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EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
by and among
XXXXXXX XXXXXX BUILDING PRODUCTS, INC.,
a Georgia corporation
GUARDIAN FIBERGLASS, INC.,
a Delaware corporation
and
CAB MERGER CORP.,
a Georgia corporation
Dated as of April 28, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I -- THE OFFER AND THE MERGER
Section 1.1 The Offer .....................................................2
Section 1.2 Company Actions ...............................................4
Section 1.3 The Merger ....................................................6
Section 1.4 Effective Time ................................................6
Section 1.5 Effects of the Merger .........................................6
Section 1.6 Amended and Restated Articles of Incorporation and Bylaws .....6
Section 1.7 Directors .....................................................7
Section 1.8 Officers ......................................................8
Section 1.9 Subsequent Actions ............................................8
Section 1.10 Conversion of Shares ..........................................8
Section 1.11 Stock Options and Warrants ....................................9
Section 1.12 Special Meeting of Shareholders ...............................9
Section 1.13 Merger Without Approval of Company Shareholders ..............10
ARTICLE II -- DISSENTING SHARES; PAYMENT FOR SHARES
Section 2.1 Dissenting Shares ............................................10
Section 2.2 Payment for Shares ...........................................11
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization and Qualification, Subsidiaries .................13
Section 3.2 Capitalization of the Company and its Subsidiaries ...........14
Section 3.3 Authority Relative to this Agreement, Consents and Approvals .16
Section 3.4 SEC Reports, Financial Statements ............................17
Section 3.5 Proxy Statement ..............................................18
Section 3.6 Consents and Approvals; No Violations ........................18
Section 3.7 No Default ...................................................19
Section 3.8 No Undisclosed Liabilities ...................................19
Section 3.9 Litigation ...................................................20
Section 3.10 Compliance with Applicable Law ...............................20
Section 3.11 Employee Benefit Matters .....................................21
Section 3.12 Environmental Laws and Regulations ...........................23
Section 3.13 Rights Agreement .............................................25
Section 3.14 Brokers ......................................................26
Section 3.15 Absence of Certain Changes ...................................26
Section 3.16 Taxes ........................................................26
Section 3.17 Intellectual Property ........................................28
Section 3.18 Labor Matters ................................................29
Section 3.19 Opinion of Financial Advisor..................................29
Section 3.20 Real Property ................................................30
Section 3.21 Material Contracts ...........................................31
Section 3.22 Suppliers and Customers.......................................32
Section 3.23 Accounts Receivable, Inventory ...............................33
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Section 3.24 Insurance ....................................................33
Section 3.25 Title and Condition of Properties ............................33
Section 3.26 Statements True and Correct ..................................34
Section 3.27 Board Recommendation .........................................34
Section 3.28 Required Vote ................................................34
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization .................................................34
Section 4.2 Authority Relative to this Agreement .........................34
Section 4.3 Consents and Approvals; No Violations ........................35
Section 4.4 Proxy Statement ..............................................35
Section 4.5 Financing ....................................................36
Section 4.6 Brokers ......................................................36
Section 4.7 No Default ...................................................36
Section 4.8 Litigation ...................................................36
Section 4.9 Compliance with Applicable Law ...............................36
ARTICLE V -- COVENANTS
Section 5.1 Conduct of Business of the Company ...........................37
Section 5.2 Acquisition Proposals ........................................40
Section 5.3 Access to Information ........................................41
Section 5.4 Additional Agreements; Reasonable Efforts ....................42
Section 5.5 Public Announcements .........................................43
Section 5.6 Indemnification ..............................................43
Section 5.7 State Takeover Laws ..........................................45
Section 5.8 Rights Agreement .............................................45
Section 5.9 Disclosure Schedule Supplements ..............................45
Section 5.10 Change of Control Agreements .................................45
ARTICLE VI -- CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect the Merger ..46
ARTICLE VII -- TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination ..................................................48
Section 7.2 Effect of Termination ........................................50
Section 7.3 Fees and Expenses ............................................50
Section 7.4 Amendment ....................................................52
Section 7.5 Waiver .......................................................52
ARTICLE VIII -- MISCELLANEOUS
Section 8.1 Nonsurvival of Representations and Warranties ................52
Section 8.2 Entire Agreement; Assignment .................................52
Section 8.3 Validity .....................................................52
Section 8.4 Notices ......................................................53
Section 8.5 Governing Law ................................................54
Section 8.6 Descriptive Headings .........................................54
Section 8.7 Parties in Interest ..........................................54
Section 8.8 Signatures. ..................................................54
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Section 8.9 Definitions ..................................................54
SIGNATURES ..............................................................................55
INDEX OF DEFINED TERMS:
Acquisition Proposal .......................................................5.2(c)
Agreement ................................................................Preamble
Audit .....................................................................3.16(l)
Board ....................................................................Preamble
CERCLA ....................................................................3.12(b)
Certificates ...............................................................2.2(b)
Closing .......................................................................1.4
Code ......................................................................3.11(a)
Company ..................................................................Preamble
Company Balance Sheet .........................................................3.8
Company Benefit Plan ......................................................3.11(h)
Company Common Stock .....................................................Preamble
Company Directors ..........................................................1.7(a)
Company Disclosure Schedule ................................................3.1(a)
Company Material Adverse Effect ............................................3.1(b)
Company Permits ..............................................................3.10
Company SEC Documents ......................................................3.4(a)
Company Securities .........................................................3.2(a)
Dissenting Shares .............................................................2.1
Effective Time ................................................................1.4
Environmental Claims ......................................................3.12(d)
Environmental Law .........................................................3.12(b)
Environmental Permits .....................................................3.12(a)
ERISA .....................................................................3.11(a)
Exchange Act ...............................................................1.1(a)
Financial Advisor ..........................................................3.3(d)
GAAP .......................................................................3.4(a)
GBBC .....................................................................Preamble
Governmental Entity ...........................................................3.6
HSR Act .......................................................................3.6
Indebtedness ...............................................................3.2(e)
Indemnified Parties ........................................................5.6(c)
Intellectual Property .....................................................3.17(a)
Intent Notice ..............................................................5.2(b)
IRS .......................................................................3.11(a)
Liens ......................................................................3.2(b)
Litigation ....................................................................3.9
Material Contracts ...........................................................3.21
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Materials of Environmental Concern ........................................3.12(b)
Merger ........................................................................1.3
Merger Consideration ......................................................1.10(a)
Minimum Condition ..........................................................1.1(a)
Offer ....................................................................Preamble
Offer Deadline .............................................................7.1(f)
Offer Documents ............................................................1.1(b)
Offer Price ................................................................1.1(a)
Offer to Purchase ..........................................................1.1(a)
Option .......................................................................1.11
Other Transactions .........................................................1.2(a)
Paying Agent ...............................................................2.2(a)
PCBs ......................................................................3.12(b)
Permitted Liens ............................................................3.2(b)
Person .....................................................................5.2(c)
Preferred Stock ............................................................3.2(a)
Premium Amount .............................................................5.6(b)
Proxy Statement ...........................................................1.12(d)
Purchaser ................................................................Preamble
Purchaser Material Adverse Effect .............................................4.3
Purchaser Permits .............................................................4.9
RCRA ......................................................................3.12(b)
Real Property ................................................................3.20
Restated Articles .............................................................1.6
Rights .....................................................................1.1(a)
Rights Agreement .........................................................Preamble
Rights Amendment ...........................................................1.2(a)
Schedule TO ...................................................................1.1
Schedule 14D-9 .............................................................1.2(b)
SEC ........................................................................1.1(a)
Securities Act .............................................................3.4(a)
Selling Shareholders .....................................................Preamble
Share or Shares ..........................................................Preamble
Special Meeting ...........................................................1.12(a)
Subsidiary .................................................................3.1(a)
Surviving Corporation .........................................................1.3
Tax Authority .............................................................3.16(l)
Taxes .....................................................................3.16(l)
Tax Returns ...............................................................3.16(l)
Tender and Option Agreement ..............................................Preamble
Transmittal Documents ......................................................2.2(b)
WARN Act ..................................................................3.18(b)
Warrants .....................................................................1.11
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1999 Financial Statements ..................................................3.4(a)
ANNEXES:
Annex A -- Form of Tender and Option Agreement
Annex B -- Conditions to the Tender Offer
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April 28,
2000, is entered into by and among Xxxxxxx Xxxxxx Building Products Inc., a
Georgia corporation (the "Company"), Guardian, Fiberglass, Inc., a Delaware
corporation ("Purchaser"), and CAB Merger Corp., a Georgia corporation and a
wholly owned subsidiary of Purchaser ("Acquisition Sub").
