the Company or any of its Subsidiaries, and no such claims, suits or other proceedings have been brought or threatened against any Person by the Company or any of its Subsidiaries. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not result in the loss of, or any Lien on, the rights of the Company or any of its Subsidiaries with respect to any material Intellectual Property owned or used by the Company or any of its Subsidiaries.

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3.13 Contracts.

(a) Except as set forth in Section 3.13 of the Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to or bound by any contract, arrangement, commitment or understanding (whether written or oral) that: (i) has been entered into with any officer, director of affiliate of the Company or its Subsidiaries, (ii) requires remaining payments by the Company or any of its Subsidiaries in excess of $50,000 and is not terminable by the Company or its Subsidiaries, as the case may be, on notice of three months or less without penalty, (iii) which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC), (iv) restrains, limits or impedes the Company’s or any of its Subsidiaries’, or will materially restrain, limit or impede the Surviving Corporation’s, ability to compete with or conduct any business or any line of business, including geographic limitations on the Company’s or any of its Subsidiaries’ or the Surviving Corporation’s activities, (v) is a joint venture agreement, partnership agreement, profit-sharing or similar agreement, (vi) governs the terms of indebtedness or any other obligation of third parties owed to the Company or any of its Subsidiaries, other than receivables arising from the sale of goods or services, or loans or advances not exceeding $25,000 in the aggregate made to employees of the Company or any of its Subsidiaries, by the Company or such Subsidiary in the ordinary course of business consistent with past practice, (vii) governs the terms of indebtedness or any other obligation of third parties owed by or guaranteed by the Company or any of its Subsidiaries, or (viii) which is material to the Company and its Subsidiaries taken as a whole. Each contract, arrangement, commitment or understanding of the type described in this Section 3.13(a), whether or not set forth in Section 3.13(a) of the Disclosure Letter, is referred to herein as a “Material Contract.” The Company has previously made available to Parent true, complete and correct copies of each Material Contract.

(b) Each Material Contract is valid and binding and in full force and effect, and the Company and each of its Subsidiaries has performed all material obligations required to be performed by it to date under each Material Contract. No event or condition exists which constitutes or, after notice or lapse of time or both, would constitute, a material default on the part of the Company or any of its Subsidiaries under any Material Contract and to the knowledge of the Company, no other party to any such Material Contract is in default in any respect thereunder.

3.14 Taxes.

(a) Except as set forth on Section 3.14(a) of the Disclosure Letter, (i) all Returns required to be filed with any taxing authority on or before the Closing Date by, or with respect to, the Company and its Subsidiaries have (or by the Closing Date shall have) been filed in accordance with all applicable laws and all such returns are true, correct and complete in all material respects; (ii) the Company and its Subsidiaries have timely paid all Taxes shown as due and payable on the Returns referred to in clause (i), above; (iii) the Company and its Subsidiaries have made provision in accordance with GAAP in the Balance Sheet for all Taxes that are or may become payable by the Company and its Subsidiaries relating to periods on or prior to the Closing Date for which no Return has been filed; (iv) all material Employment and Withholding Taxes (as hereinafter defined) have been either duly and timely paid to the proper governmental authority or properly set aside in accounts for such purpose in accordance with applicable Laws; (v) the charges, accruals and reserves for Taxes (as hereinafter defined) with respect to the Company and its Subsidiaries reflected in the Balance Sheet are adequate under GAAP to cover the Tax liabilities accruing through the date thereof; (vi) no deficiencies for any Taxes have been asserted or assessed, or, to the knowledge of the Company, proposed, against the Company or any of its Subsidiaries that are not subject to adequate reserves in accordance with GAAP in the Balance Sheet; and (vii) as of the Closing Date, there is no action, suit, proceeding, investigation, audit or claim pending or, to the knowledge of the Company, threatened, against or with respect to the Company or any of its Subsidiaries in respect of any Tax.

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(b) Neither the Company nor any of its Subsidiaries has been included in any “consolidated,” “unitary” or “combined” Return (other than Returns which include only the Company and any Subsidiaries of the Company) provided for under the laws of the United States, any foreign jurisdiction or any state or locality for any taxable period for which the statute of limitations has not expired.

(c) The Company is not, nor has it been within the most recent five years, a “United States real property holding corporation” as defined in Section 897 of the Code.

(d) There are no Tax sharing, allocation, indemnification or similar agreements in effect as between the Company, any of its Subsidiaries or any predecessor or affiliate of any of them and any other party under which the Company or any of its Subsidiaries could be liable for any Taxes of any party other than the Company or any Subsidiary of the Company.

(e) Neither the Company nor any of its Subsidiaries has entered into an agreement or waiver extending any statute of limitations relating to the payment or collection of Taxes of the Company or any of its Subsidiaries.

(f) There are no Liens for Taxes on any asset of the Company or its Subsidiaries, except for Permitted Liens.

(g) Each of the Company and its Subsidiaries has disclosed on its Returns all positions taken therein that could give rise to a substantial understatement of Tax within the meaning of Section 6662 of the Code. Neither the Company nor its Subsidiaries has entered into, has any liability in respect of, or has any filing obligations with respect to, any “reportable transactions,” as defined in Section 1.6011-4(b)(1) of the Treasury Regulations.

(h) Neither the Company nor its Subsidiaries is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any taxing authority.

(i) Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date under Section 481(c) of the Code (or any corresponding or similar provision of state, local or foreign tax law); (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign tax law) executed on or prior to the Closing Date, and (iii) deferred intercompany gain or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign tax law).

(j) Neither the Company nor any of its Subsidiaries has undergone an “ownership change” as defined pursuant to Section 382(g) of the Code.

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3.15 Environmental Matters.

(a) Except as disclosed in Section 3.15(a) of the Disclosure Letter, the Company and its Subsidiaries have complied, and are in compliance, in all material respects with all applicable Environmental Laws (as hereinafter defined), which compliance includes the possession of all Permits required under applicable Environmental Laws and compliance with the terms and conditions thereof and the making and filing with all applicable Governmental Entities of all reports, forms and documents and the maintenance of all records required to be made, filed or maintained by it under any Environmental Law. All material Permits and other governmental authorizations currently held by the Company and each of its Subsidiaries pursuant to Environmental Laws are identified in Schedule 3.15(a)(1). Neither the Company nor any of its Subsidiaries has received any communication (written or oral) from any Person, whether a Governmental Entity, citizens group, employee or otherwise, that alleges that the Company or any of its Subsidiaries are not in compliance with Environmental Laws, and, to the knowledge of the Company, there are no circumstances that could reasonably be expected to prevent or interfere with such compliance in the future.

(b) Except as disclosed in Section 3.15(b) of the Disclosure Letter, there are no past or present actions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Hazardous Substance, that could reasonably be expected to form the basis of any material Environmental Claim against the Company or any of its Subsidiaries, against any Person whose liability for any Environmental Claim the Company or any of its Subsidiaries has retained or assumed either contractually or by operation of law. There are no Environmental Claims (as hereinafter defined) pending or, to the knowledge of the Company, threatened, against the Company or any of its Subsidiaries, or, to the knowledge of the Company, against any Person whose liability for any Environmental Claim the Company or any of its Subsidiaries has retained or assumed either contractually or by operation of law.

(c) Except as disclosed in Section 3.15(c) of the Disclosure Letter, neither the Company nor any of its Subsidiaries is subject to any material liability or obligation (accrued, contingent or otherwise), including the obligation, liability or commitment to cleanup, correct, abate or to take any response, remedial or corrective action under or pursuant to any Environmental Laws, relating to (i) environmental conditions on, under, or about any of the properties or assets owned, leased, operated or used by the Company or any of its Subsidiaries or any predecessor thereto at the present time or in the past, including the air, soil, surface water and groundwater conditions at, on, under, from or near such properties, or (ii) the past or present use, management, handling, transport, treatment, generation, storage, disposal or Release of any Hazardous Substances, whether on-site at any Real Property, or at any off-site location. The Company has provided to Parent all material information, including such studies, analyses and test results, in the possession, custody or control of or otherwise known and available to the Company or any of its Subsidiaries relating to (1) the environmental conditions on, under or about any of the properties or assets owned, leased, operated or used by any of the Company and its Subsidiaries or any predecessor in interest thereto at the present time or in the past, and (2) any Hazardous Substances (as hereinafter defined) used, managed, handled, transported, treated, generated, stored or Released by any Person on, under, about or from, or otherwise in connection with the use or operation of, any of the properties, assets and businesses of the Company or any of its Subsidiaries.

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(d) Except as set forth in Section 3.15(d) of the Disclosure Letter, and without in any way limiting the generality of the foregoing, (i) to the knowledge of the Company, there are no underground storage tanks located at any property currently or previously owned, leased, operated or used by the Company or any of its Subsidiaries, (ii) there is no asbestos contained in or forming part of any building, building component, structure or office space currently or previously owned, leased, operated or used by the Company or any of its Subsidiaries, and (iii) no polychlorinated biphenyls (PCBs) or PCB-containing items are used or stored at any property currently or previously owned, leased, operated or used by the Company or any of its Subsidiaries.

(e) To the knowledge of the Company, neither the Company nor any of its Subsidiaries is required by virtue of the transactions contemplated by this Agreement, or as a condition to the effectiveness of any transactions contemplated by this Agreement, (i) to perform a site assessment for Hazardous Substances, (ii) to remove or remediate any Hazardous Substances, (iii) to give notice to or receive approval from any Governmental Entity, or (iv) to record or deliver to any Person any disclosure document or statement pertaining to environmental matters.

3.16 Assets. The Company and its Subsidiaries own, or otherwise have sufficient and legally enforceable rights to use, all of their respective material properties and assets (the “Assets”). The Company and its Subsidiaries have valid title to, or in the case of leased property have valid leasehold interests in, all such Assets, including all such Assets reflected in the Balance Sheet or acquired since the date thereof (except as may have been disposed of since December 31, 2004 in the ordinary course of business consistent with past practice), in each case, free and clear of any Lien, except Permitted Liens. Section 3.16(a) of the Disclosure Letter sets forth all appraisals of the tangible properties and assets received by the Company or any of its Subsidiaries within the last three years, true, correct and complete copies of which have been delivered to Parent. The Assets constitute all of the material assets and rights necessary to operate the businesses of the Company and its Subsidiaries in substantially the same manner that the Company and its Subsidiaries have been operating their respective businesses prior to the Closing, and all material operating equipment of the Company and its Subsidiaries is in good operating condition, ordinary wear and tear excepted.

3.17 Real Property.

(a) Section 3.17(a)(i) of the Disclosure Letter contains a complete and correct list of all Owned Real Property setting forth information sufficient to specifically identify such Owned Real Property (as hereinafter defined) and the legal owner thereof. Except as disclosed in Section 3.17(a)(ii) of the Disclosure Letter, the Company and its Subsidiaries have good, valid and marketable fee simple title to the Owned Real Property, free and clear of any Liens other than Permitted Liens. There are no outstanding options or rights of first refusal to purchase the Owned Real Property, or any material portion thereof or interest therein.

(b) Section 3.17(b) of the Disclosure Letter contains a complete and correct list of all material Leased Real Property setting forth information sufficient to specifically identify such Leased Real Property (as hereinafter defined) and legal rights of the lessee thereof. Each Lease (as hereinafter defined) grants the lessee thereunder the exclusive right to use and occupy the premises free and clear of any Liens other than Permitted Liens. Each of the Company and its Subsidiaries has good and valid title to the leasehold estate or other interest created under its respective Leases free and clear of any Liens other than Permitted Liens. Each of the Company and its Subsidiaries enjoys peaceful and undisturbed possession under its respective Leases of its respective Leased Real Property (as hereinafter defined) free and clear of any Lien other than Permitted Liens.

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(c) The Real Property constitutes all the fee, leasehold and other interests in real property held by the Company and its Subsidiaries, and constitutes all of the fee, leasehold and other interests in real property, necessary for the conduct of the business of the Company and its Subsidiaries as it is currently conducted. The use and operation of the Real Property in the conduct of the business of the Company and its Subsidiaries does not materially violate any instrument of record or agreement affecting the Real Property. No current use by the Company and its Subsidiaries of the Real Property is dependent on a nonconforming use or other Governmental Approval.

3.18 Insurance. Section 3.18 of the Disclosure Letter contains a com-plete and correct list and summary description of all material insurance policies main-tained by or on behalf of any of the Company and its Subsidiaries. Such policies are in full force and effect, and all premiums due thereon have been paid. The Company and its Subsidiaries have complied in all material respects with the terms and provisions of such policies. The insurance coverage provided by such policies is suitable for the business and operations of the Company and its Subsidiaries.

3.19 Labor Matters.

(a) None of the Company or any of its Subsidiaries is a party to or bound by a collective bargaining agreement with any labor union or labor organization applicable to the employees of the Company or any of its Subsidiaries, and no such agreement is currently being negotiated. Except as set forth on Section 3.19(a) of the Disclosure Letter, no representation election petition or application for certification has been filed by any employees of the Company or any of its Subsidiaries, nor is such a petition or application pending with the National Labor Relations Board or any Governmental Entity, and no labor union is currently engaged in or, to the knowledge of the Company, threatening, organizational efforts with respect to any employees of the Company or any of its Subsidiaries. Except as set forth on Section 3.19(a) of the Disclosure Letter, since January 1, 2000, no labor dispute, strike, slowdown, picketing, work stoppage, lockout or other collective labor action involving the employees of the Company or any of its Subsidiaries has occurred or is in progress or, to the knowledge of the Company, has been threatened against the Company or any of its Subsidiaries.

(b) Except as set forth on Section 3.19(b) of the Disclosure Letter, since January 1, 2000, neither the Company nor any of its Subsidiaries has effectuated (i) a “plant closing” (as defined in the Worker Adjustment Retraining and Notification (the “WARN Act”), affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company or any of its Subsidiaries, or (ii) a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility of the Company or any of its Subsidiaries; nor has the Company or any of its Subsidiaries been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any state, local or foreign Law or regulation similar to the WARN Act. To the knowledge of the Company, neither the Company nor any of its Subsidiaries’ employees has suffered an “employment loss” (as defined in the WARN Act) in the ninety (90) days prior to the date of this Agreement.

(c) Section 3.19(c) of the Disclosure Letter contains a true and complete list of the names of all directors and officers of each of the Company and its Subsidiaries.

3.20 Affiliate Transactions. Section 3.20 of the Disclosure Letter contains a complete and correct list of all (i) transactions between the Company or any of its Subsidiaries and any director, officer, employee or affiliate of the Company or its Subsidiaries other than transactions between the Company and its wholly owned Subsidiaries and compensation paid to directors, officers or employees in the ordinary course of business and (ii) agreements, arrangements or understandings by the Company or any of its Subsidiaries, on the one hand, and any of their respective affiliates on the other hand, that involve continuing liabilities and obligations of the Company or its Subsidiaries.

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3.21 Brokers. Except for Morgan Keegan & Company, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its Subsidiaries, that is or will be payable by the Company or any of its Subsidiaries. The Company has previously delivered to Parent true and correct copies of such engagement letter.

3.22 Opinion of Financial Advisor. The Company has received an opinion of Morgan Keegan & Company to the effect that, as of the date hereof, the Merger Consideration to be received by the stockholders of the Company in the Merger is fair, from a financial point of view, to the stockholders of the Company. The Company has previously delivered to Parent a true and correct copy of such opinion. The Company has received the approval of Morgan Keegan & Company to permit the inclusion of a copy of its written opinion in its entirety in the Proxy Statement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER

Parent and the Purchaser represent and warrant to the Company, as of the date hereof, as follows:

4.1 Organization.

(a) Parent is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Nevada and the Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of Nevada, and each of Parent and the Purchaser has all requisite power and authority to own, lease, operate or use its properties and to carry on its business as now being conducted. Each of Parent and the Purchaser is qualified or licensed to do business as a foreign limited liability company or corporation, respectively, and is in good standing in each jurisdiction in which it owns real property or in which the nature of the business conducted by it makes such qualification or licensing necessary. Each of Parent and the Purchaser has previously delivered to the Company complete and correct copies of its organizational documents as currently in effect.

4.2 Authorization; Validity of Agreement. Each of Parent and the Purchaser has the requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by Parent and the Purchaser of this Agreement and the consummation by Parent and the Purchaser of the transactions contemplated hereby have been duly authorized by the board of managers of Parent and the board of directors of the Purchaser and no other proceedings on the part of Parent or the Purchaser are necessary to authorize the execution, delivery and performance of this Agreement by Parent and the Purchaser and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent and the Purchaser and, assuming due authorization, execution and delivery of this Agreement by the Company, is a valid and binding obligation of each of Parent and the Purchaser enforceable against it in accordance with its terms except that such enforceability (i) may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law).

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4.3 Consents and Approvals; No Violations.

(a) Neither the execution, delivery and performance of this Agreement by Parent and the Purchaser nor the consummation by Parent and the Purchaser of the transactions contemplated hereby will (i) violate any provision of the organizational documents of Parent or the Purchaser, (ii) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination, cancellation or amendment under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Parent or the Purchaser under, or result in the acceleration or trigger of any payment, time of payment, vesting or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, guarantee or other evidence of indebtedness, lease, license, contract, agreement, plan or other instrument or obligation to which Parent or the Purchaser is a party or by which Parent or the Purchaser or any of their respective properties or assets may be bound or affected or (iii) conflict with or violate any Law applicable to Parent or the Purchaser or any of their respective properties or assets; except in the case of clause (ii) or (iii) for such conflicts, violations, breaches, defaults or Liens which individually or in the aggregate would not have or result in a Material Adverse Effect on Parent or the Purchaser.

(b) Assuming that the representations and warranties of the Company set forth in Section 3.4(b) are true and correct, no filing or registration with, declaration or notification to, or order, authorization, consent or approval of, any Governmental Entity or any other Person is required in connection with the execution, delivery and performance of this Agreement by Parent and the Purchaser or the consummation by Parent and the Purchaser of the transactions contemplated hereby, except (i) the filing of the Articles of Merger with the Secretary of State, and (ii) such other consents, approvals, orders, authorizations, notifications, registrations, declarations and filings the failure of which to be obtained or made individually or in the aggregate would not have or result in a Material Adverse Effect on Parent or the Purchaser.

4.4 Information in Proxy Statement; Schedule 13E-3; Merger Documents. The information supplied by, and pertaining to, Parent and the Purchaser in writing for inclusion in the Proxy Statement (including any amendments or supplements thereto), the Schedule 13E-3 (including any amendments or supplements thereto), or any other statement or schedule filed with the SEC by the Company, Parent or the Purchaser at the date mailed to stockholders and at the time of the Stockholders’ Meeting, (i) will not make any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading and any statement or schedule filed by Parent or the Purchaser and (ii) will comply in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder; except that no representation is made by Parent or the Purchaser with respect to statements made in such statement or schedule based on information supplied to Parent and the Purchaser by the Company for inclusion in such statement or schedule.

4.5 Broker. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or the Purchaser, that is or will be payable by the Company or any of its Subsidiaries other than following the occurrence of the Effective Time.

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ARTICLE V

COVENANTS

5.1 Interim Operations of the Company. The Company covenants and agrees that during the period from the date of this Agreement until the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1 hereof, except as (y) expressly provided by this Agreement or (z) agreed to in writing by Parent, after the date hereof and prior to the Effective Time:

(a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary course consistent with past practice, and the Company shall use its commercially reasonable efforts to preserve intact its business organization and goodwill and the business organization and goodwill of its Subsidiaries and keep available the services of their current officers and employees and preserve and maintain existing relations with customers, suppliers, officers, employees and creditors;

(b) the Company shall not, nor shall it permit any of its Subsidiaries to, (i) enter into any new line of business outside the less-than-truckload trucking business or (ii) incur or commit to any capital expenditures, or any obligations or liabilities in connection with any capital expenditures other than capital expenditures and obligations or liabilities incurred or committed to in an amount not greater in the aggregate than, and during the same time period set forth in, Section 7.22 of the Company’s Amended and Restated Credit Agreement, dated March 24, 2005, with Bank of America, N.A. as agent (as amended, the “Credit Agreement”), a copy of which has been furnished to Parent prior to the date hereof (the “Capital Budget”);

(c) the Company shall not, nor shall it permit any of its Subsidiaries to, amend its articles of incorporation or bylaws, except as contemplated by the transactions contemplated hereby;

(d) the Company shall not, nor shall it permit any of its Subsidiaries to, declare, set aside or pay any dividend or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock; and the Company shall not, nor shall it permit any of it Subsidiaries to, (i) adjust, split, combine or reclassify any capital stock or issue, grant, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or of any other such securities or agreements of the Company or any of its Subsidiaries, other than issuances of shares of Company Common Stock pursuant to securities, options, warrants, calls, commitments or rights existing at the date hereof and previously disclosed to Parent in writing; or (ii) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or any other securities or agreements of the type described in clause (i) of this Section 5.1(d);

(e) the Company shall not, nor shall it permit any of its Subsidiaries to, (i) except for normal increases in the ordinary course of business consistent with past practice with respect to non-officer employees, grant any increase in the compensation or benefits payable or to become payable by the Company or any of its Subsidiaries to any employee; (ii) adopt, enter into, amend or otherwise increase, or accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under any compensation, severance, retention, other similar profit sharing, stock option or equity-linked pension or retirement plan, program agreement or arrangement; or (iii) enter into or amend any employment or severance agreement or, except in accordance with existing contracts or agreements disclosed on Section 3.13 of the Disclosure Letter, grant any severance or termination pay to any officer, director or employee of the Company or any of its Subsidiaries;

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(f) the Company shall not, nor shall it permit any of its Subsidiaries to, change the accounting principles used by it unless required due to changes in GAAP;

(g) the Company shall not, nor shall it permit any of its Subsidiaries to, acquire any securities or assets of any Person or any division or business of any Person other than purchases of inventory in the ordinary course of business consistent with past practice;

(h) the Company shall not, nor shall it permit any of its Subsidiaries to, sell, lease, exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange, transfer or otherwise dispose of, any of the Assets, except in the ordinary course of business consistent with past practice (whether by purchase, merger or otherwise);

(i) the Company shall not, nor shall it permit any of its Subsidiaries to, mortgage, pledge, hypothecate, grant any security interest in, or otherwise subject to any other Lien other than Permitted Liens, any of the Assets;

(j) the Company shall not, nor shall it permit any of its Subsidiaries to, (i) pay, discharge or satisfy any material claims (including claims of stockholders), liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) where such payment, discharge or satisfaction would require any material payment except for the payment, discharge or satisfaction of liabilities or obligations in accordance with the terms of Material Contracts as in effect on the date hereof, or (ii) compromise, settle, grant any waiver or release relating to or otherwise adjust any Litigation (other than the settlement of any Litigation reference in Section 6.3(f));

(k) the Company shall not, nor shall it permit any of its Subsidiaries to, engage in any transaction with, or enter into any agreement, arrangement, or understanding with, directly or indirectly, any of the Company’s affiliates other than pursuant to agreements in force on the date of this Agreement as set forth on Schedule 5.1(k);

(l) the Company and its Subsidiaries shall not make or change any Tax election, amend any Return or settle or compromise any Tax liability;

(m) the Company shall not, and shall not permit any of its Subsidiaries to, take any action that would, or could reasonably be expected to, result in (i) any of its representations and warranties set forth in this Agreement becoming untrue in any respect, (ii) any of the conditions to the Merger set forth in Article VI not being satisfied, or (iii) a Material Adverse Effect on the Company;

(n) the Company shall not, and shall not permit any of its Subsidiaries to, adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger) or any agreement relating to an Acquisition Proposal, except as provided for in Section 5.2;

(o) the Company shall not, and shall not permit any of its Subsidiaries to, (i) incur or assume any debt other than (A) debt pursuant to the Credit Agreement as currently in effect, (B) capital leases of equipment and purchase money secured debt incurred to purchase equipment in the ordinary course of business consistent with past practice, (C) debt or sale/leasebacks secured by real property, provided that the aggregate amount of such debt (including capital leases) outstanding does not exceed $50,000,000 at any time, and (D) other debt not exceeding $100,000 in aggregate outstanding principal amount; (ii) incur or modify any material indebtedness or other material liability except as

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provided in the foregoing subsection (i); (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except in the ordinary course of business and consistent with past practice and in no event exceeding $10,000 in the aggregate; (iv) make any loans, advances or capital contributions to, or investments in, any other Person (other than to wholly owned Subsidiaries of the Company, or by such Subsidiaries to the Company, or customary loans or advances to employees in accordance with past practice and in no event exceeding $5,000 individually or $20,000 in the aggregate); or (v) enter into any material commitment or transaction, except in the ordinary course of business and consistent with past practice and in no event exceeding $25,000 individually;

(p) the Company shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, understanding or commitment that materially restrains, limits or impedes the Company’s or any of its Subsidiaries’ ability to compete with or conduct any business or line of business, including geographic limitations on the Company’s or any of its Subsidiaries’ activities;

(q) the Company shall not, and shall not permit any of its Subsidiaries to, modify, amend or terminate any Material Contract or enter into any contract that would be a Material Contract if entered into prior to the date hereof, or waive or assign any of its rights or claims; and

(r) the Company shall not, nor shall it permit any of its Subsidiaries to, enter into an agreement, contract, commitment or arrangement to do any of the foregoing.

5.2 Acquisition Proposals.

(a) The Company agrees that, except as expressly contemplated by this Agreement, neither it nor any of its Subsidiaries shall, and the Company shall, and shall cause its Subsidiaries to, cause their respective officers, directors, investment bankers, attorneys, accountants, financial advisors, agents or other representatives not to (x) directly or indirectly initiate, solicit, knowingly encourage or facilitate (including by way of furnishing information) any inquiries or the making or submission of any proposal that constitutes an Acquisition Proposal (as hereinafter defined), (y) participate or engage in discussions or negotiations with, or disclose any non-public information or data relating to the Company or any of its Subsidiaries or afford access to the properties, books or records of the Company or any of its Subsidiaries to, any Person that has made an Acquisition Proposal or to any Person in contemplation of an Acquisition Proposal, or (z) accept an Acquisition Proposal or enter into any agreement, including any letter of intent or agreement in principle, (other than an Acceptable Confidentiality Agreement (as hereinafter defined) in circumstances contemplated in the next sentence) providing for or relating to an Acquisition Proposal (an “Alternative Definitive Agreement”). Notwithstanding the foregoing, the Company and the Board may take the actions described in clause (y) and (z) of this Section 5.2(a) with respect to a third party at any time prior to the holding of the vote of the Company’s stockholders to adopt the Merger Agreement if prior to such vote (A) the Company receives a bona fide unsolicited written proposal from such third party, (B) the Board (or a committee of the Board) determines in good faith that such proposal constitutes a Superior Proposal (as hereinafter defined), after receiving such advice of its financial advisors, (and such Acquisition Proposal was not solicited, knowingly encouraged or facilitated by the Company or any of its Subsidiaries or any of their respective

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officers, directors, investment bankers, attorneys, accountants, financial advisors, agents or other representatives), (C) the Board determines in good faith, after consultation with its outside counsel, that the failure to participate in such negotiations or discussions or to furnish such information or data to such third party would constitute a breach of the Board’s fiduciary duties, provided that the Company shall not deliver any information to such third party without entering into a confidentiality agreement (as hereinafter defined) on terms no less favorable to the Company than the Confidentiality Agreement) (an “Acceptable Confidentiality Agreement”), (D) (i) the Board provides a written notice to Parent (a “Notice of Superior Proposal”) advising Parent that the Board or a committee thereof has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal, identifying the Person or group making such Superior Proposal and (ii) the Company and the Board does not take such actions described in clause (z) until the third Business Day after receipt of a Notice of Superior Proposal by Parent, and (E) in the case of clause (z) of this Section 5.2(a), the Company terminates this Agreement pursuant to Section 7.1(f) of this Agreement and complies with its obligations under Section 8.1, provided, however, the Company shall not be entitled to terminate this Agreement unless and until the Company has (i) paid the Termination Fee (ii) and reimbursed Expenses pursuant to Section 8.1. Nothing contained in this Section 5.2 shall prohibit the Company or the Board from taking and disclosing to the Company’s stockholders a position with respect to an Acquisition Proposal pursuant to Rule 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any similar disclosure, in either case to the extent required by applicable Law, provided that such disclosure states that no action will be taken by the Board or any committee thereof in violation of this Section 5.2.