WHEREAS, Purchaser proposes to cause Acquisition Sub to make a tender offer
(as it may be amended from time to time as permitted under this Agreement, the
"Offer") to purchase all of the issued and outstanding shares of common stock,
no par value, of the Company (hereinafter referred to as either the "Shares" or
the "Company Common Stock") at a price per share of Company Common Stock of
$18.35, net to each seller in cash, without interest, upon the terms and subject
to the conditions set forth in this Agreement, and the Board of Directors of the
Company has adopted resolutions approving, among other things, the Offer and the
Merger and recommending that the Company's shareholders accept the Offer; and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as an inducement to Purchaser and Acquisition Sub to enter into this Agreement,
Acquisition Sub and certain shareholders are entering into tender and option
agreements in the form attached hereto as Annex A (the "Tender and Option
Agreement") pursuant to which such shareholders (the "Selling Shareholders")
have agreed to (i) grant Acquisition Sub an irrevocable option to purchase all
of their Shares, and (ii) tender and, in the event such irrevocable option is
not theretofore exercised, sell their Shares in the Offer and (iii) vote their
Shares in favor of the Merger (as defined below) in each case upon the terms and
subject to the conditions set forth therein; and
WHEREAS, as an inducement to Purchaser and Acquisition Sub to enter into
this Agreement, the Board of Directors of the Company (the "Board") has approved
the execution and delivery of the Tender and Option Agreement so that (i) the
restrictions on "business combinations" set forth in Sections 14-2-1110 through
14-2-1133 of the Georgia Business Corporation Code ("GBCC") do not and will not
apply to Purchaser and Acquisition Sub or affiliates or associates of Purchaser
and Acquisition Sub as a result of the execution and delivery of the Tender and
Option Agreement or the consummation of the transactions contemplated thereby or
by this Agreement, and (ii) the Rights Agreement between the Company and
SunTrust Bank, Atlanta, Georgia, as Rights Agent, dated as of August 19, 1997
(the "Rights Agreement") shall be amended to prevent this Agreement or the
Tender and Option Agreement from resulting in the distribution of right
certificates or Purchaser and Acquisition Sub or their affiliates from being an
Acquiring Person (as defined in the Rights Agreement); and
WHEREAS, the Boards of Directors of Purchaser and Acquisition Sub have
approved the execution and delivery of this Agreement and have determined that
it is advisable and in the best interests of their respective shareholders, that
the Company and Acquisition Sub combine pursuant to the Merger in which
Acquisition Sub will merge with and into the Company in accordance with the GBCC
and upon the terms and subject to the conditions set forth herein, with the
Company being the surviving corporation; and
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WHEREAS, the Board has, in light of and subject to the terms and conditions
set forth herein, in accordance with the recommendation of a duly constituted
special committee of independent members of the Board (the "Special Committee"),
after considering the long-term prospects and interests of the Company and its
shareholders (i) determined that the consideration to be paid for each Share in
the Offer and the Merger (other than Shares held by Purchaser, Acquisition Sub
or any affiliate thereof) is fair to the holders of such Shares and that the
Offer and the Merger are in the best interests of such shareholders, (ii)
approved and adopted this Agreement and (iii) resolved to recommend that the
holders of such Shares approve this Agreement and the Merger upon the terms and
subject to the conditions set forth herein; and
WHEREAS, Purchaser, Acquisition Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also prescribe various conditions to the Offer and the
Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, Purchaser, Acquisition Sub and the Company hereby agree as
follows:
ARTICLE I -- THE OFFER AND THE MERGER
Section 1.1 The Offer. (a) Subject to the conditions of this Agreement, as
promptly as practicable, but in no event later than ten (10) business days after
the date of the public announcement of the execution of this Agreement,
Purchaser shall cause Acquisition Sub to commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) the Offer to purchase for cash all of the issued and outstanding shares
of Company Common Stock, and the associated rights (the "Rights") issued
pursuant to the Rights Agreement, at a price of $18.35 per Share, net to the
seller in cash, without interest (such price, or such higher price per Share as
may be paid in the Offer, being referred to herein as the "Offer Price"). The
obligation of Acquisition Sub to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject (i) to there being validly tendered and
not withdrawn prior to the expiration of the Offer that number of Shares which,
together with any Shares beneficially owned by Purchaser or Acquisition Sub,
represents at least a majority of the Shares outstanding on a fully-diluted
basis on the date of purchase ("on a fully-diluted basis" meaning, as of any
date, the number of Shares outstanding plus all Shares the Company is then
required to issue pursuant to obligations outstanding at that date under
employee stock option or other benefit plans, outstanding warrants, outstanding
options of any kind, convertible securities, or otherwise (to the extent such
options, warrants, convertible securities or other rights are vested or
exercisable) (the "Minimum Condition")), and (ii) to the other conditions set
forth in Annex B hereto. Acquisition Sub shall, on the terms and subject to the
prior satisfaction or waiver of the conditions of the Offer, including, without
limitation, the Minimum Condition, accept for payment and pay for Shares
tendered as soon as practicable after it is legally permitted to do so under
applicable law. The Offer shall promptly be made by means of an offer to
purchase (the "Offer to Purchase") containing the terms set forth in this
Agreement, the Minimum Condition and the other conditions set forth in Annex B
hereto. Without the written consent of the Company, Acquisition
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Sub shall not decrease the Offer Price, decrease the number of Shares sought,
change the form of consideration to be paid in the Offer, increase the Minimum
Condition, extend the Offer or amend or add to the offer conditions set forth in
Annex B or amend, add or waive any other condition of the Offer in any manner
adverse to the Company or the holders of the Shares. Notwithstanding the
foregoing, but subject to any rights the Company may have under this Agreement,
Acquisition Sub may, without the consent of the Company, extend the Offer one or
more times, up to July 31, 2000, (i) if at the then scheduled expiration date of
the Offer (which shall be not less than twenty (20) business days following the
commencement of the Offer), or any extension thereof, any of the conditions to
Acquisition Sub's obligation to accept for payment and pay for shares of Company
Common Stock shall not be satisfied or waived; (ii) for any period required by
any rule, regulation or interpretation of the Securities and Exchange Commission
("SEC") or the staff of the SEC applicable to the Offer; or (iii) if, as of such
date, all of the conditions to Acquisition Sub's obligations to accept payment
for Shares are satisfied or waived, but the number of Shares validly tendered
and not withdrawn pursuant to the Offer equals less than 90% of the then
outstanding Shares on a fully-diluted basis. Acquisition Sub shall terminate the
Offer upon termination of this Agreement pursuant to its terms.
(b) On the date the Offer is commenced, Acquisition Sub shall file with the
SEC a Tender Offer Statement on Schedule TO with respect to the Offer (together
with all amendments and supplements thereto and including the exhibits thereto,
the "Schedule TO"). The Schedule TO will include, as exhibits, any
pre-commencement written communications to Company shareholders, the Offer to
Purchase and a form of letter of transmittal and summary advertisement
(collectively, together with any amendments and supplements thereto, the "Offer
Documents") with respect to the Offer. Purchaser and Acquisition Sub agree that
the Offer Documents shall comply in all material respects with the provisions of
applicable Federal securities laws and the rules and regulations promulgated
thereunder and, on the date filed with the SEC and on the date first published,
sent or given to the Company's shareholders, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
covenant is made by Acquisition Sub with respect to information supplied by the
Company in writing specifically for inclusion in the Offer Documents. Each of
Purchaser and Acquisition Sub further agrees to take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
each of the holders of Shares, in each case as and to the extent required by
applicable Federal securities laws. Each of Purchaser and Acquisition Sub, on
the one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by such party for use in the Offer Documents if and to the
extent that it shall have become false and misleading in any material respect
and Purchaser and Acquisition Sub further agree to take all steps necessary to
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable Federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment upon the Offer Documents before
they are filed with the SEC. In addition, Purchaser and Acquisition Sub agree to
provide the Company and its counsel in writing with any comments Purchaser,
Acquisition Sub or its counsel may receive from time to time from the SEC or its
staff with respect to the Offer Documents promptly
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after the receipt of such comments. Purchaser, Acquisition Sub and its counsel
will advise the Company and its counsel of the substance of all communications
received by Purchaser, Acquisition Sub and its counsel from the SEC and its
staff relating to the Schedule TO, the Offer, the Merger, this Agreement or the
transactions contemplated thereby.
(c) Purchaser shall provide or cause to be provided to Acquisition Sub on a
timely basis the funds necessary to accept for payment, and pay for, any Shares
that Acquisition Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
Section 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents that the Special Committee and the Board,
at meetings duly called and held on the date or dates on or before which the
parties entered into this Agreement and the Tender and Option Agreement, have
unanimously adopted resolutions (i) determining that each of the Offer and the
Merger are fair to and in the best interests of the Company's shareholders
(other than Purchaser, Acquisition Sub and their affiliates); (ii) approving
this Agreement and the transactions contemplated hereby (including, without
limitation, (x) the acquisition of the Company by Purchaser or any of its
affiliates, and any purchase of Shares in connection therewith, by means of this
Agreement, the Offer, the Merger and the Tender and Option Agreement, and any
other transactions conducted to effectuate the acquisition of the Company by
Purchaser or its affiliates in accordance with this Agreement ("Other
Transactions")) and (y) any other transactions contemplated hereby and by the
foregoing clause (x)); (iii) resolving to recommend that the shareholders of the
Company accept the Offer, tender their Shares thereunder to Acquisition Sub and
approve and adopt this Agreement and the Merger, subject to the Company's rights
pursuant to Section 5.2; (iv) approving all of the actions and transactions
referenced herein, with the consequences that the requirements for "business
combinations" set forth in Sections 14-2-1110 through 14-2-1133 of the GBCC will
not be applicable to the Merger; and (v) approving an amendment to the Rights
Agreement, as necessary (the "Rights Amendment"), (A) to prevent this Agreement,
the Tender and Option Agreement or the consummation of any of the transactions
contemplated hereby or thereby, including without limitation, the publication or
other announcement of the Offer and the consummation of the Offer and the
Merger, from resulting in the distribution of separate right certificates or the
occurrence of a Distribution Date (as defined therein) and (B) to provide that
neither the Purchaser nor Acquisition Sub shall be deemed to be an Acquiring
Person (as defined therein) by reason of the transactions expressly provided for
in this Agreement and the Tender and Option Agreement. The Company hereby
consents to the inclusion in the Offer Documents of the recommendation of the
Special Committee and the Board described in the immediately preceding sentence.
The Company shall not amend, revoke, withdraw or modify the approval of
Purchaser's acquisition of the Company Common Stock by reason of the Offer, the
Merger or the Tender and Option Agreement so as to render the restrictions of
Sections 14-2-1110 through 14-2-1133 of the GBCC applicable thereto; provided,
however, that the Company may take any such action if this Agreement has been
terminated pursuant to Section 7.1(g) hereof and Acquisition Sub has been paid
the fees contemplated by Section 7.3 hereof.
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(b) Concurrently with the commencement of the Offer, the Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, and including the
exhibits thereto, the "Schedule 14D-9") which, except as provided in Section
5.2, shall contain the statements to the same effect as those referred to in
Section 1.2(a) hereof. The Schedule 14D-9 will comply in all material respects
with the provisions of applicable Federal securities laws, and the rules and
regulations promulgated thereunder, and, on the date filed with the SEC and on
the date first published, sent or given to the Company's shareholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no covenant is made by the Company with respect to
information supplied by Purchaser and Acquisition Sub in writing specifically
for inclusion in the Schedule 14D-9. The Company further agrees to take all
steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable Federal securities laws. Each of the Company, on the one hand, and
Purchaser and Acquisition Sub, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false and misleading in any material respect and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and to be disseminated to each of the
holders of the Shares, in each case as and to the extent required by applicable
Federal securities laws. Purchaser, Acquisition Sub and its counsel shall be
given a reasonable opportunity to review and comment upon the Schedule 14D-9
before it is filed with the SEC. In addition, the Company agrees to provide
Purchaser, Acquisition Sub and its counsel in writing any comments the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments. The
Company and its counsel will advise Purchaser, Acquisition Sub and its counsel
of the substance of all communications received by the Company from the SEC and
its staff relating to the Schedule 14D-9, the Merger, this Agreement or the
transactions contemplated hereby.
(c) In connection with the Offer and the Merger, the Company shall cause
its transfer agent to furnish Acquisition Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of shareholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Acquisition Sub such information and assistance (including updated
lists of shareholders, security position listings and computer files) as
Acquisition Sub may reasonably request in communicating the Offer to the
Company's shareholders. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Purchaser and
Acquisition Sub and their agents shall hold in confidence the information
contained in any such labels, listings and files, will use such information only
in connection with the Offer and the Merger and, if this Agreement shall be
terminated, will, upon request, deliver, and will use their reasonable efforts
to cause their agents to deliver, to the Company, all copies and any extracts or
summaries from such information then in their possession or control.
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Section 1.3 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the GBCC, at the Effective Time (as
hereinafter defined) the Company and Acquisition Sub shall consummate a merger
(the "Merger") pursuant to which (a) Acquisition Sub shall merge with and into
the Company and the separate corporate existence of Acquisition Sub shall
thereupon cease, (b) the Company shall be the successor or the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Georgia and (c) the corporate existence of the Company with all of its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger.
Section 1.4 Effective Time. As soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VI, the parties hereto shall
cause (a) a Certificate of Merger to be executed and filed on the date of the
Closing (as hereinafter defined) (or on such other date as Purchaser and the
Company may agree) with the Secretary of State of Georgia in such form as
required by, and executed in accordance with the relevant provisions of, the
GBCC, and (b) all other filings or recordings required by the GBCC in connection
with the Merger. Prior to the filing referred to in this Section 1.4, a closing
(the "Closing") will be held at the offices of Xxxxx Xxxxxxx & Xxxx LLP, 0000
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, at 10:00 a.m., Dallas, Texas time
(or such other place, date and time as the parties may agree in writing). The
Merger shall become effective at such time as such Certificate of Merger is duly
filed with the Secretary of State of Georgia, or at such later time specified in
such Certificate of Merger (the time the Merger becomes effective being referred
to herein as the "Effective Time"). Subject to the terms and conditions hereof,
unless otherwise mutually agreed upon in writing by the authorized officers of
the Company and Purchaser, the parties hereto shall use their reasonable efforts
to cause the Effective Time to occur on the first business day following the
last to occur of (i) the effective date (including expiration of any applicable
waiting period) of the last required consent of any Governmental Entity (as
defined below) having authority over and approving or exempting the Merger and
(ii) the date on which the shareholders of the Company approve this Agreement
and the Merger to the extent such approval is required by applicable law; or
such later date within two (2) business days thereof as may be specified by
Purchaser.