(b) Neither the Board nor any committee thereof shall directly or indirectly (i) (A) withdraw (or amend or modify in a manner adverse to Parent or the Purchaser), or publicly propose to withdraw (or amend or modify in a manner adverse to Parent or the Purchaser), the approval or recommendation by the Board or any such committee thereof of this Agreement, the Merger or the other transactions contemplated by this Agreement or (B) recommend, adopt or approve, or propose publicly to recommend, adopt or approve, any Acquisition Proposal (any action described in this clause (i) being referred to as (an “Adverse Recommendation Change”). Notwithstanding the foregoing, at any time prior to obtaining the Required Vote, and subject to the Company’s compliance at all times with the provisions of this Section 5.2 and Section 5.6, the Board may make an Adverse Recommendation Change after the Company has received an unsolicited Acquisition Proposal that it determines in good faith is a Superior Proposal and the Board (x) provides written notice to Parent (a “Notice of Superior Proposal”) advising Parent that the Board or a committee thereof has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal, identifying the Person or group making such Superior Proposal, and (y) determines in good faith (1), based on the advice of its financial advisors that any transaction proposed by Parent is not at least as favorable to the Company and its stockholders from a financial point of view (taking into account, among other things, all legal, financial, regulatory and other aspects of the proposal and identity of the offeror and the financial capacity of the offeror to consummate the transaction) as the Superior Proposal and (2), based on the advise of its outside counsel that the failure to make such Adverse Recommendation Change would result in a breach of the fiduciary duties of the Board provided, however, that (I) neither the Board nor any committee thereof may make an Adverse Recommendation Change until the third Business Day after receipt of a Notice of Superior Proposal by Parent, (II) any change in the financial or other material terms of a Superior Proposal shall require a new Notice of Superior Proposal and a new three Business Day period under this Section 5.2(b), and (III) the Company shall not be entitled to enter into an Alternative Definitive Agreement, with respect to a Superior Proposal unless and until the Company has paid the Termination Fee and reimbursed Expenses up to an amount not in excess of $500,000 to Parent pursuant to Section 8.1 and this Agreement is terminated by its terms pursuant to Section 7.1.

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(c) The Company agrees to advise Parent in writing promptly (but in no event more than 24 hours) after receipt thereof of any request for information or any Acquisition Proposal received from any Person, or any communications with respect to any Acquisition Proposal, and the terms and conditions of such request, Acquisition Proposal, or communications, and the Company shall promptly provide to Parent copies of any written materials received by the Company in connection with any of the foregoing, and the identity of the Person or group making any such request, Acquisition Proposal or communications. The Company agrees that it shall simultaneously provide to Parent any non-public information concerning the Company provided to any other Person or group in connection with any Acquisition Proposal which was not previously provided to Parent. The Company shall keep Parent fully informed of the status of any Acquisition Proposals (including the identity of the parties and price involved and any changes to any terms and conditions thereof). The Company agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which the Company is a party and will use its commercially reasonable efforts to enforce any such agreement at the request of or on behalf of Parent, including initiating and prosecuting litigation seeking appropriate equitable relief (where available) and, to the extent applicable, damages.

(d) For purposes of this Agreement, “Acquisition Proposal” shall mean any bona fide proposal, whether or not in writing, for the (i) direct or indirect acquisition or purchase of a business or assets that constitutes 10% or more of the net revenues, net income or the assets (based on the fair market value thereof) of the Company and its Subsidiaries, taken as a whole, (ii) direct or indirect acquisition or purchase of 10% or more of any class of equity securities or capital stock of the Company or any of its Subsidiaries whose business constitutes 10% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, (iii) merger, consolidation, restructuring, transfer of assets or other business combination, sale of shares of capital stock, tender offer, exchange offer, recapitalization, stock repurchase program or other similar transaction that if consummated would result in any Person or Persons beneficially owning 10% or more of any class of equity securities of the Company or any of its Subsidiaries whose business constitutes 10% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, other than the transactions contemplated by this Agreement. The term “Superior Proposal” shall mean any bona fide written Acquisition Proposal that was not solicited by the Company or any of its Subsidiaries or any of their respective officers, directors, investment bankers, attorneys, accountants, financial advisors, agents or other representatives, made by a third party to purchase all of the outstanding equity securities of the Company pursuant to a tender offer, exchange offer or merger (i) which a majority of the Board determines in good faith after receiving the advice of its independent financial and legal advisors (A) to be superior to the Company and its stockholders (in their capacity as stockholders) from a financial point of view as compared to the transactions contemplated hereby and to any alternative transaction proposal made by Parent pursuant to Section 5.2(b), and (B) which is likely to be consummated on its terms and (ii) for which all requisite financing is fully committed.

(e) Immediately after the execution and delivery of this Agreement, the Company and its Subsidiaries will, and will instruct their respective officers, directors, employees, investment bankers, attorneys, accountants and other agents to, cease and terminate any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any possible Acquisition Proposal. The Company agrees that it shall (i) take the necessary steps to promptly inform its officers, directors, investments bankers, attorneys, accountants, financial advisors, agents or other representatives involved in the transactions contemplated by this Agreement of the obligations undertaken in Section 5.2(a) and (ii) request each Person who has heretofore executed a confidentiality agreement in connection with such Person’s consideration of acquiring the Company or any portion thereof to return or destroy (which destruction shall be certified in writing by an executive officer of such Person) all confidential information heretofore furnished to such Person by or on its behalf.

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5.3 Takeover Statute. If any “moratorium,” “control share,” “fair price,” or other antitakeover laws shall become applicable to the Merger or any of the other transactions contemplated by this Agreement, then the Board shall grant such approvals and take such actions as necessary so that the Merger or any of the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate the effects of such laws on the transactions contemplated by this Agreement.

5.4 Access to Information and Properties.

(a) From the date of this Agreement until the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, (i) afford to the Purchaser and its authorized representatives, including consultants, advisors, lenders and financing sources, reasonable access during normal business hours upon reasonable prior notice to all of its premises, properties (including for purposes of environmental testing), contracts, commitments, data, books and records and personnel and (ii) shall use its reasonable efforts to cause its customers, suppliers, lenders and other creditors to be available to the Purchaser, in order that the Purchaser may have an opportunity to make such investigation as it shall reasonably deem necessary of the Company’s and its Subsidiaries’ respective affairs; provided that such investigation shall not affect the representations and warranties made by the Company in this Agreement. In addition, during such period, the Company shall, and shall cause each of its Subsidiaries to, furnish promptly to the Purchaser (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal or state securities laws and (b) all other information concerning its business, properties and personnel as the Purchaser may reasonably request. Until the Effective Time, the Purchaser will hold any such information in accordance with the provisions of the confidentiality agreement between the Company and the Parent, dated as of October 6, 2005 (the “Confidentiality Agreement”).

5.5 Further Action; Reasonable Efforts.

(a) Upon the terms and subject to the conditions herein provided, each of the parties hereto agrees to use its reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement, including using reasonable efforts to satisfy the conditions precedent to the obligations of any of the parties hereto, to obtain all necessary authorizations, consents and approvals, and to effect all necessary registrations and filings and to assist Parent and the Purchaser in obtaining financing. Each of the parties hereto will furnish to the other parties such necessary information and reasonable assistance as such other parties may reasonably request in connection with the foregoing and will provide the other parties with copies of all filings made by such party with any Governmental Entity or any other information supplied by such party to a Governmental Entity in connection with this Agreement and the transactions contemplated hereby.

(b) Parent shall use its commercially reasonable efforts to arrange the financing contemplated by Section 6.3(c). Parent shall keep the Company informed on a reasonably current basis in reasonable detail of the status of its efforts to arrange such financing and provide copies of all documents related to the financing to the Company.

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(c) The Company agrees to, and to cause its Subsidiaries and its and their respective officers, employees, advisors and accountants to, reasonably cooperate with Parent and its affiliates in connection with the arrangement of any financing to be consummated prior to or contemporaneously with the Closing in respect of the transactions contemplated by this Agreement, including participation in meetings, due diligence sessions, road shows, the preparation of offering memoranda, private placement memoranda, prospectuses and similar documents, obtaining comfort letters from the Company’s accountants, and obtaining legal opinions from the Company’s outside counsel, as may be reasonably requested by Parent. In conjunction with the obtaining of any such financing, the Company agrees, at the reasonable request of Parent, to call for prepayment or redemption, or to prepay or redeem, or to attempt to renegotiate the terms of, any then existing indebtedness for borrowed money of the Company; provided, however, that no such prepayment or redemption or call for prepayment or redemption or renegotiated terms shall actually be made or become effective (nor shall the Company be required to incur any liability in respect of any such prepayment or redemption or call therefore or renegotiation thereof) prior to the Effective Time.

(d) In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers or directors of the Surviving Corporation shall take or cause to be taken all such necessary action.

(e) Notwithstanding the foregoing provisions of this Section 5.5, neither Parent nor the Purchaser shall be required to accept, as a condition to obtaining any required approval or resolving any objection of any Governmental Entity, any requirement to divest or hold separate or in trust (or the imposition of any other condition or restriction with respect to) any assets or operations of Parent, the Purchaser or any of their respective affiliates or any of the respective businesses of the Company or any of its Subsidiaries, the Assets or the Real Property.

5.6 Proxy Statement; Schedule 13E-3; Stockholders’ Meeting.

(a) As soon as reasonably practicable following the date of this Agreement the Company shall prepare and file with the SEC a proxy statement (together with any amendments or supplements thereto, the “Proxy Statement”) in connection with the Merger, and the parties shall file, if necessary, any other statement or schedule relating to this Agreement and the transactions contemplated hereby; provided, however, that the Company shall not be in breach of this Section 5.6 if Parent shall fail to provide any information reasonably necessary for the preparation of the Proxy Statement. Each of the Company, Parent and the Purchaser shall use their respective reasonable efforts to furnish the information required to be included by the SEC in the Proxy Statement and any such statement or schedule. After consultation with Parent, the Company shall respond promptly to any comments made by the SEC with respect to the Proxy Statement and cause a definitive Proxy Statement to be mailed to its stockholders, and the parties shall respond promptly to any comments with respect to any other statement or schedule filed by them. No filing of, or amendment or supplement to, the Proxy Statement or any other statement or schedule will be made by the Company without providing Parent a reasonable opportunity to review and comment thereon, and no filing of any statement or schedule will be made by Parent or the Purchaser without providing the Company a reasonable opportunity to review and comment thereon. If at any time after the date the Proxy Statement is mailed to the Company’s stockholders and prior to the Stockholders’ Meeting any information relating to the Company, Parent, the Purchaser or any of their respective affiliates, officers or directors, should be discovered by the Company, Parent or the Purchaser which is required to be set forth in an amendment or supplement to the Proxy Statement or any other statement or schedule, including the Schedule 13E-3, so that none of the Proxy Statement and any such statement or schedule will include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other parties and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the stockholders of the Company.

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(b) Each of Parent and the Purchaser agrees that (i) it will promptly provide the Company with all information concerning Parent and the Purchaser necessary or reasonably appropriate to be included in the Proxy Statement and (ii) at the Stockholders’ Meeting, if held, or any postponement or adjournment thereof (or at any other meeting at which the Merger or this Agreement are considered by stockholders), it will vote, or cause to be voted, all of the Shares then owned by it or any of its Subsidiaries, if any, in favor of the approval and adoption of this Agreement and the transactions contemplated hereby.

(c) The Company, Parent and the Purchaser shall cooperate with one another in the preparation and filing of a Rule 13E-3 Transaction Statement on Schedule 13E-3 (together with any amendments or supplements thereto, the “Schedule 13E-3”) and shall use all reasonable efforts to promptly obtain and furnish the information required to be included in the Schedule 13E-3 and to respond promptly to any comments or requests made by the SEC with respect to the Schedule 13E-3. Each party to this Agreement shall promptly notify the other parties of the receipt of comments of, or any requests by, the SEC with respect to the Schedule 13E-3, and shall promptly supply the other parties with copies of all correspondence between such party (or its representatives) and the SEC (or its staff) relating thereto. The Company, Parent and the Purchaser each agrees to correct any information provided by it for use in the Schedule 13E-3 which is or shall have become false or misleading.

(d) The Company, acting through the Board, shall, in accordance with its articles of incorporation and bylaws and with applicable Law, promptly and duly call, give notice of, convene and hold, as soon as practicable following the date upon which the Proxy Statement is cleared by the SEC, a special or annual meeting of its stockholders for the purpose of considering and taking action upon this Agreement (the “Stockholders’ Meeting”), and shall (i) except as otherwise provided in Section 5.2(b), recommend adoption of this Agreement and include in the Proxy Statement such recommendation and (ii) use its reasonable efforts to solicit and obtain such adoption. Notwithstanding any withdrawal, amendment or modification by the Board or any committee thereof of its recommendation of this Agreement in accordance with Section 5.2(b) or the commencement, public proposal, public disclosure or communication to the Company of any Acquisition Proposal, or any other fact or circumstance, this Agreement shall be submitted to the stockholders of the Company at the Stockholders’ Meeting as promptly as practicable for the purpose of adopting this Agreement.

5.7 Notification of Certain Matters. The Company shall give prompt notice to Parent of (i) information or development that could reasonably be respected to lead to the conclusion that any representation or warranty made by the Company was untrue or inaccurate when made or would reasonably be expected to cause such representation or warranty to be untrue or inaccurate as of the Closing (including the Company’s receiving knowledge of any fact, event or circumstance which may cause any representation qualified as to the knowledge of the Company to be or become untrue or inaccurate) or (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement.

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5.8 Directors’ and Officers’ Insurance and Indemnification.

(a) After the Effective Time, the Surviving Corporation shall indemnify, defend and hold harmless the present and former officers, directors, employees and agents of the Company and any of its Subsidiaries in such capacities (“Indemnified Parties”) to the fullest extent permitted by applicable Law against any losses, damages, expenses or liabilities resulting from any claim, liability, loss, damage, cost or expense, asserted against, or incurred by, an Indemnified Party that is based on the fact that such Indemnified Party is or was a director, officer, employee or agent of the Company or any of its Subsidiaries and arising out of actions or omissions or alleged actions or omissions occurring at or prior to the Effective Time.

(b) In the event any Indemnified Party becomes involved in any capacity in any action, proceeding or investigation based in whole or in part on, or arising in whole or in part out of, any matter, including the transactions contemplated hereby, existing or occurring at or prior to the Effective Time, for which the Indemnified Party intends to seek Indemnity from the Surviving Corporation (i) the Surviving Corporation shall have the right to assume the defense thereof and upon such assumption the Surviving Corporation shall not be liable to such Indemnified Party for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, except that if the Surviving Corporation elects not to assume such defense or counsel for such Indemnified Party reasonably advises that there are issues that raise or may raise conflicts of interest between the Surviving Corporation and such Indemnified Party, such Indemnified Party may retain one counsel reasonably satisfactory to the Surviving Corporation after consultation with the Surviving Corporation, and the Surviving Corporation shall pay the reasonable fees and expenses of such counsel for such Indemnified Party, (ii) the Surviving Corporation shall in all cases be obligated pursuant to this Section 5.7(b) to pay for only one firm of counsel for all Indemnified Parties, (iii) the Surviving Corporation shall not be liable for any settlement effected without its prior written consent and (iv) the Surviving Corporation shall have no obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall ultimately determine, and such determination shall have become final and nonappealable, that indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable Law. Any Indemnified Party wishing to claim Indemnification under this Section 5.8, upon learning of any such claim, action, suit, proceeding or investigation, shall notify promptly the Surviving Corporation thereof, provided that the failure to so notify shall not affect the obligations of the Surviving Corporation under this Section 5.8 except to the extent such failure to notify prejudices the Surviving Corporation.

(c) The Surviving Corporation shall maintain, directors’ and officers’ liability insurance covering, for a period of six years after the Effective Time, the directors and officers of the Company and its Subsidiaries who as of the Effective Time are covered by the Company’s existing directors’ and officers’ liability insurance with respect to claims arising from facts or events that occurred before the Effective Time, on terms and conditions no less substantially similar to those in effect on the date hereof; provided, however, that the aggregate annual premiums for such insurance at any time during such period shall not exceed 200% of the per annum rate of premium currently paid by the Company and its Subsidiaries for such insurance on the date of this Agreement.

5.9 Publicity. Neither the Company, Parent, the Purchaser nor any of their respective affiliates shall issue or cause the publication of any press release or other announcement with respect to this Agreement, the Merger or the other transactions contemplated by this Agreement without the prior consultation of the other party.

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5.10 Indemnity.

(a) The Company, shall indemnify, defend and hold harmless Parent, the Purchaser, their respective controlling persons, directors, officers, employees and agents (the “Indemnified Merger Parties”), to the fullest extent permitted by applicable Law, with respect to any claim, liability, loss, damage, cost or expense, asserted against, or incurred by, an Indemnified Merger Party in connection with any judicial or similar proceeding brought by any securityholder of the Company or pursuant to any derivative claim made on behalf of the Company based on or arising out of the negotiation, approval, execution or performance of this Agreement (“Transaction Litigation”); provided however that in no event shall the Company be obligated to pay more than $1.5 million pursuant to this section 5.10. The provisions of this Section 5.10 are intended for the benefit of, and shall be enforceable by, the respective Indemnified Merger Parties, and shall survive any termination of this Agreement.

(b) In the event that any such claim, liability, loss, damage, cost or expense, is asserted against or incurred by an Indemnified Merger Party in connection with any Transaction Litigation, Parent will notify Company of the commencement thereof and Company will be entitled to participate therein and, to the extent that Company may wish, to assume the defense and settlement thereof, with counsel of nationally recognized standing reasonably satisfactory to Parent; provided, however, that Company shall not settle any Transaction Litigation without the consent of Parent, whose consent will not be unreasonably withheld or delayed, and provided, further, that if the defendants in any such Transaction Litigation include both an Indemnified Merger Party and Company, and if Company has been advised by counsel that such counsel cannot represent both the Indemnified Merger Party and Company due to legal ethics requirements, Parent will have the right, at the Company’s Expense, to elect one counsel to participate in the defense of such Transaction Litigation on the Indemnified Merger Party’s behalf. Notwithstanding the foregoing, an Indemnified Party shall not be prevented from retaining its own counsel, at such Indemnified Party’s expense, in connection with any Transaction Litigation.

5.11 Stockholders’ Agreement and Subscription Agreement. Parent shall negotiate in good faith with the Investing Stockholder (as defined herein), to finalize the terms of the Subscription Agreement (as defined herein) and the Stockholders’ Agreement, which terms of such agreements are to be mutually agreed upon by Parent and the Investing Stockholder, as soon as practicable.

ARTICLE VI

CONDITIONS

6.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligation of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which may be waived by the parties hereto in writing as provided in Section 8.2(h), in whole or in part, to the extent permitted by applicable Law):

(a) No statute, rule, order, decree or regulation shall have been enacted or promulgated, and no action shall have been taken, by any Governmental Entity of competent jurisdiction which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the Merger or makes the Merger illegal;

(b) This Agreement shall have been adopted by the Required Vote; and

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(c) Other than filing the Articles of Merger in accordance with the NRS, all authorizations, consents and approvals of all Governmental Entities required to be obtained prior to consummation of the Merger shall have been obtained, except for such authorizations, consents, and approvals the failure of which to be obtained individually or in the aggregate would not have or result in a Material Adverse Effect on any party to this Agreement.

6.2 Conditions to the Obligation of the Company to Effect the Merger. The obligation of the Company to effect the Merger is further subject to the satisfaction or waiver at or prior to the Effective Time of the following conditions:

(a) The representations and warranties of each of Parent and the Purchaser contained in this Agreement shall be true and correct in all material respects both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date) and the Company shall have received a certificate signed on behalf of each of Parent and the Purchaser by the Chief Executive Officer of each of Parent and the Purchaser to such effect;

(b) Each of Parent and the Purchaser shall have performed in all material respects its obligations under this Agreement required to be performed by it at or prior to the Effective Time pursuant to the terms hereof, and the Company shall have received a certificate signed on behalf of each of Parent and the Purchaser by the Chief Executive Officer of each of Parent and the Purchaser to such effect.

6.3 Conditions to Obligations of Parent and the Purchaser to Effect the Merger. The obligations of Parent and the Purchaser to effect the Merger are further subject to the satisfaction or waiver at or prior to the Effective Time of the following conditions:

(a) (i) The representations and warranties of the Company set forth in Sections 3.2 through 3.5 and 3.23 of this Agreement shall be true and correct in all material respects both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date); and (ii) the representations and warranties of the Company set forth in this Agreement (other than the representations and warranties set forth in Sections 3.2 through 3.5 and 3.23 of this Agreement) shall be true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) when made and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The Purchaser shall have received a certificate signed on behalf of the Company by the Chief Executive Officer and the Chief Financial Officer of the Company to the foregoing effect;

(b) The Company shall have performed in all material respects each of its obligations under this Agreement required to be performed by it at or prior to the Effective Time pursuant to the terms hereof, and the Purchaser shall have received a certificate signed on behalf of the Company by the Chief Executive Officer or Chief Financial Officer to such effect;

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(c) Parent shall have received the proceeds of financing in an amount sufficient to pay the Merger Consideration and all of the fees and expenses related to the consummation of the transactions contemplated by this Agreement and otherwise enable the Purchaser to consummate the transactions contemplated hereby;

(d) The Investing Stockholder shall have executed and delivered the Subscription Agreement;

(e) All of the conditions precedent in the Subscription Agreement in favor of the Surviving Corporation shall have been satisfied;

(f) The Investing Stockholder shall have executed and delivered the Stockholders’ Agreement;

(g) There shall not be pending any suit, action or proceeding seeking to (i) prohibit or limit in any material respect the ownership or operation by the Company, Parent, the Purchaser or any of their respective affiliates of a substantial portion of the business or assets of the Company and its Subsidiaries, taken as a whole, or to require any such Person to dispose of or hold separate any material portion of the business or assets of the Company and its Subsidiaries, taken as a whole, as a result of the Merger or any of the other transactions contemplated by this Agreement or (ii) restrain, preclude, enjoin or prohibit the Merger or any of the other transactions contemplated by this Agreement;

(h) All (i) shareholder derivative actions, (ii) securities class actions and (iii) actions brought by securityholders based on a breach of duty in connection with the transactions contemplated by this Agreement; in any case, brought against the Company or its officers or directors (or other persons entitled to seek indemnification or contribution from the Company) shall have been settled for an aggregate amount within the limits set forth in the Company’s applicable insurance policies and without further liability of the Company, its officers or directors or indemnified parties; and

(i) All material consents and approvals of any Person necessary to the consummation of the Merger and any other transactions contemplated by this Agreement, including consents and approvals from parties to loans, contracts, leases or other agreements shall have been obtained, and a copy of each such consent and approval shall have been provided to Parent at or prior to the Closing.

ARTICLE VII

TERMINATION

7.1 Termination. Notwithstanding anything herein to the contrary, this Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after stockholder adoption of this Agreement:

(a) By the mutual consent of Parent and the Company in a written instrument.

(b) By either the Company or Parent upon written notice to the other party, if:

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(i) the Merger shall not have been consummated on or before July 31, 2006 (the “Outside Date”); provided that the right to terminate this Agreement pursuant to this Section 7.1(b)(i) shall not be available to a party whose failure to fulfill any material obligation under this Agreement or other material breach of this Agreement has been the cause of, or resulted in, the failure of the Merger to have been consummated on or before such date;

(ii) any Governmental Entity shall have issued a statute, rule, order, decree or regulation or taken any other action (which statute, rule, order, decree, regulation or other action the parties hereto shall have used their commercially reasonable efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting consummation of the Merger or making the Merger illegal and such statute, rule, order, decree, regulation or other action shall have become final and not-appealable (provided that the terminating party is not then in breach of Section 5.5); and

(iii) the stockholders of the Company fail to adopt this Agreement by the Required Vote at the Stockholders’ Meeting (including any postponement or adjournment thereof); (provided that the Company shall not be entitled to terminate this Agreement pursuant to this Section 7.1(b)(iii) if it has breached any of its obligations under Section 5.2 or Section 5.6).

(c) By Parent if there shall have been a material violation or breach of or any inaccuracy in any of the representations, warranties, covenants or agreements of the Company that (i) has rendered the satisfaction of any condition to the obligations of the Parent impossible and such violation or breach has not been waived by Parent and (ii) has not been cured within 30 days following receipt by the Company of written notice of such breach from Parent, or which breach, by its nature, cannot be cured prior to the Outside Date (provided that Parent is not then in material breach of any representation, warranty, covenant or other agreement contained herein); or

(d) By the Company if there shall have been a material violation or breach of or any inaccuracy in any of the representations, warranties, covenants or agreements of Parent that (i) has rendered the satisfaction of any condition to the obligations of the Company impossible and such violation or breach has not been waived by the Company and (ii) has not been cured within 30 days following receipt by Parent of written notice of such breach from the Company, or which breach, by its nature, cannot be cured prior to the Outside Date (provided that the Company is not then in material breach of any representation, warranty, covenant or other agreement contained herein); or

(e) By Parent, upon written notice to the Company, if (i) the Board or any committee thereof shall have made on Adverse Recommendation Change, (ii) the Company shall have entered into an Alternative Definitive Agreement or (iii) the Company or the Board or any committee thereof shall have resolved to do any of the foregoing.

(f) By Company, upon written notice to Parent, if the Board shall resolve to enter into, subject to the terms of this Agreement, including Sections 5.2 and 8.1 of this Agreement, an Alternative Definitive Agreement; provided, that Company shall not be permitted to terminate this Agreement pursuant to this Section 7.1(f) unless Company shall have complied with its obligations under Section 5.2 and shall have paid the Termination Fee and the Expenses pursuant to Section 8.1, and the entering into such other definitive agreement is otherwise permitted by Section 5.2

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7.2 Effect of Termination. In the event of the termination of this Agreement as provided in Section 7.1, written notice thereof shall forthwith be given by the terminating party to the other parties specifying the provision hereof pursuant to which such termination is made, and except as provided in this Section 7.2, this Agreement shall forthwith become null and void after the expiration of any applicable period following such notice. In the event of such termination, there shall be no liability on the part of Parent, the Purchaser or the Company, except as set forth in Section 8.1 hereof, except as set forth in Section 5.10 hereof, and except with respect to the requirement to comply with the Confidentiality Agreement; provided that nothing herein shall relieve any party from any liability or obligation with respect to any willful breach of this Agreement prior to its termination.

ARTICLE VIII

MISCELLANEOUS

8.1 Fees and Expenses.

(a) Whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses, except as provided in Sections 8.1(b) and 8.1(c).