Section 1.5 Effects of the Merger. At the Effective Time, the Merger shall
have the effects as set forth in the applicable provisions of the GBCC. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and Acquisition Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Acquisition Sub shall become
the debts, liabilities and duties of the Surviving Corporation.
Section 1.6 Amended and Restated Articles of Incorporation and Bylaws.
(a) The Amended and Restated Articles of Incorporation (the "Restated
Articles") of the Company in effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the Surviving Corporation until
amended in accordance with applicable law.
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(b) The Bylaws of the Company in effect at the Effective Time shall be the
Bylaws of the Surviving Corporation until amended in accordance with applicable
law.
Section 1.7 Directors. (a) Promptly upon the purchase of and acceptance for
payment for any Shares (including, without limitation, all Shares subject to the
Tender and Option Agreement) by Acquisition Sub or any affiliate of Acquisition
Sub pursuant to the Offer or the Tender and Option Agreement which represents
the Minimum Condition, Acquisition Sub shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board as is
equal to the product of the total number of directors then serving on such Board
(after giving effect to the directors designated by Acquisition Sub pursuant to
this Section) multiplied by the ratio of the aggregate number of Shares
beneficially owned by Acquisition Sub and any of its affiliates to the total
number of Shares then outstanding. The Company shall, upon request of
Acquisition Sub, take all action necessary to cause Acquisition Sub's designees
to be elected or appointed to the Board, including, without limitation,
increasing the size of the Board or, at the Company's election, securing the
resignations of such number of its incumbent directors as is necessary to enable
Acquisition Sub's designees to be so elected or appointed to the Board, and
shall cause Acquisition Sub's designees to be so elected or appointed. At such
time, the Company shall also cause persons designated by Acquisition Sub to
constitute the same percentage (rounded up to the next whole number) as is on
the Board of (i) each committee of the Board, (ii) each board of directors (or
similar body) of each Subsidiary (as defined below) of the Company and (iii)
each committee (or similar body) of each such board. In the event that
Acquisition Sub's designees are elected to the Board, until the Effective Time,
the Board shall have at least two directors who are directors on the date hereof
(the "Company Directors"). In such event, if either of the Company Directors is
unable to serve for any reason whatsoever, the other directors shall designate a
person to fill such vacancy who shall not be a designee, shareholder or
affiliate of Acquisition Sub to be a Company Director for purposes of this
Agreement. Notwithstanding anything in this Agreement to the contrary, in the
event that Acquisition Sub's designees are elected to the Board, after the
acceptance for payment of shares of Common Stock pursuant to the Offer and prior
to the Effective Time, the affirmative vote of the Company Directors shall be
required to (a) amend or terminate this Agreement by the Company, (b) exercise
or waive any of the Company's rights, benefits or remedies hereunder, (c) extend
the time for performance of Acquisition Sub's respective obligations hereunder
or (d) take any other action by the Board of Directors of the Company in
connection with this Agreement.
(b) Subject to applicable law, the Company shall promptly take all actions
required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under Section 1.7(a),
including mailing to shareholders as part of the Schedule 14D-9 the information
required by such Section 14(f) and Rule 14f-1, as is necessary to enable
Acquisition Sub's designees to be elected to the Board. Purchaser and
Acquisition Sub shall supply the Company with any information with respect to
either of them and their nominees, officers, directors and affiliates required
by such Section 14(f) and Rule 14f-1. The provisions of Section 1.7(a) are in
addition to and shall not limit any rights which Acquisition Sub or any of its
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
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(c) The directors of Acquisition Sub at the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Restated Articles and the Bylaws of the Surviving
Corporation until each such director's successor is duly elected or appointed
and qualified.
Section 1.8 Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Restated Articles and the Bylaws of the Surviving
Corporation until each such officer's successor is duly elected or appointed and
qualified.
Section 1.9 Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Acquisition Sub acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers and directors
of the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or Acquisition Sub, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
rights, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.10 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of any of Purchaser, Acquisition Sub
or the Company:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time, together with the associated
Rights issued pursuant to the Rights Agreement, other than (i) any Shares
to be canceled pursuant to Sections 1.10(b) and 1.10(c) and (ii) any
Dissenting Shares (as defined in Section 2.1 hereof), shall be canceled and
extinguished and be converted into the right to receive $18.35 in cash (the
"Merger Consideration"), payable to the holder thereof, without interest
thereon, upon the surrender of the certificate formerly representing such
Share in the manner provided in Section 2.2 hereof and less any required
withholding of Taxes (as hereinafter defined). From and after the Effective
Time, all such Shares shall no longer be outstanding and shall be deemed to
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor, without interest thereon, upon the surrender of such certificate
in accordance with Section 2.2 hereof, or the right, if any, to receive
payment from the Surviving Corporation of the "fair value" of such Shares
as determined in accordance with Article 13 of the GBCC.
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(b) Each Share held in the treasury of the Company and each Share
owned by any Subsidiary of the Company immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of
Acquisition Sub, the Company or the holder thereof, be canceled, retired
and case to exist and no payment or distribution shall be made with respect
thereto.
(c) Each issued and outstanding share of common stock, par value $0.01
per share, of Acquisition Sub, shall be converted into one (1) validly
issued, fully paid and nonassessable share of common stock, no par value,
of the Surviving Corporation.
Section 1.11 Stock Options and Warrants. At or immediately prior to the
Effective Time, each outstanding stock option (an "Option") to purchase Shares
granted under any stock option plan, compensation plan or arrangement of the
Company or outstanding warrant (a "Warrant") to purchase Shares shall be
canceled and the holder of each such Option or Warrant (whether or not then
vested or exercisable) shall be paid by the Company promptly after the Effective
Time for each such Option or Warrant an amount equal to the product of (a) the
excess, if any, of the Merger Consideration over the applicable exercise price
per Share and (b) the number of Shares each holder could have purchased
(assuming full vesting and exercisability of such Option or Warrant) had such
holder exercised such Option or Warrant in full immediately prior to the
Effective Time.
Section 1.12 Special Meeting of Shareholders. If required by applicable law
in order to consummate the Merger, the Company, acting through the Board, shall,
in accordance with applicable law, subject to the terms and conditions of this
Agreement:
(a) as soon as reasonably practicable, duly call, give notice of,
convene and hold a meeting of its shareholders (the "Special Meeting") for
the purpose of considering and taking action upon the approval of the
Merger and the approval and adoption of this Agreement;
(b) except as permitted in Section 1.12(c) and 5.2 below, include in
the Proxy Statement (as hereinafter defined) the recommendation of the
Board that shareholders of the Company vote in favor of the approval of the
Merger and the approval and adoption of this Agreement;
(c) use reasonable efforts to obtain shareholder approval (subject to
the Board, after having consulted with legal counsel, determining in good
faith that the taking of such action would constitute a breach of the
Board's fiduciary obligations under applicable law);
(d) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its best
efforts to obtain and furnish the information required to be included by it
in the proxy or information statement and, after consultation with
Purchaser, respond promptly to any comments made by the SEC with respect to
the preliminary proxy or information statement, and cause a definitive
proxy or
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information statement, including any amendment or supplement thereto (such
proxy or information statement, together with any amendments or supplements
thereto, the "Proxy Statement") to be mailed to its shareholders at the
earliest practicable time; and
(e) incorporate into the Proxy Statement written information provided
by Purchaser concerning Purchaser and Acquisition Sub required to be
included in the Proxy Statement. The Company shall not be responsible or
liable for any untrue statement of a material fact or omission to state a
material fact required to be stated in the Proxy Statement or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, to the extent that any such untrue statement of
a material fact or omission to state a material fact was made by the
Company in reliance upon and in conformity with written information
concerning Purchaser or Acquisition Sub furnished to the Company by
Purchaser specifically for use in the Proxy Statement. Purchaser agrees
that the written information concerning Purchaser and Acquisition Sub
provided by it for inclusion in the Proxy Statement and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
meeting(s) of shareholders of the Company, will not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 1.13 Merger Without Approval of Company Shareholders.
Notwithstanding Section 1.12 hereof, in the event that Acquisition Sub or any
permitted assignee of Acquisition Sub shall acquire at least 90% of the
outstanding Shares, pursuant to the Offer, the Tender and Option Agreement or
otherwise, the parties hereto agree, subject to Article VI hereof, to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition, without approval of the Company's
shareholders, in accordance with Section 14-2-1104 of the GBCC. If the Board so
approves a merger pursuant to Section 14-2-1104, Acquisition Sub shall, and
shall cause any permitted assignee to, continue to hold not less than 90% of the
issued and outstanding shares of Company Common Stock until the consummation or
abandonment of such merger.
ARTICLE II -- DISSENTING SHARES; PAYMENT FOR SHARES
Section 2.1 Dissenting Shares. (a) Notwithstanding anything in this
Agreement to the contrary, any Shares held by a holder who has demanded and
perfected his demand for payment for his Shares in accordance with Article 13 of
the GBCC and as of the Effective Time has neither withdrawn nor lost his right
to such appraisal ("Dissenting Shares") shall not be converted into or represent
a right to receive the Merger Consideration pursuant to Section 1.10, but the
holder thereof shall be entitled to only such rights as are granted by the GBCC.
(b) Notwithstanding the provisions of Section 2.l(a), if any holder of
Shares who demands payment for his Shares under Article 13 of the GBCC
effectively withdraws or loses (through failure to perfect or otherwise) his
right to such payment under Article 13, then as of the Effective Time or
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the occurrence of such event, whichever later occurs, such holder's Shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration as provided in Section 1.10(a), without interest thereon,
upon surrender of the certificate or certificates representing such Shares
pursuant to Section 2.2 hereof.
(c) The Company shall give Purchaser (i) prompt notice of any such demands
for payment under Article 13 of the fair value of any Shares, withdrawals of
such demands and any other instruments served pursuant to the GBCC received by
the Company and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for payment under the GBCC. The Company shall not
voluntarily make any payment with respect to any demands for payment and shall
not, except with the prior written consent of Purchaser, settle or offer to
settle any such demands.
Section 2.2 Payment for Shares.
(a) Prior to the Effective Time, Purchaser shall designate a bank or trust
company, reasonably acceptable to the Company, to act as paying agent in
connection with the Merger (the "Paying Agent") pursuant to a paying agent
agreement providing for the matters set forth in this Section 2.2 and otherwise
reasonably satisfactory to the Company. At the Effective Time, Purchaser shall
deposit, or cause to be deposited, in trust with the Paying Agent for the
benefit of holders of Shares the aggregate consideration to which such holders
shall be entitled at the Effective Time pursuant to Section 1.10. Such funds
shall be invested as directed by the Surviving Corporation pending payment
thereof by the Paying Agent to holders of the Shares. Earnings from such
investments shall be the sole and exclusive property of the Surviving
Corporation and no part thereof shall accrue to the benefit of the holders of
the Shares.
(b) As soon as reasonably practicable after the Effective Time, the Paying
Agent shall mail to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented outstanding Shares (the "Certificates"), whose Shares were
converted pursuant to Section 1.10 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 proper delivery of the Certificates to the Paying Agent and shall be
in such form and have such other provisions not inconsistent with this
Agreement) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration (together, the
"Transmittal Documents"). Upon surrender of a Certificate for cancellation to
the Paying Agent or to such other agent or agents as may be appointed by
Purchaser, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate, without
any interest thereon, and less any applicable withholding Taxes, and the
Certificate so surrendered shall forthwith be canceled. If payment of the Merger
Consideration is to be made to a Person (as hereinafter defined) 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 otherwise be in proper form for transfer, that the signatures
on the Certificate or any related stock power shall be properly guaranteed and
that the Person requesting
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such payment shall have paid 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 in accordance with the provisions of and as
contemplated by this Section 2.2 each Certificate (other than (i) Certificates
representing Shares subject to Sections 1.10(b) and 1.10(c) and (ii) Dissenting
Shares) shall be deemed at any time after the Effective Time to represent only
the right to receive the Merger Consideration in cash as contemplated by this
Section 2.2. Upon the surrender of Certificates in accordance with the terms and
instructions contained in the Transmittal Documents, Purchaser shall cause the
Paying Agent to pay the holder of such Certificates in exchange therefor cash in
an amount equal to the Merger Consideration multiplied by the number of Shares
represented by such Certificate (other than Certificates representing Dissenting
Shares and Certificates representing Shares held by Purchaser or in the treasury
of the Company).
(c) At the Effective Time, the stock transfer books of the Company shall be
closed and there shall not be any further registration of transfers of any
shares of capital stock thereafter on the records of the Company. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for the consideration provided for, and in
accordance with the procedures set forth, in this Article II. No interest shall
accrue or be paid on any cash payable upon the surrender of a Certificate or
Certificates that immediately before the Effective Time represented outstanding
Shares.
(d) From and after the Effective Time, the holders of Certificates
evidencing ownership of Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except as
otherwise provided herein or by applicable law.
(e) If 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 Surviving Corporation shall pay or cause to be
paid in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration for the Shares represented thereby. When authorizing such payment
of the Merger Consideration in exchange therefor, the Board of Directors of the
Surviving Corporation may, in its discretion and as a condition precedent to the
payment thereof, require the owner of such lost, stolen or destroyed Certificate
to give the Surviving Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Surviving Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.
(f) Promptly following the date which is six (6) months after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any cash (including any earnings and interest received with
respect thereto), Certificates and other documents in its possession relating to
the Merger, which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or similar laws) only as general
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creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon.
(g) The Merger Consideration paid in the Merger shall be net to the holder
of Shares in cash, subject to reduction only for any applicable federal
withholding Taxes or, as set forth in Section 2.2(b), stock transfer Taxes
payable by such holder.
(h) Notwithstanding anything to the contrary in this Section 2.2, none of
the Paying Agent, Purchaser or the Surviving Corporation shall be liable to any
holder of a Certificate formerly representing Shares for any amount properly
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If Certificates are not surrendered prior to two (2)
years after the Effective Time, unclaimed funds payable with respect to such
Certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedules delivered to Purchaser prior to the
execution of this Agreement setting forth specific exceptions to the Company's
representations and warranties set forth herein (the "Company Disclosure
Schedule"), the Company hereby represents and warrants to Purchaser as follows:
Section 3.1 Organization and Qualification, Subsidiaries. (a) The Company
Disclosure Schedule sets forth in Section 3.1(a) a complete list of all
Subsidiaries of the Company that are corporations (identifying its jurisdiction
of incorporation, each jurisdiction in which it is qualified and/or licensed to
transact business, and the number of shares owned and percentage ownership
interest represented by such share ownership) and all of its Subsidiaries that
are general or limited partnerships, limited liability companies or other
non-corporate entities (identifying the law under which such entity is
organized, each jurisdiction in which it is qualified and/or licensed to
transact business, and the amount and nature of the ownership interest therein).
Except as noted in Section 3.1(a) of the Company Disclosure Schedule, each of
the Company and its Subsidiaries is a corporation and each Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and (as to corporations) has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. Each Subsidiary of the Company
which is not a corporation has all power and authority under its governing
documents and the law under which it was organized to own, lease and operate its
properties and to carry on its businesses as now being conducted. The minute
book and other organizational documents for each of the Company and its
Subsidiaries have been made available to Purchaser for its review and, except as
disclosed in Section 3.1(a) of the Company Disclosure Schedule, are true and
complete in all material respects as in effect as of the date of this Agreement
and accurately reflect in all material respects all amendments thereto and all
proceedings of the board of directors and shareholders thereof. The Company has
heretofore delivered or made available to Purchaser accurate and complete copies
of the Restated Articles and Bylaws, as currently in effect,
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of the Company and promptly will deliver to Purchaser, upon request, accurate
and complete copies of the certificate or articles of incorporation and bylaws,
as currently in effect, of each of its Subsidiaries. As used in this Agreement,
the term "Subsidiary" shall mean with respect to any party, any corporation or
other organization, whether incorporated or unincorporated or domestic or
foreign to the United States of which (i) such party or any other Subsidiary of
such party is a general partner or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
(b) Each of the Company and its Subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not, individually or in aggregate, have a Company Material Adverse Effect. As
used in this Agreement, the term "Company Material Adverse Effect" shall mean
any change(s) or effect(s) that, individually or in the aggregate, are
materially adverse to the financial condition, business or results of operations
of the Company and its Subsidiaries, taken as a whole, excluding in all cases:
(i) events or conditions generally affecting the industry in which the Company
and its Subsidiaries operate or arising from changes in general business or
economic conditions; (ii) any effect resulting from any change in law or GAAP,
which generally affects entities such as the Company or its Subsidiaries; (iii)
events resulting from the execution and/or announcement of this Agreement,
including, without limitation, any material adverse change in the relationship
of Xxxxx Corning or CertainTeed with the Company or its Subsidiaries; and (iv)
any effect resulting from compliance by the Company or any of its Subsidiaries
with the terms of this Agreement.
(c) Except as set forth in Section 3.1(c) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries owns (i) any equity
interest, or option to purchase such an interest, in any corporation or other
entity or (ii) marketable securities where the Company's or its Subsidiary's
equity interest in any entity exceeds five percent (5%) of the outstanding
equity of such entity on the date hereof.
Section 3.2 Capitalization of the Company and its Subsidiaries. (a) The
authorized capital stock of the Company consists of 20,000,000 shares of Company
Common Stock and 100,000 shares of preferred stock, no par value (the "Preferred
Stock"). As of the date hereof, 8,718,507 shares of Common Stock are issued and
outstanding and no shares of Preferred Stock are outstanding. As of the date
hereof, 1,189,911 shares of Company Common Stock and no shares of Preferred
Stock are held in the treasury of the Company. All of the Shares have been
validly issued, are fully paid, nonassessable and have been issued free of
preemptive rights. Section 3.2(a) of the Company Disclosure Schedule identifies
the number of shares of each class of capital stock of the Company which are
reserved and subject to any Company Benefit Plan (as defined in Section
3.11(h)), indicating the name of the plan, the date of the grant, the holder of
the option, the number of shares granted, the type of option and the exercise
price thereof. Section 3.2(a) of the Company Disclosure
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Schedule also identifies the number of shares of each class of capital stock of
the Company which are reserved and subject to any warrant of the Company,
indicating the warrant agreement, the date of the warrant, the holder of the
warrant, the number of shares subject to the warrant and the exercise price
thereof. The actions to be taken in Section 1.11 hereof with respect to all
outstanding options and warrants of the Company are permissible under the terms
of such options and warrants without any further action on the part of the
Company, Purchaser or the holders of any such options or warrants. As of the
date hereof, options to purchase 1,600,025 shares of Company Common Stock were
outstanding under Company Benefit Plans and warrants to purchase 200,000 shares
of Company Common Stock were outstanding. Except as set forth above and except
for the Rights issued pursuant to the Rights Agreement, there are outstanding
(i) no shares of capital stock or other voting securities of the Company, (ii)
no securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
(iii) no options or other rights to acquire from the Company or any of its
Subsidiaries, and no other contract, understanding, arrangement or obligation
(whether or not contingent) of the Company or any of its Subsidiaries to issue
or sell, directly or indirectly, any capital stock, voting securities,
securities convertible into or exchangeable for capital stock or voting
securities, or other securities of the Company or any of its Subsidiaries, or
any other ownership interests in the Company or any of its Subsidiaries and (iv)
no equity equivalents, interests in the ownership or earnings of the Company or
any of its Subsidiaries or other similar rights (collectively, "Company
Securities"). Except for the put options relating to the capital stock of Field
Marketing, Inc., there are no outstanding obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding capital stock of, or other ownership interests
in, each Subsidiary of the Company, is owned by the Company, directly or
indirectly, free and clear of any Lien (as hereinafter defined) or any other
limitation or restriction (including any restriction on the right to vote or
sell the same, except as may be provided as a matter of law) and is fully paid
and non-assessable and was issued free of preemptive rights. For purposes of
this Agreement, "Lien" shall mean, with respect to any asset (including, without
limitation, any security) any option, claim, mortgage, lien, pledge, charge,
security interest or encumbrance or restriction of any kind in respect of such
asset (other than rights or interests held by lessors or sublessors under
operating leases entered into in the ordinary course of business and other than
Permitted Liens). For purposes of this Agreement, "Permitted Liens" shall mean
(i) statutory Liens not yet delinquent, (ii) Liens with respect to the
properties or assets that do not, individually or in the aggregate, materially
detract from the value or interfere with the use of the properties or assets or
otherwise materially impair present business operations at such properties,
(iii) Liens for Taxes and other governmental charges not yet delinquent or the
validity of which are being contested in good faith by appropriate actions and
(iv) Liens reflected on the 1999 Financial Statements or Section 3.2(b) of the
Company Disclosure Schedule.
(c) The Shares and the Rights constitute the only class of equity
securities of the Company or any of its Subsidiaries registered or required to
be registered under the Exchange Act.
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(d) There are no voting trusts or other agreements or understandings 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 the Subsidiaries.
(e) Other than as set forth in the 1999 Financial Statements (as defined in
Section 3.4(a)) or in Section 3.2(e) of the Company Disclosure Schedule, there
is no outstanding material Indebtedness (as hereinafter defined) of the Company
or any of its Subsidiaries. Except as identified in the 1999 Financial
Statements or in Section 3.2(e) of the Company Disclosure Schedule, no such
Indebtedness of the Company or its Subsidiaries contains any restriction upon
(i) the prepayment of such Indebtedness, (ii) the incurrence of Indebtedness by
the Company or its Subsidiaries, respectively, or (iii) the ability of the
Company or its Subsidiaries to grant any Liens on its properties or assets. For
purposes of this Agreement, "Indebtedness" shall include (i) all indebtedness
for borrowed money or for the deferred purchase price of property or services
(other than current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices and operating
leases), (ii) any other indebtedness which is evidenced by a note, bond,
debenture or similar instrument, (iii) all obligations under financing leases,
(iv) all obligations in respect of acceptances issued or created, (v) all
liabilities secured by any Lien on any property and (vi) all guarantee
obligations.
Section 3.3 Authority Relative to this Agreement, Consents and Approvals.