(b) If this Agreement is terminated by Parent pursuant to Section 7.1(e) or the Company pursuant to Section 7.1(f), then the Company shall (i) reimburse Parent for all of the Expenses of Parent and the Purchaser up to an amount not in excess of U.S.$500,000 and (ii) pay to Parent in immediately available funds a termination fee in an amount equal to U.S.$1.0 million (the “Termination Fee”); provided, however, that the effectiveness of the Company’s termination of this Agreement pursuant to Section 7.1(f) shall be conditioned on the Company reimbursing Parent for all of the Expenses of Parent and the Purchaser up to an amount not in excess of U.S.$500,000 and paying the Termination Fee.

(c) In the event that (i) an Acquisition Proposal has been proposed by any Person (other than Parent and the Purchaser or any of their respective affiliates) or any Person has announced its intention (whether or not conditional) to make an Acquisition Proposal or an Acquisition Proposal or such intention has otherwise become known to the Company’s directors or officers, or its stockholders generally and (ii) thereafter this Agreement is terminated by either the Company or Parent pursuant to Section 7.1(b)(i) or 7.1(b)(iii) or by Parent pursuant to Section 7.1(c), then the Company shall reimburse Parent for all of the Expenses of Parent and the Purchaser up to an amount not in excess of U.S. $500,000. Furthermore, if (x) the events in clauses (i) and (ii) in the first sentence of this Section 8.1(c) occur and (y) within 12 months after the termination of this Agreement, the Company or any of its Subsidiaries enters into an Alternative Definitive Agreement, or an Acquisition Proposal is consummated, then the Company shall pay Parent the Termination Fee upon the first to occur of the events described in clause (y) of this sentence.

(d) Any payment of the Expenses and the Termination Fee pursuant to Section 8.1(b) shall be made within one Business Day after termination of this Agreement by wire transfer of immediately available funds to an account designated by Parent. Any payment of the Expenses pursuant to Section 8.1(c) shall be made upon the termination of this Agreement, and any payment of the Termination Fee pursuant to Section 8.1(c) shall be made prior to the first to occur of the execution of an Alternative Definitive Agreement or the consummation of an Acquisition Proposal. In circumstances where Section 8.1 requires a reimbursement of Expenses, the Company shall reimburse Parent for the Expenses up to an amount not in excess of U.S. $500,000. The Company acknowledges that the

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agreements contained in this Section 8.1 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, neither Parent nor the Purchaser would enter into this Agreement; accordingly, if the Company fails promptly to pay or cause to be paid the amounts due pursuant to this Section 8.1, and, in order to obtain such payment, Parent or the Purchaser commences a suit that results in a judgment against the Company for the amounts set forth in this Section 8.1, the Company shall pay to Parent and the Purchaser (as the case may be) its reasonable costs and expenses (including attorneys’ fees and expenses) in connection with such suit and any appeal relating thereto, together with interest on the amounts set forth in this Section 8.1 at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made.

(e) This Section 8.1 shall survive any termination of this Agreement.

8.2 Amendment; Waiver.

(a) This Agreement may be amended by the parties to this Agreement, by action taken or authorized by their respective boards of directors, at any time before or after approval by the stockholders of the Company of the matters presented in connection with the Merger, but after any such approval no amendment shall be made without the approval of the stockholders of the Company if such amendment alters or changes (i) the Merger Consideration, (ii) any term of the Articles of Incorporation or (iii) any terms or conditions of this Agreement if such alteration or change would adversely affect the holders of any shares of capital stock of the Company. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.

(b) At any time prior to the Effective Time, the parties to this Agreement may (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 of the other parties contained herein or in any document, certificate or writing delivered pursuant hereto by the other party or (iii) waive compliance with any of the agreements or conditions of the other parties hereto contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and remedies herein provided are cumulative and none is exclusive of any other, or of any rights or remedies that any party may otherwise have at Law or in equity.

8.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given upon (a) transmitter’s confirmation of a receipt of a facsimile transmission, (b) confirmed delivery by a standard overnight carrier or when delivered by hand, (c) the expiration of five Business Days after the day when mailed in the United States by certified or registered mail, postage prepaid, or (d) delivery in Person, addressed at the following addresses (or at such other address for a party as shall be specified by like notice):

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(a) if to the Company, to:

	Central Freight Lines, Inc.
	15333 North Pima Road
	Suite 230
	Scottsdale, AZ 85260
	Telephone: (480) 361-5289
	Facsimile: (480) 361-5297
	Attention: John C. Carruth

	with a copy to:

	Blackwell Sanders Peper Martin LLP
	4801 Main Street, Suite 1000
	Kansas City, MO 64112
	Telephone: (816) 983-8000
	Facsimile: (816) 983-8080
	Attention: Jeffrey T. Haughey, Esq.

(b) if to Parent or the Purchaser, to:

	North American Truck Lines, LLC
	2710 E. Tower Rd.
	Phoenix, AZ 85034
	Telephone: (602) 225-3712
	Facsimile: (602) 275-6417
	Attention: Jeff A. Shumway

	with a copy to:

	Skadden, Arps, Slate, Meagher & Flom LLP
	Four Times Square
	New York, New York 10036
	Telephone: (212) 735-3000
	Facsimile: (212) 735-2000
	Attention: Stephen F. Arcano, Esq.

8.4 Interpretation; Definitions. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.” Unless the context otherwise requires, the word “or” when used in this Agreement will be deemed to have the inclusive meaning represented by the phrase “and/or.” The phrase “made available” when used in this Agreement shall mean that the information referred to has been made available to the party to whom such information is to be made available. The word “affiliates” when used in this Agreement shall have the respective meanings ascribed to them in Rule 12b-2 under the Exchange Act. The phrase “beneficial ownership” and words of similar import when used in this Agreement shall have the meaning ascribed to it in Rule 13d-3 under the Exchange Act.

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The following terms have the following definitions:

(a) “Acceptable Confidentiality Agreement” shall have the meaning set forth in Section 5.2(a).

(b) “Acquisition Proposal” shall have the meaning set forth in Section 5.2(d).

(d) “Agreement” shall have the meaning set forth in the Preamble.

(e) “Alternative Definitive Agreement” shall have the meaning set forth in Section 5.2(a).

(f) “Articles of Incorporation” shall have the meaning set forth in Section 1.3.

(g) “Articles of Merger” shall have the meaning set forth in Section 1.2.

(h) “Assets” shall have the meaning set forth in Section 3.16.

(i) “Balance Sheet” shall have the meaning set forth in Section 3.8.

(j) “Board” shall have the meaning set forth in the Recital.

(k) “Business Day” means any day other than Saturday and Sunday and any day on which banks are not required or authorized to close in the State of New York.

(l) “Bylaws” shall have the meaning set forth in Section 1.3.

(m) “Capital Budget” shall have the meaning set forth in Section 5.1(b).

(n) “Certificates” shall have the meaning set forth in Section 2.2(b).

(o) “Closing” shall have the meaning set forth in Section 1.2.

(p) “Closing Date” shall have the meaning set forth in Section 1.2.

(q) “Code” means the Internal Revenue Code of 1986, as amended.

(r) “Company” shall have the meaning set forth in the Preamble.

(s) “Company Common Stock” shall have the meaning set forth in Section 2.1.

(t) “Company SEC Documents” shall have the meaning set forth in Section 3.5(a).

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(u) “Confidentiality Agreement” shall have the meaning set forth in Section 5.4(a).

(v) “Credit Agreement” shall have the meaning set forth in Section 5.1(b).

(w) “Disclosure Letter” shall have the meaning set forth in Section 3.1(a).

(x) “Effective Time” shall have the meaning set forth in Section 1.2.

(y) “Employment and Withholding Taxes” mean any federal, state, local, foreign or other employment, unemployment, insurance, social security, disability, workers’ compensation, payroll, health care or other similar tax, duty or other governmental charge or assessment or deficiencies thereof and all taxes required to be withheld by or on behalf of each of the Company or any of its Subsidiaries in connection with amounts paid or owing to any employee, independent contractor, creditor or other party, in each case, on or in respect of the business or assets thereof (including all interest and penalties thereon and additions thereto whether disputed or not).

(z) “Environmental Claim” means any claim, demand, suit, action, cause of action, proceeding, investigation or notice to the Company or any of its Subsidiaries by any Person or entity alleging any potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resource damages, personal injuries, or penalties) arising out of, based on, or resulting from (A) the presence, or Release into the environment, of any Hazardous Substance at any location, whether or not owned, leased, operated or used by the Company or its Subsidiaries, or (B) circumstances forming the basis of any violation, or alleged violation, of any applicable Environmental Law;

(aa) “Environmental Laws” means all Laws, including common law, relating to pollution, cleanup, restoration or protection of the environment (including ambient air, surface water, groundwater, land surface or subsurface strata and natural resources) or to the protection of flora or fauna or their habitat or to human or public health or safety, including (A) Laws relating to emissions, discharges, Releases or threatened Releases of Hazardous Substances, or otherwise relating to the manufacture, generation, processing, distribution, use, sale, treatment, receipt, storage, disposal, transport or handling of Hazardous Substances, including the Comprehensive Environmental Response, Compensation, and Liability Act and the Resource Conservation and Recovery Act, and (B) the Occupational Safety and Health Act;

(bb) “ERISA” shall have the meaning set forth in Section 3.10(a).

(cc) “ERISA Affiliate” shall have the meaning set forth in Section 3.10(a).

(dd) “ERISA Plans” shall have the meaning set forth in Section 3.10(a).

(ee) “Exchange Act” shall have the meaning set forth in Section 3.5(a).

(ff) “Expenses” means out-of-pocket fees and expenses incurred or paid in connection with the negotiation of this Agreement or the consummation of any of the transactions contemplated by this Agreement, including all due diligence and financing costs, filing fees, printing fees and fees and expenses of law firms, commercial banks, investment banking firms, accountants, experts and consultants.

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(gg) “GAAP” shall have the meaning set forth in Section 3.5(b).

(hh) “Governmental Entity” shall have the meaning set forth in Section 3.4(b).

(ii) “Hazardous Substance” means (A) chemicals, pollutants, contaminants, wastes, toxic and hazardous substances, and oil and petroleum products, (B) any substance that is or contains asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum or petroleum-derived substances or wastes, radon gas or related materials, lead or lead-based paint or materials, fungus or mold, (C) any substance that requires investigation, removal or remediation under any Environmental Law, or is defined, listed or identified as hazardous, toxic or otherwise actionable or dangerous under any Environmental Laws, or (D) any substance that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous; and

(jj) “Indemnified Merger Parties” shall have the meaning set forth in Section 5.10.

(kk) “Indemnified Merger Party” shall have the meaning set forth in Section 5.10(a).

(ll) “Indemnified Parties” shall have the meaning set forth in Section 5.8(a).

(mm) “Intellectual Property” shall have the meaning set forth in Section 3.12(a).

(nn) “Investing Stockholder” shall mean the stockholder listed on Schedule A hereto.

(oo) “Laws” shall have the meaning set forth in Section 3.4(a).

(pp) “Leased Real Property” means all interests in real property pursuant to the Leases.

(qq) “Leases” means the real property leases, subleases, licenses and use or occupancy agreements pursuant to which the Company or any of its Subsidiaries is the lessee, sub lessee, licensee, user, operator or occupant of real property, or interests therein.

(rr) “Liens” means any mortgage, pledge, deed of trust, hypothecation, right of others, claim, security interest, encumbrance, burden, title defect, title retention agreement, lease, sublease, license, occupancy agreement, easement, covenant, condition, encroachment, voting trust agreement, interest, option, right of first offer, negotiation or refusal, proxy, lien, charge or other restrictions or limitations of any nature whatsoever.

(ss) “Litigation” shall have the meaning set forth in Section 3.11(a).

(tt) “Material Adverse Effect” means (i) with respect to the Company, a condition, circumstance, event or effect which (A) is materially adverse to the business, assets, liabilities, prospects, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole, or (B) materially impairs the ability of the Company and its Subsidiaries to consummate the transactions contemplated hereby, and (ii) with respect to Parent or the Purchaser, any condition, circumstance, event or effect which materially impairs the ability of Parent or the Purchaser to consummate the transactions contemplated hereby, provided, however, that to the extent any change or effect is caused

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by or results from any of the following, it shall not be taken into account in determining whether there has been a “Material Adverse Effect” with respect to the Company or Parent, as the case may be: (i) changes affecting the United States economy or financial markets as a whole or changes that are the result of factors generally affecting the industries in which the Company or Parent, as the case may be, and their respective Subsidiaries conduct its business in either case not disproportionately affecting the Company in comparison to its competitors, (ii) failure to meet internal or analyst financial forecasts, (iii) any change in the market price or trading volume of the equity securities of the Company after the date hereof, (iv) the suspension of trading in securities generally on the New York Stock Exchange or the Nasdaq Stock Market or (v) the commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism involving or affecting the United States of America or any part thereof, and (vi) any change in any applicable law, rule or regulation or GAAP or official interpretation thereof after the date hereof.

(uu) “Material Contract” shall have the meaning set forth in Section 3.13(a).

(vv) “Merger” shall have the meaning set forth in Section 1.1.

(ww) “Merger Consideration” shall have the meaning set forth in Section 2.1(a).

(xx) “Moyes Stockholders” mean Jerry Moyes, the Jerry and Vickie Moyes Family Trust, dated December 11, 1987 and the Moyes Children’s Trust, dated December 14, 1992.

(yy) “Moyes Stockholders Shares” shall have the meaning set forth in Section 2.1(b).

(zz) “Notice of Superior Proposal” shall have the meaning set forth in Section 5.2(b).

(aaa) “NRS” shall have the meaning set forth in Section 1.1.

(bbb) “Outside Date” shall have the meaning set forth in Section 7.1(b)(i).