(a) The Company has all the necessary corporate power and authority to execute
and deliver this Agreement and to consummate the Merger in accordance with the
terms hereof (subject to obtaining the necessary approval and adoption of this
Agreement and approval of the Merger by the shareholders of the Company as
contemplated by Section 1.12 hereof). The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the Merger
have been duly and validly authorized by the Board and, except for obtaining the
approval of the Company's shareholders as contemplated by Section 1.12 hereof,
no other corporate action or corporate proceedings on the part of the Company
are necessary to authorize the execution and delivery by the Company of this
Agreement and the consummation by the Company of the Merger. This Agreement has
been duly and validly executed and delivered by the Company, and assuming due
and valid authorization, execution and delivery by Purchaser and Acquisition
Sub, constitutes a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought).
(b) The Board of Directors of the Company has duly and validly approved and
taken all corporate action required to be taken by it for the consummation by
the Company of the transactions contemplated by this Agreement, including the
Offer, the Merger and the acquisition of Shares pursuant to the Offer, the
Merger, the Tender and Option Agreement, and any Other Transactions, including,
without limitation, all matters contemplated by Section 1.2(a)(ii) hereof. The
actions set forth in Section 1.2(a) are all the actions required, and are
sufficient, to render the relevant
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antitakeover provisions of Sections 14-2-1110 through 14-2-1133 of the GBCC
inapplicable to the Offer, the Merger, the Tender and Option Agreement and any
Other Transactions so long as this Agreement has not been terminated in
accordance with its terms.
(c) The Rights Amendment will be sufficient to render the Rights
inoperative with respect to any acquisition of Shares by the Acquisition Sub or
any of its affiliates pursuant to this Agreement and/or the Tender and Option
Agreement. As a result of the Rights Amendment, the Rights shall not be
exercisable as a result of the acceptance for payment of Shares pursuant to the
Offer and/or the purchase of Shares by Acquisition Sub pursuant to the Tender
and Option Agreement.
(d) Credit Suisse First Boston Corporation (the "Financial Advisor") has
consented to inclusion of its opinion in the Company's Schedule 14D-9 in such
form and substance as is satisfactory to such Financial Advisor.
Section 3.4 SEC Reports, Financial Statements. (a) Except as set forth on
Section 3.4(a) of the Company Disclosure Schedule, since October 31, 1998, the
Company has timely filed with the SEC all forms, reports, schedules, statements
and other documents required to be filed by it with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and the SEC's rules
and regulations promulgated thereunder and the Exchange Act and the SEC's rules
and regulations promulgated thereunder, including, without limitation, any
financial statements or schedules included therein (any such documents filed
prior to the date hereof being collectively, the "Company SEC Documents"). At
the time filed, or in the case of registration statements on their respective
effective dates, the Company SEC Documents (i) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as
the case may be, and the rules and regulations promulgated thereunder and (ii)
did not, at the time filed (or in the case of registration statements, at the
time of effectiveness), 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 made therein, in light of the circumstances under which they
were made, not misleading. No Subsidiary of the Company is required to file any
form, report or other document with the SEC. The audited financial statements
dated October 31, 1999 delivered to Purchaser (the "1999 Financial Statements")
and the financial statements included in the Company SEC Documents filed since
October 31, 1998 (i) have been prepared from, and are in accordance with, the
books and records of the Company and its Subsidiaries, (ii) complied in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, (iii) have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and (iv) fairly present, in all material
respects, the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of the
Company and its Subsidiaries as of the times and for the periods referred to
therein, except that any such Financial Statements that are unaudited, interim
financial statements were or are subject to normal and recurring year end
adjustments, which were not or are not expected to be material in amount or
effect.
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(b) The Company has heretofore delivered or made available to Purchaser, in
the form filed with the SEC (including any amendments thereto), (i) its Annual
Reports on Form 10-K for each of the three fiscal years ended October 31, 1996,
October 31, 1997 and October 31, 1998, (ii) all definitive proxy statements
relating to the Company's meetings of shareholders (whether annual or special)
held since October 31, 1998 and (iii) all other reports or registration
statements filed by the Company with the SEC since October 31, 1998.
(c) The Company has heretofore furnished or made available to Purchaser a
complete and correct copy of any amendments or modifications, which have not yet
been filed by the Company with the SEC, to all agreements, documents or other
instruments which previously had been filed by the Company and are currently in
effect.
Section 3.5 Proxy Statement. The Proxy Statement to be sent to the
shareholders of the Company in connection with the Special Meeting, as of the
date first mailed to the shareholders of the Company and at the time of the
Special Meeting 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
were made, not misleading. The Proxy Statement will, when filed by the Company
with the SEC, comply as to form in all material respects with the applicable
provisions of the Exchange Act and the SEC rules and regulations promulgated
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to the statements made in any of the foregoing
documents based on written information supplied by or on behalf of Purchaser,
Acquisition Sub or any of their respective affiliates specifically for inclusion
therein.
Section 3.6 Consents and Approvals; No Violations. No filing with or notice
to, and no permit, authorization, consent or approval of, any court or tribunal
or any foreign, provincial, federal, state, county or local administrative,
governmental or regulatory body, agency, authority (including a self-regulated
authority), instrumentality, commission, board or body (a "Governmental Entity")
is required on the part of the Company or any of its Subsidiaries for the
execution, delivery and performance by the Company of this Agreement or the
consummation by the Company of the Merger, except (a) in connection with the
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and comparable Canadian requirements, (b)
pursuant to the applicable requirements of the Exchange Act and the SEC's rules
and regulations promulgated thereunder, (c) the filing and recordation of the
Certificate of Merger pursuant to the GBCC or (d) where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings or
give such notice would not have a Company Material Adverse Effect. Except as
disclosed in Section 3.6 of the Company Disclosure Schedule, neither the
execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the Merger will (i) conflict with or result in
any breach of any provision of the respective Certificate or Articles of
Incorporation or Bylaws (or similar governing documents) of the Company or of
any its Subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) or require
any consent pursuant to, or result in the creation of any Lien on any asset of
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the Company or its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement 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 (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except in the case
of (ii) or (iii) for any such violations, breaches, defaults (or rights of
termination, amendment, cancellation or acceleration), Liens or failures to
obtain consents which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
Section 3.7 No Default. None of the Company or any of its Subsidiaries is
in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (a) its Certificate or Articles of Incorporation or
Bylaws (or similar governing documents), (b) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its Subsidiaries is now a party or by which any
of them or any of their respective properties or assets may be bound or (c) any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
the Company, any of its Subsidiaries or any of their respective properties or
assets, except in the case of (b) or (c) for violations, breaches or defaults
which would not, individually or in the aggregate, have a Company Material
Adverse Effect.
Section 3.8 No Undisclosed Liabilities. Except (a) for liabilities incurred
pursuant to the terms of this Agreement, (b) for liabilities that are accrued or
reserved against in the consolidated balance sheet of the Company included in
the 1999 Financial Statements (the "Company Balance Sheet"), or (c) as set forth
in Section 3.8 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries has incurred any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that have, or would reasonably
be expected to have, a Company Material Adverse Effect or that would be required
by GAAP to be reflected or reserved against on a consolidated balance sheet, or
in the notes thereto, of the Company. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, there is no Indebtedness of the Company and its
Subsidiaries which exceeds $50,000 and will accelerate or become due or result
in a right of redemption or repurchase on the part of the holder of such
Indebtedness (with or without due notice or lapse of time) as a result of this
Agreement or the Merger. Neither the Company nor any Subsidiary has incurred or
paid any liability since the date of the Company Balance Sheet except for such
liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect or (ii) in
connection with the transactions contemplated by this Agreement. Except as
disclosed in the Company SEC Documents or in Section 3.8 of the Company
Disclosure Schedule, neither the Company nor any Subsidiary is directly or
indirectly liable, by guarantee, indemnity, or otherwise, upon or with respect
to, or obligated, by discount or repurchase agreement or in any other way, to
provide funds in respect to, or obligated to guarantee or assume any liability
of any Person for any amount in excess of $100,000. As used in this Section 3.8,
the term "liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty
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or endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
Section 3.9 Litigation. Except as disclosed in the Company SEC Documents or
in Section 3.9 of the Company Disclosure Schedule, there is no suit, claim,
complaint, action, arbitration, criminal prosecution, governmental or other
examination, investigation, hearing, administrative or other proceeding
(collectively, "Litigation") pending or, to the knowledge of the Company,
threatened against, affecting or involving the Company or any of its
Subsidiaries or any of their respective properties or assets before any
Governmental Entity which is reasonably likely to have a Company Material
Adverse Effect. Except as disclosed in the Company SEC Documents or in Section
3.9 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree
which is reasonably likely to have a Company Material Adverse Effect. Reserves
reflected on the 1999 Financial Statements are adequate for all Litigation
disclosed in the Company SEC Documents or in Section 3.9 of the Company
Disclosure Schedule. Section 3.9 of the Company Disclosure Schedule contains a
summary of all Litigation as of the date of this Agreement where the potential
liability is reasonably likely to exceed $25,000 (i) to which the Company or any
Subsidiary is a party or (ii) which names the Company or any Subsidiary as a
defendant or cross-defendant or for which the Company or any Subsidiary has any
potential liability.
Section 3.10 Compliance with Applicable Law. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not have a Company Material
Adverse Effect. The businesses of the Company and its Subsidiaries are not being
and have not been conducted in violation of any law, ordinance or regulation of
any Governmental Entity, except for violations or possible violations which,
individually or in the aggregate, would not have a Company Material Adverse
Effect. None of the directors, officers, agents, representatives or employees of
the Company or its Subsidiaries (in their capacity as directors, officers,
agents, representatives or employees) has taken any action or made any omission
which would violate any law, ordinance or regulation of any Governmental Entity,
except for violations or possible violations which, individually or in the
aggregate, would not have a Company Material Adverse Effect. Except as set forth
in Sections 3.9 or 3.10 of the Company Disclosure Schedule or in the Company SEC
Documents, no investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries, or with respect to any of their
respective directors, officers, agents, representatives or employees (in regard
to actions taken or omissions made in their capacity as directors, officers,
agents, representatives or employees) is pending or, to the knowledge of the
Company, threatened. Excluded from the scope of this representation and warranty
are all matters related to Environmental Laws, Materials of Environmental
Concern or Environmental Claims (as such terms are defined in Section 3.12);
these
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excluded matters, to the extent subject to a representation and warranty under
this Agreement, are covered exclusively by Section 3.12.
Section 3.11 Employee Benefit Matters. (a) All Company Benefit Plans are
listed in Section 3.11 of the Company Disclosure Schedule or in the Company SEC
Documents. True and complete copies of the Company Benefit Plans (including: (i)
all trust agreements or other funding arrangements for such Company Benefit
Plans (including insurance contracts), and all amendments thereto, (ii) with
respect to any such Company Benefit Plans or amendments, all determination
letters, rulings, opinion letters, information letters, or advisory opinions
issued by the United States Internal Revenue Service, the United States
Department of Labor, or the Pension Benefit Guaranty Corporation after December
31, 1992, (iii) annual reports or returns, audited or unaudited financial
statements, actuarial valuations and reports and summary annual reports prepared
for any Company Benefit Plan with respect to the most recent three (3) plan
years, (iv) the most recent summary plan descriptions and any material
modifications thereto and (v) any filing or compliance action taken under
Revenue Procedures 98-22, 99-13, or 99-31) have been provided or made available
to the Purchaser. Except as set forth in Section 3.11(a) of the Company
Disclosure Schedule, each Company Benefit Plan has been administered and
maintained in all material respects in compliance with its terms, with the
material provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), with the Internal Revenue Code of 1986, as amended (the
"Code"), and with all other applicable laws. Each Company Benefit Plan intended
to be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service (the "IRS") to be so qualified and no event has
occurred that could reasonably be expected to adversely affect the qualified
status of such Company Benefit Plan or the tax-exempt status of any trust. All
government approvals for tax exemption of any trust applicable to a Company
Benefit Plan have been timely obtained and all such approvals as well as all IRS
determination letters applicable to a Company Benefit Plan continue in full
force and effect. Neither the Company nor any of its Subsidiaries has engaged in
a transaction with respect to any Company Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
the Company to a Tax imposed by either Section 4975 of the Code or Section
502(i) of ERISA. To the knowledge of the Company, there are no pending, nor has
the Company or any of its Subsidiaries received notice of any threatened, claims
against or otherwise involving any of the Company Benefit Plans (other than
routine claims for benefits). No Company Benefit Plan is under audit or
investigation by the IRS, the Department of Labor or the Pension Benefit
Guaranty Corporation and, to the knowledge of the Company, no such audit or
investigation is threatened. Except as listed on Section 3.11(a) of the Company
Disclosure Schedule, all contributions and other payments required to be made as
of the date of this Agreement to, or pursuant to, the Company Benefit Plans have
been made or accrued for in the 1999 Financial Statements. Neither the Company
nor any entity under "common control" with the Company within the meaning of
Section 4001 of ERISA has at any time contributed to, or been required to
contribute to, any "pension plan" (as defined in Section 3(2) of ERISA) that is
subject to Title IV of ERISA or Section 412 of the Code, including, without
limitation, any "multi-employer plan" (as defined in Sections 3(37) and
4001(a)(3) of ERISA) and neither the Company nor any such entity has at any time
incurred or could reasonably expect to incur any liability under Title IV of
ERISA. To the knowledge of the Company, neither the Company nor any of its
Subsidiaries nor any employee or
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agent thereof, has made any oral or written representation to any participant in
or beneficiary of a Company Benefit Plan, or to any other individual or entity
that is contrary to the written or otherwise preexisting terms and provisions of
any Company Benefit Plan, which representations (in the aggregate) could
reasonably create a material liability for the Company.
(b) Except as listed on Section 3.11(b) of the Company Disclosure Schedule
or in the Company SEC Documents, the consummation of the Merger will not (either
alone or upon the occurrence of any additional or subsequent events) constitute
an event under any Company Benefit Plan, employment or severance agreement,
trust, loan or other compensation or benefits agreement or arrangement that will
or may result in any payment (whether of severance pay, unemployment
compensation, golden parachute or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current or former employee, officer, director,
agent or consultant of the Company or any Subsidiary. Except as listed on
Section 3.11(b) of the Company Disclosure Schedule, no such payment,
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits will cause a loss of tax deductions
under Section 280G of the Code.
(c) Except as listed on Section 3.11(c) of the Company Disclosure Schedule,
(i) neither the Company nor any of its Subsidiaries maintains or contributes to
any Company Benefit Plan which provides, or has any liability to provide, life
insurance, medical, severance or other employee welfare benefits to any employee
upon or with respect to periods following his retirement or termination of
employment, except as may be required by Section 4980B of the Code and (ii)
there are no restrictions on the rights of the Company to amend or terminate any
such retiree health or benefit Plan without incurring any liability thereunder.
(d) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of the Company and their respective beneficiaries, have been fully
reflected on the 1999 Financial Statements to the extent required by and in
accordance with GAAP.
(e) To the extent a Company Benefit Plan has excluded any individual from
coverage, such exclusion is (i) consistent with the written terms of the Company
Benefit Plan, (ii) enforceable under the terms of such Plan, (iii) consistent
with the terms of any agreement with such individual (whether written or oral)
and (iv) enforceable under applicable law.
(f) Neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any administrator or fiduciary of any Company Benefit Plan (or
any agent of any of the foregoing) has engaged in any transaction, or acted or
failed to act in any manner which could subject the Company or Purchaser to any
direct or indirect liability (by indemnity or otherwise) for breach of any
fiduciary, co-fiduciary or other duty under ERISA.
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(g) Except as listed on Section 3.11(g) of the Company Disclosure Schedule,
all Company Benefit Plan documents and annual reports or returns, audited or
unaudited financial statements, actuarial valuations, summary annual reports and
summary plan descriptions issued with respect to the Company Benefit Plans are
correct and complete and have been timely distributed to participants of the
Company Benefit Plans (as required by law).
(h) "Company Benefit Plan" means collectively, each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, any medical, vision,
dental or other health plan, any life insurance plan or any other employee
benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA,
maintained by, sponsored in whole or in part by, or contributed to by the
Company or any of its Subsidiaries for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate. Company Benefit
Plans include (but are not limited to) "employee benefit plans" as defined in
Section 3(3) of ERISA and any other plan, fund, policy, program, practice,
custom, understanding or arrangement providing compensation or other benefits to
any current or former officer or employee or director or independent contractor
of the Company, or any dependent or beneficiary thereof, maintained by the
Company or under which the Company has any obligation or liability, whether or
not they are or are intended to be (i) covered or qualified under the Code,
ERISA or any other applicable law, (ii) written or oral, (iii) funded or
unfunded, (iv) actual or contingent or (v) generally available to any or all
employees (or former employees) of the Company (or their beneficiaries of
dependents), including, without limitation, all incentive, bonus, deferred
compensation, flexible spending accounts, cafeteria plans, vacation, holiday,
medical, disability, share purchase or other similar plans, policies, programs,
practices or arrangements.
(i) Neither Purchaser nor the Company has any liability or obligation with
respect to any Company Benefit Plan (including any previously adopted Company
Benefit Plan) or any other employee benefit, plan, program, arrangement or
policy that covers employees of the Company, other than those listed on Schedule
3.11(i) of the Company Disclosure Schedule or reflected on the 1999 Financial
Statements or listed in the Company SEC Documents.
Section 3.12 Environmental Laws and Regulations. (a) Except as shown on
Section 3.12(a) of the Company Disclosure Schedule, and except for such failures
to comply which would not, individually or in the, aggregate, be reasonably
likely to have a Company Material Adverse Effect, the Company and each of its
Subsidiaries (i) is and has been in full compliance with all Environmental Laws
(as defined in Section 3.12(b)) and including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of Materials of Environmental Concern (as defined in Section 3.12(b)) or
otherwise relating to the manufacture, generation, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; (ii) has all permits, licenses, certificates, variances,
exemptions,
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orders, authorizations and approvals of Governmental Entities ("Environmental
Permits") required under all applicable Environmental Laws, except for those
Environmental Permits which, if the Company or a Subsidiary did not have, such
failure would not have a Company Material Adverse Effect; and (iii) is in
compliance with the terms and conditions of such Environmental Permits.
(b) For purposes of this Agreement, the term "Environmental Laws" shall
mean any and all codes, laws (including, without limitation, common law),
ordinances, regulations, reporting or licensing requirements, rules, or statutes
relating to pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land surface, or subsurface
strata), including, without limitation (i) the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq.
("CERCLA"); (ii) the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., ("RCRA"); (iii)
the Emergency Planning and Community Right to Know Act (42 U.S.C. Sections 11001
et seq.); (iv) the Clean Air Act (42 U.S.C. Sections 7401 et seq.); (v) the
Clean Water Act (33 U.S.C. I 1251 et seq.); (vi) the Toxic Substances Control
Act (15 U.S.C. I 2601 et seq.); (vii) the Hazardous Materials Transportation Act
(49 U.S.C. Sections 5101 et seq.); (viii) any state, county, municipal or local
statues, laws or ordinances similar or analogous to the federal statutes listed
in parts (i) - (vii) of this subparagraph, (ix) any amendments to the statutes,
laws or ordinances listed in parts (i) - (viii) of this subparagraph, in
existence on the date hereof, (x) any rules, regulations, guidelines,
directives, orders or the like adopted pursuant to or implementing the statutes,
laws, ordinances and amendments listed in parts (i) - (ix) of this subparagraph
in existence on the date hereof; and (xi) any other law, statute, ordinance,
amendment, rule, regulation, guideline, directive, order or the like now in
effect relating to environmental, health or safety matters.
For purposes of this Agreement, the term "Materials of Environmental
Concern" shall mean any and all chemicals, substances, wastes, materials,
pollutants, contaminants, equipment or fixtures defined as or deemed hazardous
or toxic or otherwise regulated under any Environmental Law, including, without
limitation, RCRA hazardous wastes, CERCLA hazardous substances, pesticides and
other agricultural chemicals, oil and petroleum products or byproducts and any
constituents thereof, lead or lead-based paints or materials, radon, asbestos or
asbestos-containing materials and polychlorinated biphenyls ("PCBs").
(c) Except as shown on Section 3.12(c) of the Company Disclosure Schedule,
and except for such written communications which would not, individually or in
the aggregate, be reasonably likely to have a Company Material Adverse Effect,
neither the Company nor any of its Subsidiaries has received any written
communication whether from a Governmental Entity, citizens group, employee or
otherwise, that alleges that the Company or any of its Subsidiaries is not in
full compliance with or is potentially liable under any Environmental Laws. In
addition, no Lien has arisen on any properties or assets of the Company or any
Subsidiary under or as a result of any Environmental Law.
(d) Except as shown on Section 3.12(d) of the Company Disclosure Schedule,
and except for such Environmental Claims which would not, individually or in the
aggregate, be reasonably likely
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to have a Company Material Adverse Effect, the Company has not received written
notice of any claim, action, cause of action, investigation or notice (together,
"Environmental Claims") alleged, filed or being conducted by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (i) the presence, disposal, placement,
burial, migration or release, of any Materials of Environmental Concern at, on,
under, to or from any location or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law, that in either case
is pending or threatened against the Company or any of its Subsidiaries or
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.
(e) Except as set forth in Section 3.12(e) of the Company Disclosure
Schedule, there has been no disposal, placement, burial or release of Materials
of Environmental Concern by the Company or any Subsidiary or, to the knowledge
of the Company, by any other Person, on, in, at or from any of the properties or
facilities owned or operated by the Company or any of its Subsidiaries, except
for such disposal, placement, burial or release which would not, individually or
in the aggregate, be reasonably likely to have a Company Material Adverse
Effect.
(f) Without in any way limiting the generality of the foregoing, except as
set forth in Section 3.12(f) of the Company Disclosure Schedule and, except for
any of the matters below which would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect, (i) there are no
above ground storage tanks, underground storage tanks, oil/water separators,
water treatment facilities or septic systems located on any property owned,
leased, operated or controlled 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 owned, leased, operated or controlled by
the Company or any of its Subsidiaries and (iii) no PCBs or PCB-containing items
are used or stored at any property owned, leased, operated or controlled by the
Company or any of its Subsidiaries.
(g) Except as set forth in Section 3.12(g) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries are not subject to any
Environmental Laws requiring the performance of site assessment for Materials of
Environmental Concern, or the removal or remediation of Materials of
Environmental Concern, or the giving of notice to or receiving the approval of
any Governmental Entity, or the recording or delivery to other Persons of any
disclosure document or statement pertaining to environmental matters by virtue
of the Merger or as a condition to the Merger.