(ccc) “Owned Real Property” means the real property, and interests in real property, owned by the Company and its Subsidiaries.

(ddd) “Parent” shall have the meaning set forth in the Preamble.

(eee) “Paying Agent” shall have the meaning set forth in Section 2.2(a).

(fff) “Permits” shall have the meaning set forth in Section 3.11(c).

(ggg) “Permitted Liens” means (a) Liens specifically identified in the Balance Sheet or in the notes thereto, (b) Liens for Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are reflected on the Balance Sheet in accordance with GAAP, and (c) immaterial Liens that, individually or in the aggregate with all other Permitted Liens, do not and will not materially interfere with the use or value of the properties or assets of the Company and its Subsidiaries taken as a whole as currently used.

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(hhh) “Person” means any natural Person, firm, individual, partnership, joint venture, business trust, trust, association, corporation, company, unincorporated entity or Governmental Entity).

(iii) “Plans” shall have the meaning set forth in Section 3.10(a).

(jjj) “Preferred Stock” shall have the meaning set forth in Section 3.2(a).

(kkk) “Proxy Statement” shall have the meaning set forth in Section 5.6(a).

(lll) “Public Stockholders” shall mean all of the Company Stockholders other than the Moyes Stockholders and the Continuing Stockholders.

(mmm) “Purchaser” shall have the meaning set forth in the Preamble.

(nnn) “Purchaser Common Stock” shall have the meaning set forth in Section 2.1.

(ooo) “Real Property” means the Owned Real Property and the Leased Real Property.

(ppp) “Release” means any releasing, disposing, discharging, injecting, spilling, leaking, pumping, dumping, emitting, escaping, emptying, dispersal, leaching, migration, transporting, placing and the like, including into or upon, any land, soil, surface water, ground water or air, or otherwise entering into the environment.

(qqq) “Required Vote” shall have the meaning set forth in Section 3.3(c).

(rrr) “Return” means any return, report, declaration, form, claim for refund or information statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, that relates to the business or assets of the Company and any of its Subsidiaries.

(sss) “Schedule 13E-3” shall have the meaning set forth in Section 5.6(c).

(ttt) “SEC” shall have the meaning set forth in Section 3.4(b).

(uuu) “Secretary of State” shall have the meaning set forth in Section 1.2.

(vvv) “Securities Act” shall have the meaning set forth in Section 3.5(a).

(www) “Shares” shall have the meaning set forth in Section 2.1.

(xxx) “SPD” shall have the meaning set forth in Section 3.10(b)(iv).

(yyy) “Special Committee” shall have the meaning set forth in the Recitals.

(zzz) “Stockholders’ Agreement” means the Stockholders’ Agreement between Parent and certain individuals and entities listed on Schedule A thereto.

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(aaaa) “Stockholders’ Meeting” shall have the meaning set forth in Section 5.6(d).

(bbbb) “Stock Option Plans” shall have the meaning set forth in Section 2.4(a).

(cccc) “Stock Options” shall have the meaning set forth in Section 2.4(a).

(dddd) “Subscription Agreement” means the Subscription Agreement between the Surviving Corporation and the individual listed on Schedule A hereto.

(eeee) “Subsidiary” means with respect to any Person, any other Person of which 50% or more of the securities or other interests having by their terms ordinary voting power for the election of directors or others performing similar functions are directly or indirectly owned by such Person; and in addition, with respect to any representation and warranty of the Company, the term Subsidiary shall mean any such other Persons of which 50% or more of such securities or other interests are or were at any time directly or indirectly owned by the Company, provided that the Company’s representation and warranty with respect to such Subsidiary shall only relate to the period during which the Company directly or indirectly owned such Subsidiary.

(ffff) “Superior Proposal” shall have the meaning set forth in Section 5.2(d).

(gggg) “Surviving Corporation” shall have the meaning set forth in Section 1.1.

(hhhh) “Tax” means any federal, state, local, foreign or other income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits, windfall profits, gross receipts, value added, sales, use, excise, custom duties, transfer, conveyance, mortgage, registration, stamp, documentary, recording, premium, severance, environmental, real and personal property, ad valorem, intangibles, rent, occupancy, license, occupational, employment, unemployment insurance, social security, disability, workers’ compensation, payroll, health care, withholding, estimated or other similar tax, duty or other governmental charge or assessment or deficiencies thereof (including all interest and penalties thereon and additions thereto).

(iiii) “Technology” shall have the meaning set forth in Section 3.12(a).

(jjjj) “Termination Fee” shall have the meaning set forth in Section 8.1(b).

(kkkk) “Transaction Litigation” shall have the meaning set forth in Section 5.10(a).

(llll) “WARN Act” shall have the meaning set forth in Section 3.19(b).

8.5 Headings; Schedules. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Disclosure of any matter pursuant to any Section to the Disclosure Letter shall not be deemed to be an admission or representation as to the materiality of the item so disclosed.

8.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall be considered one and the same agreement.

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8.7 Entire Agreement. This Agreement, including the Disclosure Letter and the schedule attached hereto, and the Confidentiality Agreement constitute the entire agreement, and supersedes all prior agreements and understandings (written and oral), among the parties with respect to the subject matter hereof.

8.8 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

8.9 Governing Law. This Agreement shall be governed, construed and enforced in accordance with the Laws of the State of Nevada without giving effect to the principles of conflicts of law thereof.

8.10 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties; provided, that each of Parent and the Purchaser may assign its rights under this Agreement to any Subsidiary of Parent, or to any lender to each of Parent and the Purchaser or any Subsidiary or affiliate thereof as security for obligations to such lender, and provided, further, that no assignment to any such lender shall in any way affect Parent’s obligations or liabilities under this Agreement.

8.11 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party to this Agreement and their permitted assignees, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

8.12 Specific Performance. The parties to this Agreement agree that irreparable damage would occur in the event that any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof in addition to any other remedy at Law or equity.

******

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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.


	NORTH AMERICAN TRUCK LINES, LLC


	By:	/s/ Jeff A. Shumway
	Name:	Jeff A. Shumway
	Title:	Manager


	GREEN ACQUISITION COMPANY


	By:	/s/ Jeff A. Shumway
	Name:	Jeff A. Shumway
	Title:	President


	CENTRAL FREIGHT LINES, INC.


	By:	/s/ J. C. Carruth
	Name:	J. C. Carruth
	Title:	Director

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SCHEDULE A

Robert V. Fasso

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Table of Contents

Annex A-2

FIRST AMENDMENT TO AGREEMENT AND

PLAN OF MERGER

by and among

CENTRAL FREIGHT LINES, INC.,

NORTH AMERICAN TRUCK LINES, LLC

and GREEN ACQUISITION COMPANY

dated as of September 13, 2006

FIRST AMENDMENT TO

AGREEMENT AND PLAN OF MERGER

This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the “Amendment”) is dated as of September 13, 2006 (this “Amendment”), by and among CENTRAL FREIGHT LINES, INC., a Nevada corporation (the “Company”), NORTH AMERICAN TRUCK LINES, LLC, a Nevada limited liability company (“Parent”), and GREEN ACQUISITION COMPANY, a Nevada corporation and wholly owned subsidiary of Parent (the “Purchaser”).

WHEREAS, the Company, Parent and the Purchaser are parties to that certain Agreement and Plan of Merger dated as of January 30, 2006 (the “Agreement”); and

WHEREAS, in accordance with Section 8.2 of the Agreement, the Company, Parent and the Purchaser desire to amend the Agreement as set forth herein.

1. Amendment of Section 2.4. Section 2.4 of the Agreement is deleted in its entirety and replaced with the following:

“2.4 Company Option Plans.

(a) The Company, the Board and each relevant committee of the Board shall take any and all actions necessary or desirable (including, without limitation, obtaining consents) to provide that, effective immediately prior to the consummation of the Merger, each option to purchase shares of Company Common Stock (collectively, the “Stock Options”) held by or issued or granted to any current or former employee, consultant or director, other than the Investing Stockholder and Jerry Moyes, that is outstanding immediately prior to the consummation of the Merger granted under the Central Freight Lines, Inc. Incentive Stock Plan dated May 6, 1997, as amended (the “Stock Option Plans”), or otherwise, shall (i) become fully vested or exercisable and (ii) be cancelled in exchange for an amount in cash (less any applicable tax withholding), payable at the Effective Time, equal to (A) in the case of Stock Options with respect to which the Merger Consideration is greater than the per share exercise price of such Stock Option, the product of (x) (1) the excess of the Merger Consideration over (2) the per share exercise price of such Stock Option, and (y) the number of shares of Company Common Stock subject to such Stock Option; and (B) in the case of Stock Options with respect to which the per share exercise price of such Stock Option is equal to or greater than the Merger Consideration, the product of (x) $.01 and (y) the number of shares of Company Common Stock subject to such Stock Option.

A2-1

(b) Any options to purchase 504,000 shares of Company Common Stock held by the Investing Stockholder (constituting all of the options to purchase shares of Company Common Stock held by the Investing Stockholder) shall remain in full force and effect, in accordance with that certain Stock Option Amendment between the Company and the Investing Stockholder dated September 13, 2006 and attached to this Agreement as Exhibit 1 (the “Stock Option Amendment”). Any options to purchase shares of Company Common Stock held by Jerry Moyes shall be cancelled without any monetary consideration.

(c) The Company, the Board and each relevant committee of the Board shall ensure that immediately following the Effective Time, no holder of a Stock Option (other than the Investing Stockholder), and no participant in any Stock Option Plan or any other plan, agreement or arrangement (other than the Investing Stockholder), shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation or any interest in respect of any capital stock of the Company or the Surviving Corporation. The Company, the Board and each relevant committee of the Board shall take any and all actions necessary or desirable to provide that all Stock Option Plans shall remain in full force and effect from and after the Effective Time, but only with respect to the Stock Options held by the Investing Stockholder.”

2. Amendment of Section 3.2(a)(iii). Section 3.2(a)(iii) of the Agreement is amended by replacing the reference to “Option Plans” with a reference to “Stock Option Plans”.

3. Amendment of Section 3.22. Section 3.22 of the Agreement is amended by deleting the first sentence in its entirety and replacing it with the following:

“The Company has received an opinion of Morgan Keegan & Company to the effect that, as of the date hereof, the Merger Consideration to be received by the stockholders of the Company in the Merger is fair, from a financial point of view, to the stockholders of the Company, other than the Moyes Stockholders and the directors and executive officers of the Company.”

4. Amendment of Section 5.1(e). Section 5.1(e) of the Agreement is amended by deleting clause (ii) in its entirety and replacing it with the following:

“(ii) adopt, enter into, amend or otherwise increase, or accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under any compensation, severance, retention, other similar profit sharing, stock option or equity-linked pension or retirement plan, program agreement or arrangement, except as otherwise provided herein; or”.

A2-2

5. Amendment of Section 5.5(b). Section 5.5(b) of the Agreement is deleted in its entirety and replaced with the following:

“(b) Intentionally omitted.”

6. Amendment of Section 5.1(j). Section 5.1(j) of the Agreement is amended by deleting clause (ii) in its entirety and replacing it with the following:

“(ii) compromise, settle, grant any waiver or release relating to or otherwise adjust any Litigation (other than the settlement of any Litigation subject to Section 6.3(h) on terms satisfying such condition);”.

7. Amendment of Section 5.11. Section 5.11 of the Agreement is deleted in its entirety and replaced with the following:

“5.11 Stockholders’ Agreement. Parent shall negotiate in good faith with the Investing Stockholder (as defined herein), to finalize the terms of the Stockholders’ Agreement, which terms of such agreement are to be mutually agreed upon by Parent and the Investing Stockholder, as soon as practicable.”

8. Amendment of Sections 6.3(a). Section 6.3(a) of the Agreement is amended by replacing all references to Section 3.23 of the Agreement with references to Section 3.22 of the Agreement.

9. Amendment of Sections 6.3(c), (d) and (e). Sections 6.3(c), (d) and (e) of the Agreement are deleted in their entirety and replaced with the following:

“(c) Intentionally omitted.

(d) Intentionally omitted.

(e) Intentionally omitted.”

10. Amendment of Section 6.3(h). Section 6.3(h) of the Agreement is deleted in its entirety and replaced with the following:

“(h) All (i) shareholder derivative actions, (ii) securities class actions and (iii) actions brought by securityholders based on a breach of duty in connection with the transactions contemplated by this Agreement; in any case, brought against the Company or its officers or directors (or other persons entitled to seek indemnification or contribution from the Company) shall have been settled for an aggregate amount within the limits set forth in the Company’s applicable insurance policies and without further liability of the Company, its officers or directors or indemnified parties. Section 6.3(h) of the Disclosure Letter sets forth the pending shareholder derivative actions, securities class actions and actions brought by securityholders based on a breach of duty that are not subject to this Section 6.3(h); and”.

A2-3

11. Amendment of Section 7.1(b)(i). Section 7.1(b)(i) of the Agreement is deleted in its entirety and replaced with the following:

“(i) the Merger shall not have been consummated on or before November 30, 2006 (the “Outside Date”); provided that the right to terminate this Agreement pursuant to this Section 7.1(b)(i) shall not be available to a party whose failure to fulfill any material obligation under this Agreement or other material breach of this Agreement has been the cause of, or resulted in, the failure of the Merger to have been consummated on or before such date;”.

12. Amendment of Section 8.4(lll). Section 8.4 (lll) of the Agreement is deleted in its entirety and replaced with the following:

“(lll) “Public Stockholders” shall mean all of the stockholders of the Company other than the Moyes Stockholders and the Investing Stockholder.”

13. Amendment of Section 8.4(zzz). Section 8.4(zzz) of the Agreement is deleted in its entirety and replaced with the following:

“(zzz) “Stockholders’ Agreement” means the Stockholders’ Agreement substantially in the form attached as Exhibit 2 to this Agreement.”

14. Amendment of Section 8.4(dddd). Section 8.4(dddd) of the Agreement is deleted in its entirety and replaced with the following:

“(dddd) Intentionally omitted.”

15. Amendment of Schedule 3.2(a) of the Disclosure Letter. Schedule 3.2(a) is amended by inserting an asterisk after “Robert V. Fasso” and inserting the following footnote at the bottom of the table:

“* At closing, the terms of Mr. Fasso’s options will be amended as contemplated by the amendment to Mr. Fasso’s Stock Option Agreement.”

16. Other Provisions Unaffected. Except as specifically and expressly amended by this Amendment, the terms, covenants and conditions of the Agreement shall remain in full force and effect.

17. Controlling Document. In the event of a conflict or inconsistency between any term of this Amendment and any term of the Agreement, the terms of this Amendment shall control and prevail.

18. Miscellaneous. This Amendment: (a) may be amended only by a writing signed by each of the parties hereto; (b) may be executed in several counterparts, each of which is deemed an original but all of which constitute one and the same instrument; (c) may not be assigned, pledged or otherwise transferred, whether by operation of law or otherwise, without the prior consent of the other parties; (d) together with the Agreement, contains the entire agreement of the parties with respect to the transactions contemplated hereby and supersedes all prior written and oral

A2-4

agreements, and all contemporaneous oral agreements, relating to such transactions; (e) is governed by, and will be construed and enforced in accordance with, the laws of the State of Nevada, without giving effect to any conflict of laws rules; and (f) is binding upon, and will inure to the benefit of, the parties and their respective heirs, successors and permitted assigns. The waiver by a party of any breach or violation of any provision of this Amendment will not operate as, or be construed to be, a waiver of any subsequent breach or violation hereof. Capitalized terms used but not defined in this Amendment have the meanings assigned to them in the Agreement.

[SIGNATURE PAGE FOLLOWS]

A2-5

SIGNATURE PAGE TO FIRST AMENDMENT TO AGREEMENT AND

PLAN OF MERGER

IN WITNESS WHEREOF, the Company, Parent and the Purchaser have caused this Amendment to be executed as of the date first written above by their respective duly authorized officers.

	NORTH AMERICAN TRUCK LINES, LLC

	By:	/s/ Jeff A. Shumway
	Name:	Jeff A. Shumway
	Title:	President


	GREEN ACQUISITION COMPANY

	By:	/s/ Jeff A. Shumway
	Name:	Jeff A. Shumway
	Title:	President


	CENTRAL FREIGHT LINES, INC.

	By:	/s/ Robert V. Fasso
	Name:	Robert V. Fasso
	Title:	Chief Executive Officer and President

A2-6

Table of Contents

Annex B

MORGAN KEEGAN & COMPANY, INC.

FAIRNESS OPINION

dated January 30, 2006

Morgan Keegan

Morgan Keegan & Company, Inc.

Morgan Keegan Tower

Fifty North Front Street

Memphis, Tennessee 38103

901/524-4100 Telex 69-74324

WATS 800/366-7426

Members New York Stock Exchange, Inc.

January 30, 2006

Board of Directors

Central Freight Lines, Inc.

5601 West Waco Drive

Waco, Texas 76710

Members of the Board of Directors:

The Board of Directors of Central Freight Lines, Inc. (“Central Freight” or the “Company”) has requested our opinion as to the fairness, from a financial point of view, to the Company’s public shareholders of the consideration to be paid by North American Truck Lines, LLC (the “Buyer”), an entity formed by Mr. Jerry Moyes, for shares of Central Freight common stock. We understand that Central Freight, North American Truck Lines, LLC and Green Acquisition Company propose to enter into an Agreement and Plan of Merger (the “Agreement”) pursuant to which Green Acquisition Company will merge with and into Central Freight (the “Merger”). You have advised us that the proposed transaction would be effected as a cash merger whereby the shareholders of Central Freight would receive $2.25 for each of the common shares of Central Freight (the “Transaction”). The terms and conditions are set out more fully in the Agreement.

In connection with our opinion, we have (1) participated in discussions with various members of management and representatives of the Company concerning the Company’s historical and current operations, financial condition and prospects and strategic objectives; (2) reviewed publicly-available historical financial and operating data as well as historical financial and operating data that was furnished to us by the Company relating to its business; (3) reviewed internal financial analyses, financial and operating forecasts, reports and other information prepared by officers and representatives of the Company relating to its business; (4) reviewed certain publicly available information with respect to certain other companies in lines of business that we believe to be generally comparable to those of the Company and the trading markets for such other companies’ securities; (5) reviewed certain publicly available information concerning the financial terms of certain other transactions that we deemed relevant to our inquiry; (6) analyzed the value of projected cash flows of Central Freight; and (7) undertaken such other studies, analyses and investigations, and considered such other information, as we deemed relevant. During the course of our engagement, we were asked by the Special Committee of the Board of Directors to solicit indications of interest from various third parties regarding a transaction with Central Freight, and we have considered the results of such solicitation in rendering our opinion.

In our review and analysis and in arriving at our opinion, we have assumed and relied upon the accuracy and completeness of all of the financial and other information provided to us. We have not been engaged to, and have not attempted to, independently verify any of such information and have further relied upon the assurances of management of the Company that they are not aware of any facts or circumstances that would make such information inaccurate or misleading.

With respect to the financial and operational forecasts made available to us by the management of the Company and used in our analysis, we have assumed that such financial and operational forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of management as to the matters covered thereby. We have not been engaged to assess the achievability of such projections or the assumptions on which they were based and express no view as to such projections or assumptions. In addition, we have not conducted a physical inspection or appraisal of any of the assets or liabilities of the Company nor have we been furnished with any such evaluation or appraisal.

B - 1

It should be noted that this opinion is based on economic and market conditions and other circumstances existing on, and information made available as of, the date hereof and does not address any matters subsequent to such date. In addition, our opinion is, in any event, limited to the fairness, as of the date hereof, from a financial point of view, of the consideration to be paid to shareholders of the Company in connection with the Transaction and does not address the underlying business decision to effect the Transaction or any other terms of the Transaction. In addition, we are not expressing any opinion as to the prices at which the Company’s common stock may trade following the date of this opinion.

In the ordinary course of our business, we may actively trade in the equity securities of the Company for our own account and the accounts of our customers and, accordingly, may at any time hold a significant long or short position in such securities. In addition, certain of our employees own shares of the Company’s common stock.

Our opinion is rendered to the Board of Directors of Central Freight in connection with its consideration of the Transaction and does not constitute a recommendation to any shareholder of the Company as to how such shareholder should vote in connection with the Transaction. Except as may be required by the United States Securities and Exchange Commission, law or a court of competent jurisdiction, this letter may not be disclosed or otherwise referred to without our prior written consent in each instance.

Based upon and subject to the foregoing and based upon such other matters as we consider relevant, it is our opinion that, as of the date hereof, the consideration to be paid in connection with the Transaction is fair, from a financial point of view, to the Company’s public shareholders (other than shareholders affiliated with the Buyer).

	Very truly yours,

	/s/ Morgan Keegan & Company, Inc.
	MORGAN KEEGAN & COMPANY, INC.

B - 2

Table of Contents

x	Preliminary Proxy Statement
o	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o	Definitive Proxy Statement
o	Definitive Additional Materials
o	Soliciting Materials Pursuant to § 240.14a-11(c) or § 240.14a-12

o	No fee required
o	Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
		(1)	Title of each class of securities to which transaction applies:
		(2)	Aggregate number of securities to which transaction applies:
		(3)	Per unit price or other underlying value of transaction computed
			pursuant to Exchange Act Rule 0-11 (set forth the amount on which
			the filing fee is calculated and state how it was determined):
		(4)	Proposed maximum aggregate value of transaction:
		(5)	Total Fee paid:
x	Fee paid previously
x	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	By Order of the Board of Directors,

	Jeffrey A. Hale
	Secretary
Waco, Texas
October___, 2006

		Page
SUMMARY TERM SHEET		1
	The Merger and Related Transactions	1
	Effects of the Merger and Related Transactions	1
	Recommendation of our Board	2
	Factors Considered by the Board and the Special Committee	3
	Morgan Keegan's Fairness Opinion	3
	Position of NATL, Green, Mr. Fasso and the Affiliated Continuing Investors Regarding the Merger	3
	Conflicts of Interest and Other Interests of Certain Persons in the Merger and Certain Relationships	3
	U.S. Federal Income Tax Consequences of the Merger	4
	Central’s Stockholders Must Approve the Merger Agreement	4
	Regulatory Approvals Related to the Merger	5
	Source and Amount of Funds	5
	The Merger Consideration	5
	Conditions to Completion of the Merger	6
	Certain Stockholder Litigation Currently Pending Against Central	6
	Termination of the Merger Agreement and Non-Solicitation	6

GENERAL INFORMATION		7
	Time, Place and Date	7
	Proxies and Voting	7
	Right to Attend Annual Meeting; Revocation of Proxy	8
	Costs of Solicitation	8
	Annual Report on Form 10-K and Quarterly Report on Form 10-Q	8
	How To Read This Proxy Statement	8

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE ANNUAL MEETING OF STOCKHOLDERS		9

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		13

PROPOSAL ONE - APPROVAL OF THE MERGER AGREEMENT		14

THE PARTIES TO THE MERGER AGREEMENT		14
	Central Freight Lines, Inc.	14
	North American Truck Lines, LLC	14
	Green Acquisition Company	14
	Relationships Between Central and NATL	15

SPECIAL FACTORS		15
	Background of the Merger	15
	Litigation	21
	Reasons for the Merger	23
	Recommendation of our Board and Fairness of the Merger	31
	Opinion of Central’s Financial Advisor	31
	Position of NATL, Green, Mr. Fasso and the Affiliated Continuing Investores Regarding the Merger	37

	Conduct of Central’s Business if the Merger is Not Completed	39
	Conflicts of Interest and Other Interests of Certain Persons in the Merger and Certain Relationships	39
	Agreement with the Affiliates	39
	Accounting Treatment	42
	Regulatory Requirements	42
	Net Operating Loss Carryforwards	42
	U.S. Federal Income Tax Consequences of the Merger	43
	Fees and Expenses	44
	Source and Amount of Funds	45

THE MERGER AGREEMENT		45
	The Merger	45
	Conversion of Securities	45
	Stock Options	46
	Exchange of Certificates	46
	Articles of Incorporation and By-Laws; Directors and Officers	47
	Representations and Warranties	47
	Covenants Relating to the Conduct of Central’s Business	48
	Other Covenants	49
	Restrictions on Negotiating and Entering into Alternative Transactions and on Withdrawing the Recommendation with Respect to the Merger	50
	Covenants Regarding Stockholder Meeting	52
	Directors’ and Officers’ Insurance and Indemnification	52
	Indemnification of NATL, Green and Their Respective Controlling Persons, Directors, Officers, Employees and Agents	52
	Conditions Precedent to the Merger	53
	Termination of the Merger Agreement; Termination Fees and Expenses	54

CENTRAL FREIGHT LINES, INC. SELECTED FINANCIAL DATA		57

MARKET FOR THE COMMON STOCK		59

SECURITIES OWNERSHIP		60

CONTROLLING PERSONS, DIRECTORS AND EXECUTIVE OFFICERS OF CENTRAL, NATL AND GREEN		60
	Background of Named Persons	60
	Past Contacts, Transactions and Negotiations	63
	Plans or Proposals	63
	Recent Transactions in Central Common Stock	63
	Contracts, Arrangements or Understandings Concerning Central’s Securities	64

PROPOSAL TWO - GRANTING OF PROXY TO ADJOURN THE ANNUAL MEETING		64

PROPOSAL THREE - ELECTION OF DIRECTORS		64

CORPORATE GOVERNANCE		65

(1)	Amount previously paid:	$3,087.00
(2)	Form, Schedule or Registration Statement No.:	Schedule 14A
(3)	Filing Party:	Central Freight Lines, Inc.
(4)	Date Filed:	April 17, 2006

	Sincerely,


	Robert V. Fasso
	Chief Executive Officer and President

1.	APPROVAL OF THE MERGER AGREEMENT. To consider and vote upon a proposal to approve the Agreement and Plan of Merger dated as of January 30, 2006, as amended (the “Merger Agreement”), by and among Central, North American Truck Lines, LLC (“NATL”) and Green Acquisition Company (“Green”), which agreement provides for the merger of Green, a wholly-owned subsidiary of NATL, with and into Central with Central as the surviving corporation in the merger (the “Merger”);

2.	ADJOURNMENT. To approve the adjournment of the Annual Meeting, if necessary or appropriate, to provide time to solicit additional proxies if it does not appear that there will be enough shares voted in favor of the Merger Agreement to approve it at the time of the Annual Meeting;

3.	ELECTION OF DIRECTORS. To consider and act upon a proposal to elect four directors of Central; and

4.	OTHER MATTERS. To consider and act upon such other matters as may properly come before the Annual Meeting and any adjournment thereof.