Section 3.13 Rights Agreement. The Company has taken all necessary action
so that the execution of this Agreement, announcement or consummation of the
Offer and the Merger and announcement or consummation of the other transactions
contemplated by this Agreement do not and will not (a) cause the Rights issued
pursuant to the Rights Agreement to separate from the shares of Common Stock to
which they are attached or to be triggered or to become exercisable, (b) cause
any
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Person to become an Acquiring Person (as such term is defined in the Rights
Agreement) or (c) give rise to a Distribution Date or a Triggering Event (as
each such term is defined in the Rights Agreement). The Company has furnished to
Purchaser true and complete copies of all amendments to the Rights Agreement
that fulfill the requirements of this Section 3.13 and such amendments are in
full force and effect.
Section 3.14 Brokers. No broker, finder or investment banker other than the
Financial Advisor, a true and correct copy of whose engagement agreement has
been provided to Purchaser, is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of the Company.
Section 3.15 Absence of Certain Changes. Except as disclosed in Section
3.15 of the Company Disclosure Schedule or in the Company SEC Documents, since
October 31, 1999, the Company and each of its Subsidiaries have conducted their
respective businesses only in the ordinary course of business and consistent
with past practice and (a) there has not been any Company Material Adverse
Effect and (b) the Company has not taken any of the actions set forth in
paragraphs (a) through (r) of Section 5.1.
Section 3.16 Taxes. Except as set forth in Section 3.16 of the Company
Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has (i) duly filed (or
there have been filed on its behalf) with the appropriate Tax Authorities
(as hereinafter defined) all Tax Returns (as hereinafter defined) required
to be filed by it on or prior to the date of this Agreement, and each such
Tax Return is correct and complete in all material respects and (ii) duly
paid in full or, made adequate accruals and reserves in its books and
records in accordance with GAAP with full provision (or there has been paid
or such provision has been made on its behalf for its sole benefit and
recourse) for the payment of, all Taxes for all periods ending on or prior
to the date of this Agreement, except for those Taxes being contested in
good faith.
(b) There are no Liens for Taxes upon any property or assets of the
Company or any Subsidiary thereof, except for Liens for Taxes not yet due
and for which adequate reserves have been established in accordance with
GAAP with full provision made for the payment thereof.
(c) Neither the Company nor any of its Subsidiaries has made any
change in accounting methods, received a ruling from any Tax Authority or
signed an agreement with regard to Taxes reasonably likely to have a
Company Material Adverse Effect.
(d) No Audit (as hereinafter defined) by a Tax Authority is presently
pending with regard to any Taxes or Tax Returns of the Company or any of
its Subsidiaries and, to the knowledge of the Company, no such Audit is
threatened.
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(e) An Audit of each United States federal income Tax Return of the
Company or any of its Subsidiaries has been completed by the applicable Tax
Authorities (or the applicable statutes of limitation for the assessment of
Taxes for such periods have expired) for all periods through and including
1996, and no adjustments were asserted as a result of such Audits which
have not been finally resolved and fully paid.
(f) There are no agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment or payment of
any Taxes or deficiencies against the Company or any of its Subsidiaries,
and no power of attorney applicable to either the Company or any of its
Subsidiaries with respect to any Taxes is in force.
(g) Neither the Company nor any of its Subsidiaries is a party to, or
is bound by, any agreement, arrangement or policy relating to the
allocation, indemnification or sharing of Taxes.
(h) The Company, as the common parent of an affiliated group of
corporations (as defined in Section 1504 of the Code) consisting solely of
the Company and the Subsidiaries that are "includable corporations" (within
the meaning of Section 1504(b) of the Code), has filed since 1994 a
consolidated return for United States federal income Tax purposes on behalf
of itself and such Subsidiaries and neither the Company nor any of such
Subsidiaries has been a member of an affiliated group filing a consolidated
United States federal Tax Return other than the affiliated group in which
they are currently members and of which the Company is the common parent.
(i) With respect to completed pay periods, the Company and each of its
Subsidiaries has withheld from its employees, independent contractors,
creditors, stockholders, customers and third parties, and timely paid to
the appropriate Tax Authority, proper amounts in all material respects with
all Tax withholding provisions of applicable law.
(j) No power of attorney is currently in force with respect to any
matter relating to Taxes that could affect the Company or any of its
Subsidiaries.
(k) Neither the Company nor any Subsidiary shall become obligated in
connection with the closing of the Merger for the payment of any amount
described in Section 162(m)(1) of the Code.
(l) "Audit" means any audit, assessment or other examination relating
to Taxes by any Tax Authority or any judicial or administrative proceedings
relating to Taxes. "Tax" or "Taxes" means all federal, state, local and
foreign taxes, levies, tariffs, duties (including custom duties) and other
assessments and obligations (including liability with respect to unclaimed
property) of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, penalties or costs
applicable or related thereto, imposed, assessed or collected by any Tax
Authority. "Tax Authority" means the IRS and any
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other Governmental Entity (domestic or foreign) responsible for the
administration, assessment or collection of any Taxes. "Tax Returns" mean
all federal, state, local and foreign tax returns (including information
returns), declarations, statements, reports, requests, schedules and forms,
including other documents or information submitted in connection therewith
and any amendments thereto.
Section 3.17 Intellectual Property. (a) Each of the Company and its
Subsidiaries owns or has a license or other right to use all intellectual
property used in and material to the conduct of its business, including, without
limitation, all patents and patent applications, trademarks, trademark
registrations and applications, copyrights and copyright registrations and
applications, service marks and service names, computer software, technology
rights and licenses, know-how, trade secrets, proprietary processes and
formulae, franchises and inventions (collectively, the "Intellectual Property"),
free and clear of all Liens.
(b) Section 3.17(b) of the Company Disclosure Schedule sets forth a list of
all license agreements (other than license agreements for non-customized
third-party software) under which the Company or any of its Subsidiaries has
granted or received the right to use any Intellectual Property, and neither the
Company nor any of its Subsidiaries is in default under any such license.
(c) Except as disclosed in the Company SEC Documents or in Section 3.17(c)
of the Company Disclosure Schedule, no Person has a right to receive a royalty
or similar payment in respect of any item of Intellectual Property pursuant to
any contractual arrangements entered into by the Company or any of its
Subsidiaries or otherwise. To the knowledge of the Company, no former or present
employees, officers or directors of the Company or any Subsidiary hold any
right, title or interest, directly or indirectly, in whole or in part, in or to
any Intellectual Property.
(d) There are no claims or suits pending or, to the knowledge of the
Company, threatened (i) alleging that the conduct of the Company's or any of its
Subsidiary's business infringes upon or constitutes the unauthorized use of the
proprietary rights of any third party or (ii) challenging the ownership, use,
validity or enforceability of the Intellectual Property. To the knowledge of the
Company, no Intellectual Property of the Company or any Subsidiary is being
violated or infringed upon by any third party. There are no settlements,
consents, judgments, orders or other agreements which restrict the Company's or
any of its Subsidiary's rights to use any Intellectual Property.
(e) Except as set forth in the Company SEC Documents or in Section 3.17(e)
of the Company Disclosure Schedule, the Company has made no binding commitments
to make any material expenditure in relation to the hardware or software or
communications systems used or planned to be used in connection with the
Company's business. All material computer equipment and systems used by any of
the Company and its Subsidiaries and, to the knowledge of the Company, any major
supplier of the Company or its Subsidiaries recognize the advent of the year
2000 and can correctly recognize and manipulate date information relating to
dates on or after January 1, 2000, and the operation and functionality of such
computer systems has not been adversely affected by the advent of the year 2000
or any manipulation of data featuring date information relating to dates before,
on
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or after January 1, 2000, in each case, except for such failures to recognize,
manipulate, operate or function as would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.18 Labor Matters. (a) (i) There is no labor strike, dispute,
slowdown, stoppage or lockout actually pending, or to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
(ii) except as discussed on Section 3.18(a)(ii) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to or bound
by any collective bargaining or similar agreement with any labor organization,
or work rules or practices agreed to with any labor organization or employee
association applicable to employees of the Company or any of its Subsidiaries,
(iii) except as disclosed on Section 3.18(a)(iii) of the Company Disclosure
Schedule, none of the employees of the Company or any of its Subsidiaries is
represented by any labor organization and the Company does not have any
knowledge of any union organizing activities among the employees of the Company
or any of its Subsidiaries, (iv) there are no written personnel policies, rules
or procedures applicable to employees of the Company or any of its Subsidiaries,
other than the Company Benefit Plans and those set forth on Section 3.18(a)(iv)
of the Company Disclosure Schedule, true and correct copies of which have
heretofore been delivered or made available to Purchaser, (v) each of the
Company and its Subsidiaries is, and has at all times been, in compliance, in
all material respects, with all applicable laws and regulations respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and is not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
applicable laws, except for such non-compliance which has not had a Company
Material Adverse Effect, (vi) there is no unfair labor practice charge or
complaint against the Company pending or, to the knowledge of the Company,
threatened before the National Labor Relations Board or any similar state or
foreign agency, (vii) there is no material pending grievance arising out of any
collective bargaining agreement or other grievance procedure and (viii) to the
knowledge of the Company, no charges with respect to or relating to the Company
are pending before the Equal Employment Opportunity Commission or any other
agency responsible for the prevention of unlawful employment practices which, if
determined adversely to the Company, would have or could reasonably be expected
to have a Company Material Adverse Effect.
(b) In any ninety (90)-day period during the twelve (12) months ending on
the date of the Agreement, (i) neither the Company nor any of its Subsidiaries
has effectuated a "plant closing," (as defined in the Worker Adjustment and
Retraining Notification Act (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 and (ii) there has not occurred a "mass layoff" (as
defined in the WARN Act) affecting any site of employment or facility of the
Company or any of its Subsidiaries; nor has the Company or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation.
Section 3.19 Opinion of Financial Advisor. The Financial Advisor has
delivered its opinion to the Special Committee and the Board to the effect that,
as of the date of this Agreement, and based upon and subject to the matters
stated in the opinion, the $18.35 per Share consideration to be
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received by the holders of Company Common Stock pursuant to the Offer and the
Merger Consideration to be received in the Merger by the holders of Shares
(other than Purchaser, Acquisition Sub and their affiliates) is fair from a
financial point of view to such holders. A copy of the written opinion will be
delivered to Purchaser promptly following receipt thereof by the Special
Committee.
Section 3.20 Real Property. (a) Section 3.20 of the Company Disclosure
Schedule sets forth a complete list of all real property owned or leased by the
Company or any of its Subsidiaries or otherwise used by the Company or any of
its Subsidiaries in, and material to, the conduct of their business or
operations (collectively, together with all buildings, structures and other
improvements and fixtures located on or under the land described in this Section
3.20 and all easements, rights and other appurtenances thereto, the "Real
Property"). The Company or its Subsidiaries has good title to the owned Real
Property and good leasehold interests in the leased Real Property, free and
clear of all Liens. Copies of (i) all deeds, title insurance policies (including
copies of exception documents thereunder) and surveys of the Real Property and
(ii) all documents evidencing all Liens upon the Real Property, to the extent
such are in the files and records of the Company, have been furnished or made
available to Purchaser or will be furnished or made available to Purchaser as
promptly as practicable after the date of this Agreement. Except for the matters
disclosed in the Company SEC Documents or in Section 3.20 of the Company
Disclosure Schedule, there are no proceedings, claims, disputes or, to the
Company's knowledge, conditions affecting any Real Property that would
reasonably be expected to curtail or interfere with the use of such property,
nor is an action of rezoning or eminent domain pending or, to the knowledge of
the Company, threatened for all or any portion of the Real Property.