	Board of Directors	65
	Committees of the Board	66
	The Audit Committee	66
	Report of the Audit Committee	67

	The Compensation Committee	68
	The Nominating and Corporate Governance Committee	68
	The Special Committee	70
	Director Compensation	70
	Executive Officers of Central	71
	Code of Conduct and Ethics	72
	Section 16(a) Beneficial Ownership Reporting Compliance	72

EXECUTIVE COMPENSATION		72
	Summary Compensation Table	72
	Options Grants In Last Fiscal Year	73
	Aggregated Options Exercises in Last Fiscal Year and Fiscal Year-End Option Value Table	74
	Employment Agreements	74
	Executive Bonus Program	75
	Incentive Stock Plan	75
	401(k) Profit Sharing Plan	75
	Employee Stock Purchase Plan	76
	Compensation Committee Interlocks and Insider Participation	76
	Compensation Committee Report on Executive Compensation	76
	Stock Performance Graph	78

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		79

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		81

RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		82
	Change in Independent Registered Public Accounting Firm	82
	Principal Accounting Fees and Services	83
	Pre-Approval Policy	83

OTHER MATTERS		84

STOCKHOLDER PROPOSALS		84

INCORPORATION BY REFERENCE		84

WHERE YOU CAN FIND MORE INFORMATION		85

	Ownership Prior to the Merger			Ownership After the Merger
Stockholder	Percent Ownership of Common Stock July 1, 2006	Portion of Net Book Value as of July 1, 2006	Portion of Net Losses in the Six Months ended July 1, 2006	Percent Ownership of the Surviving Corporation Equity	Portion of Net Book Value as of July 1, 2006	Portion of Net Losses in the Six Month ended July 1, 2006
(dollars in thousands)
Public Stockholders	64.43%	$ 19,557	$ 11,784	0.00%	$ 0	$ 0

Affiliated Continuing Investors:

Jerry Moyes⁽¹⁾	0.00%	$ 0	$ 0	68.57%	$ 20,814	$ 12,541

The Family Trust	5.71%	$ 1,733	$ 1,044	5.71%	$ 1,733	$ 1,044

The Children’s Trust	25.72%	$ 7,807	$ 4,704	25.72%	$ 7,807	$ 4,704

Robert V. Fasso	4.13%	$ 1,254	$ 755	0.00%⁽²⁾	$ 0⁽²⁾	$ 0⁽²⁾

All Directors and Executive Officers as a Group other than Mr. Fasso	0.40%	$ 121	$ 73	0.00%	$ 0	$ 0

(1)	Includes shares of the surviving corporation owned by NATL, which is controlled by Mr. Moyes.

(2)	Mr. Fasso will be able to purchase up to 504,000 shares, or approximatley 2.68%, of the common stock of the surviving corporation after the Merger pursuant to his amended stock options agreement.


•	Each holder of options to purchase Central Common Stock with an exercise price below $2.25 (other than Mr. Moyes and Mr. Fasso), including each director and executive officer of Central,


•	Mr. Fasso will hold options to purchase up to 504,000 shares, or approximately 2.7%, of the common stock of the surviving corporation if he exercises his stock options as amended at a cost of $1.35 per share. It is a condition to NATL’s obligation to consummate the transactions anticipated by the Merger Agreement that, immediately prior to closing of the Merger, Mr. Fasso will execute and deliver a Stockholders’ Agreement that, when executed by the other parties thereto, will govern the rights of Mr. Fasso and the Affiliated Continuing Investors upon the consummation of the Merger.

•	Central’s directors and executive officers will continue to have rights to indemnification and liability insurance coverage for six years following the Merger.

•	The payment of $30,000 to the Chairman of the Special Committee in recognition of the time and effort he expended in evaluating the Merger and negotiating the Merger Agreement, which amount was authorized by the Board.

•	It is expected that all of Central’s executive officers, none of whom will hold any common stock in the surviving corporation at the consummation of the Merger, will continue to be employed by Central following the Merger. See the section of this Proxy Statement entitled “Special Factors—Conflicts of Interest and Other Interests of Certain Persons in the Merger and Certain Relationships.”

•	the Merger Agreement is approved by the affirmative vote of the holders of a majority of the outstanding shares of Central Common Stock and the affirmative vote of the holders of a majority of the outstanding shares beneficially held by the Public Stockholders;

•	Mr. Fasso must have executed and delivered to Central the Stockholders’ Agreement.

○	to approve the Merger Agreement;

○	to approve the adjournment of the Annual Meeting, if necessary or appropriate, to provide time to solicit additional proxies if there are not enough shares voted in favor of the Merger Agreement to approve it at the time of the Annual Meeting; and

○	to elect four directors to our Board.

○	“FOR” the proposal to approve the Merger Agreement;

○	“FOR” the adjournment of the Annual Meeting, if necessary; and

○	“FOR” each of the four director nominees.

○	The proposal to approve the Merger Agreement requires the affirmative vote of both (i) the holders of a majority of the outstanding shares of Central Common Stock entitled to vote thereon (i.e., the “Statutory Vote”) and (ii) a majority of the outstanding shares of Central Common Stock beneficially owned by holders other than the Affiliated Continuing Investors and Mr. Fasso (i.e., the “Public Stockholder Vote”).

○	The proposal to adjourn the Annual Meeting, if necessary, to provide time to solicit additional proxies if it does not appear that there will be enough shares voted in favor

	of the Merger Agreement to approve it at the time of the Annual Meeting, requires the affirmative vote of a majority of the shares then present at the meeting.

○	The election of directors is by a plurality of the votes cast.

•	Reducing the amount of public information available to competitors regarding Central’s business and strategy by terminating Central’s reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

•	Eliminating other burdens on Central’s management and sales force related to Central’s public company status, including, for example, the dedication of time and resources necessary to respond to stockholder and analyst inquiries and to maintain investor and customer relations in the face of analyst, stockholder and competitor speculation.

•	Eliminating costs associated with being a public company, including professional fees associated with filing quarterly, annual and other periodic reports with the SEC, the substantial internal and external costs of compliance with the Sarbanes-Oxley Act of 2002, the expense of publishing and distributing annual reports and proxy statements to stockholders and the costs of compensating independent directors. The Company estimates that it incurred approximately $1.9 million and $3.3 million of public company costs in 2004 and 2005, respectively, including approximately $150,000 in internal labor costs in each year.

•	Increasing the ability of Central’s management to focus on long-term business goals, as a non-reporting company, rather than short-term expectations and speculation.

•	The continuing challenges faced by Central in working with its consultants and accountants to respond to the internal controls requirements imposed by the Sarbanes-Oxley Act of 2002;

•	The recent need for Central’s junior- and senior-level management to spend significant amounts of time addressing customer and employee concerns regarding Central’s financial position following adverse analyst reports that questioned Central’s ability to continue as an independent public company; and

•	The negative impact the foregoing had on management’s ability to implement its turnaround plan and improve results of operations.

•	Elimination of the financing condition to the obligation of NATL and Green to effect the Merger.

•	Extension of the date to complete the Merger from July 31, 2006 to November 30, 2006.

•	Approval of the amendment of Mr. Fasso’s options to purchase Central Common Stock so that they may be exercised after the consummation of the Merger, which eliminated the need for a Subscription Agreement with Mr. Fasso.

•	Cancellation of the options to purchase Central Common Stock held by Mr. Moyes at the effective time of the Merger.

•	Clarification that certain pending litigation is not subject to the condition requiring settlement within Central’s applicable insurance policy limits.

•	Revision of other provisions to correspond with these revisions to the Merger Agreement.

·	The Board established the Special Committee of independent directors to consider any proposal and available alternatives. The Special Committee was composed of Mr. Carruth and Mr. Hall. The Special Committee retained an independent financial advisor, Morgan Keegan, and independent outside counsel, Blackwell Sanders.

·	The process conducted under the direction of the Special Committee was a factor in the determination by the Special Committee and our Board that the Merger Agreement is fair to the Unaffiliated Security Holders and in their best interests and it consisted of the following steps.

	°	Morgan Keegan contacted six strategic buyers regarding a potential acquisition of Central prior to the receipt of the proposal from NATL on November 10, 2005. We issued a press release on November 10, 2005 announcing NATL’s proposal and our engagement of Morgan Keegan as financial advisor to the Special Committee, which gave other parties ample opportunity to explore possible transactions with Central and which would have given Central alternative transactions to consider in addition to NATL’s proposal.

	°	Three parties contacted Central’s management expressing an interest in considering an alternative proposal, including the firm that had previously proposed a PIPE transaction. After the expiration of the Exclusivity Period with NATL, Morgan Keegan and management of Central contacted these three interested parties as well as the strategic buyers it had contacted prior to receiving NATL’s proposal and one other potential strategic buyer who we thought might be interested in Central. Only one of these parties expressed sufficient interest to warrant a non-disclosure agreement to be executed to provide further information on Central to explore a possible transaction with us, which did not lead to an alternative proposal.

·	The $2.25 per share offer by NATL to our stockholders was the only offer received even though Central, through its own efforts and the efforts of Morgan Keegan, had made other potential buyers aware of the opportunity to acquire Central. Fair value is a function of what buyers are willing to pay.

·	The fact that NATL’s offer will be paid in cash provides relative certainty, immediate value and liquidity to our stockholders.

·	The premium represented by $2.25 per share in cash to be paid to our stockholders contrasted with the current and historical trading prices of shares of Central Common Stock contributed to the conclusion by the Special Committee and our Board that the $2.25 per share offer is fair to the Unaffiliated Security Holders. See “Special Factors—Opinion of Central’s Financial Advisor.”


	○	The premium to our closing stock price of $__ on _______, 2006 is ____%.

	○	Further, the conclusion by the Special Committee and the Board was predicated, in part, on the belief of the members that absent a transaction with NATL, there is a significant risk that the Company’s stock price could decline below current levels based on continuing losses.

	○	We discounted historical trading prices of our Common Stock in light of the ongoing losses over the last two years resulting in the declining stock prices over this period.

·	The information contained in the financial analyses presented by Morgan Keegan at the Special Committee meetings on January 5, 2006 and January 21, 2006, and at our Board meetings on January 21 and 26, 2006, supported the conclusion by the Special Committee and our Board that the $2.25 per share offer is fair to the Unaffiliated Security Holders.

·	Morgan Keegan’s opinion dated January 30, 2006 that, as of that date and based upon and subject to the considerations set forth in its opinion, the $2.25 per share in cash to be received by the Unaffiliated Security Holders was fair, from a financial point of view, to such stockholders contributed to the conclusion by the Special Committee and our Board that the $2.25 per share offer is fair to the Unaffiliated Security Holders. See “Special Factors—Opinion of Central’s Financial Advisor.”

·	The Special Committee and the Board noted that a number of factors specific to the situation facing Central make the financial metrics for the traditional evaluation of fairness more speculative in assessing the fairness of the merger consideration to the Unaffiliated Security Holders. These factors include the following.

	○	Central’s significant operating losses over the last two years which has caused a steady decline in Central’s book value and stock price and which decline management currently estimates will continue into the foreseeable future makes the evaluation of the fairness of the $2.25 per share more speculative.

	○	Central’s negative cash flow and negative working capital makes more difficult the evaluation of Central’s going-concern value.

	○	The lack of comparability with peers in this industry as a result of Central’s continuing losses from operations as well as Central’s smaller size in terms of assets, revenue, earnings and market value in most cases in addition to Central’s use of operating leases for many of its terminals rather than the capital leases and outright ownership of terminals typical in the industry.

	○	The amount of Central Common Stock controlled by Mr. Moyes, the amount of Central Common Stock controlled by the Children’s Trust and Central’s lease arrangements with Southwest Premier and Mr. Moyes for a number of key terminals in Central’s core Southwest region would require the cooperation of Mr. Moyes and the Children’s Trust in any going private or other change in control transaction with a third party, which is not the case in many such transactions. While these interests may have motivated Mr. Moyes to proceed, they may have dampened the interests of any third parties in Central because they would either need to negotiate separately with Mr. Moyes, the Children’s Trust, Southwest Premier and Central to buy all of the Common Stock and terminals of Central or buy a majority of Central’s Common Stock while Mr. Moyes, Southwest Premier and the Children’s Trust maintained some or all their interest in a number of Central’s key terminals and Central Common Stock, respectively.

·	The factors set forth below relating to the adverse business, market and execution risks that we face in operating our business and pursuing growth were considered by and contributed to the conclusion of the Special Committee and our Board that the $2.25 per share offer is fair to the Unaffiliated Security Holders. These factors include the following.

	○	Speculation within the trucking industry regarding our liquidity and financial position coupled with the efforts of our competitors to capitalize on that speculation has generated a lack of confidence among our customers and potential customers that we will be able to continue to serve them, negatively impacting revenue and contributing to the decline in the market value of Central Common Stock. Without additional sources of liquidity, we have been unable to address these issues as aggressively as we wished. In addition, the need for liquidity may have contributed to a lack of competing offers.

	○	Our unwillingness to operate at unprofitable rates for some of our former customers, such as Dell Inc., has resulted in a decline in revenue, further contributing to the decline in the market value of Central Common Stock.

	○	Uncertainty over our ability to stop the erosion of our book value, which management currently believes will continue into the foreseeable future is contributing to the decline in the market value of Central Common Stock.

	○	Continued significant costs of regulatory compliance facing small public companies like us contributed to the decline in the market value of Central Common Stock.


·	Central’s current priority is establishing sufficient liquidity. Without additional liquidity, Central’s management believes there is a substantial likelihood that Central’s customers and its employee base will not be wholly supportive of Central’s turnaround efforts, and Central’s stockholders could lose up to their entire investment. If liquidity concerns were to be alleviated pursuant to the Merger and the infusion of capital thereafter by entities controlled by Mr. Moyes, which Mr. Moyes is willing to do only if the Merger is consummated, Central’s management believes it could return its full attention to the five-part turnaround plan described above.

·	In addition to the foregoing, additional factors increase the challenges we would face if we remained an independent company and contributed to the conclusion by the Special Committee and our Board that the $2.25 per share offer is fair to the Unaffiliated Security Holders. These factors include the following.


	○	The risk that if the Merger is not consummated, members of our management team and key employees would ultimately terminate their employment with us and seek alternative employment with companies with higher growth rates, better potential financial returns and better employment terms and career opportunities, which would further complicate our ability to execute our turnaround plans.


	○	The risk that if the Merger is not consummated, the significant general and administrative costs of remaining a publicly traded company as a percentage of our other costs, continuing to divert scarce resources to non-revenue generating activities and further adversely impacting Central’s ability to continue to operate, would negatively affect our value.

	○	Difficulties in achieving growth through acquisition and further adversely impacting Central’s ultimate goal of operating profitably would continue to cause the market value of Central Common Stock to decline.