(b) All buildings on the Real Property are free of material title and
physical defects which do not have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) Each of the Company and its Subsidiaries has obtained all appropriate
certificates, licenses, permits, easements and rights of way, including proofs
of dedication, required to use and operate the Real Property in the manner in
which the Real Property is currently being used and operated, except for such
easements, certificates, licenses, permits or rights of way the failure of which
to have obtained does not have, individually or in the aggregate, a Company
Material Adverse Effect.
(d) To the Company's knowledge, neither the Company nor any of its
Subsidiaries is in violation in any material respect of any applicable building,
zoning, health or other law, ordinance, regulation, contractual restriction or
covenant in respect of the use or occupation of the Real Property or structures
or their operations thereon.
Excluded from the scope of this representation and warranty are all matters
related to Environmental Laws, Materials of Environmental Concern or
Environmental Claims; these excluded matters, to the extent subject to a
representation and warranty under this Agreement, are covered by Section 3.12.
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Section 3.21 Material Contracts. (a) Section 3.21(a) of the Company
Disclosure Schedule lists each of the following contracts and agreements of the
Company and each of its Subsidiaries (such contracts and agreements, together
with all contracts and agreements disclosed in Section 3.17(b) of the Disclosure
Schedule, being "Material Contracts"):
(i) each contract, agreement and other arrangement for the purchase of
inventory, spare parts, other materials or personal property with any
supplier or for the furnishing of services to the Company or any of its
Subsidiaries or otherwise related to the businesses of the Company or any
of its Subsidiaries under the terms of which the Company or any of its
Subsidiaries: (A) have paid or otherwise given consideration of more than
$50,000 in the aggregate during the fiscal year ended October 31, 1999 or
(B) are likely to pay or otherwise give consideration of more than $250,000
in the aggregate over the remaining term of such contract, agreement or
other arrangement;
(ii) each contract, agreement and other arrangement with suppliers and
vendors for volume rebates associated with purchases of building products
under the terms of which the Company or any of its Subsidiaries: (A) have
paid or otherwise given consideration of more than $50,000 in the aggregate
during the fiscal year ended October 31, 1999 or (B) are likely to pay or
otherwise give consideration of more than $250,000 in the aggregate over
the remaining term of such contract, agreement or other arrangement;
(iii) each contract, agreement and other arrangement for the sale of
inventory or other personal property or for the furnishing of services by
the Company or any of its Subsidiaries which: (A) is likely to involve
consideration of more than $50,000 in the aggregate during the fiscal year
ended October 31, 1999 or (B) is likely to involve consideration of more
than $100,000 in the aggregate over the remaining term of the contract,
agreement or other arrangement;
(iv) all material broker, distributor, dealer, manufacturer's
representative, franchise, agency, consulting and advertising contracts and
agreements to which the Company or any of its Subsidiaries is a party;
(v) all management contracts (including those relating to severance,
change of control, termination or retirement) and contracts with
independent contractors or consultants (or similar arrangements) to which
the Company or any of its Subsidiaries is a party and which provide for
payments to any Person in any calendar year in excess of $50,000;
(vi) all contracts and agreements relating to Indebtedness of the
Company or any of its Subsidiaries in excess of $25,000 or to any direct or
indirect guaranty by the Company or any of its Subsidiaries of Indebtedness
of any other Person in excess of $25,000;
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(vii) all contracts and agreements that limit or purport to limit the
ability of the Company or any of its Subsidiaries to compete in any line of
business or with any Person or in any geographic area or during any period
of time;
(viii) any exchange-traded or over-the-counter swap, forward, future,
option, cap, floor or collar financial contract or any other interest rate
or foreign currency protection contract not included on its balance sheet
which is a financial derivative contract;
(ix) any other contract or amendment thereto that would be required to
be filed as an exhibit to a Form 10-K filed by Company with the SEC as of
the date of this Agreement (excluding this Agreement or any other
agreements contemplated by or related to this Agreement or the Merger);
(x) all contracts and agreements that provide indemnification rights
or obligations of the Company or any of its Subsidiaries, which provide for
potential payments after the Effective Time to any Person in excess of
$250,000; and
(xi) all other contracts and agreements, whether or not made in the
ordinary course of business, which are material to the Company and its
Subsidiaries, taken as a whole, or to the conduct of the business of the
Company and its Subsidiaries, taken as a whole, or the absence of which
would, in the aggregate, have or reasonably be expected to have a Company
Material Adverse Effect.
(b) Each Material Contract: (i) is legal, valid and binding on the Company
or the respective Subsidiary which is a party thereto and, to the knowledge of
the Company, the other parties thereto, and is in full force and effect and (ii)
upon consummation of the Merger, except to the extent that any consents set
forth in Section 3.6 of the Company Disclosure Schedule are not obtained, shall
continue in full force and effect without penalty or other adverse consequence.
Except as set forth in Section 3.21(b) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries (x) is in breach of, or default
under, any Material Contract or (y) to the knowledge of the Company, has
repudiated or waived any material provision thereunder.
(c) Except as shown at Section 3.21 of the Company Disclosure Schedule, no
other party to any Material Contract is, to the knowledge of the Company, in
material breach thereof or material default thereunder.
(d) Except as set forth in Section 3.21(d) of the Company Disclosure
Schedule, there is no contract, agreement or other arrangement granting any
Person any preferential right to purchase any Company Securities or any
properties or assets of the Company or any of its Subsidiaries.
Section 3.22 Suppliers and Customers. Since October 31, 1998, no material
licensor, vendor, supplier, licensee or customer of the Company or any of its
Subsidiaries has canceled or otherwise modified (in a manner materially adverse
to the Company) its relationship with the
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Company or its Subsidiaries and, to the Company's knowledge, (a) no such Person
has notified the Company or any of its Subsidiaries of its intention to do so
and (b) the consummation of the Merger will not affect any of such relationships
in a manner that would result in a Company Material Adverse Effect.
Section 3.23 Accounts Receivable, Inventory. (a) The accounts receivable of
the Company and its Subsidiaries as set forth on the Company Balance Sheet
delivered prior to the date of this Agreement or arising since the date thereof
are valid and genuine; have arisen out of bona fide sales and deliveries of
goods, performance of services and other business transactions in the ordinary
course of business consistent with past practice; and are not subject to valid
defenses, set-offs or counterclaims. The allowance for collection losses on the
Company Balance Sheet and reserves for the return of inventory have been
determined in accordance with GAAP consistently applied and, to the knowledge of
the Company, are sufficient to provide for any losses or returns which may be
sustained on realization of the accounts receivable or return of inventory shown
in the Company Balance Sheet.
(b) As of the date of the Company Balance Sheet, the inventories shown on
the Company Balance Sheet consisted in all material respects of items of a
quantity and quality usable or saleable in the ordinary course of business. All
of such inventories were acquired in the ordinary course of business. All such
inventories are valued on the Company Balance Sheet in accordance with GAAP,
applied on a basis consistent with the Company's past practices.
Section 3.24 Insurance. Section 3.24 of the Company Disclosure Schedule
lists the Company's material insurance policies. Such policies are in adequate
amounts and cover risks customarily insured against by businesses of the type
operated by the Company and its Subsidiaries. All such policies are in full
force and effect, all premiums with respect thereto covering all periods up to
and including the date of this Agreement have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies will remain in full force and effect through the respective dates
set forth in Section 3.24 of the Company Disclosure Schedule. Except as set
forth in Section 3.24 of the Company Disclosure Schedule, there are presently no
claims for amounts exceeding in any individual case $250,000 pending under such
policies of insurance and no notices of claims in excess of such amounts have
been given by the Company or any of its Subsidiaries under such policies.
Section 3.25 Title and Condition of Properties. The Company and its
Subsidiaries own good title, free and clear of all Liens, to all of the personal
property and assets shown on the Company Balance Sheet, except for assets which
have been disposed of to nonaffiliated third parties since the date of the
Company Balance Sheet, in the ordinary course of business. All of the machinery,
equipment and other tangible personal property and assets owned or used by the
Company or its Subsidiaries are in good condition and repair, except for
ordinary wear and tear not caused by neglect and are usable in the ordinary
course of business, except for any matter otherwise covered by this sentence
which would not have, individually or in the aggregate, a Company Material
Adverse Effect. All assets which are material to the Company's business on a
consolidated basis and held
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under leases or subleases by the Company or any of its Subsidiaries are held
under valid contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought), and each such contract is in
full force and effect.
Section 3.26 Statements True and Correct. No representation or warranty of
the Company contained in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section 3.27 Board Recommendation. The Board, at a meeting duly called and
held, has by unanimous vote of those directors present (who constituted all of
the directors then in office) (a) determined that this Agreement and the Merger
are fair to and in the best interests of the shareholders of the Company (other
than Purchaser or any affiliate thereof) and (b) resolved to recommend that such
holders of the shares of Common Stock approve and adopt this Agreement and
approve the Merger.
Section 3.28 Required Vote. The affirmative vote of the holders of shares
of Common Stock representing a majority of all shares entitled to vote at the
Special Meeting is required to approve and adopt this Agreement and approve the
Merger. No other vote of the shareholders of the Company is required by law, the
Restated Articles, the Bylaws of the Company or otherwise in order for the
Company to consummate the Merger.
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
Section 4.1 Organization. Acquisition Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Purchaser and Acquisition Sub
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Section 4.2 Authority Relative to this Agreement. Each of Purchaser and
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the Offer and the Merger in accordance
with the terms hereof. The execution, delivery and performance of this Agreement
by Purchaser and Acquisition Sub and the consummation of the Offer, the Merger
and the Tender and Option Agreement by Purchaser and Acquisition Sub have been
duly and validly authorized by the Board of Directors of Purchaser and the Board
of Directors of Acquisition Sub, and no other corporate action or other
proceedings on the part of Purchaser or Acquisition Sub are necessary to
authorize the execution and delivery by Purchaser and Acquisition
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Sub of this Agreement or to consummate the Offer, the Merger and the Tender and
Option Agreement. This Agreement has been duly and validly executed and
delivered by Purchaser and Acquisition Sub and, assuming due and valid
authorization, execution and delivery by the Company, constitutes a valid, legal
and binding agreement of Purchaser and Acquisition Sub, enforceable against
Purchaser and Acquisition Sub in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought).
Section 4.3 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state securities or blue sky
laws, the HSR Act and the filing and recordation of a Certificate of Merger as
required by the GBCC, no filing with or notice to, and no permit, authorization,
consent or approval of, any Governmental Entity is necessary for the execution
and delivery by Purchaser or Acquisition Sub of this Agreement or the
consummation by Purchaser or Acquisition Sub of the Offer and the Merger, except
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings or give such notice would not have a Purchaser Material
Adverse Effect. Neither the execution, delivery or performance of this Agreement
by Purchaser or Acquisition Sub, nor the consummation by Purchaser and
Acquisition Sub of the Offer and the Merger, will (a) conflict with or result in
any breach of any provision of the Certificate or Articles of Incorporation or
Bylaws of Purchaser or Acquisition Sub, (b) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) or require any consent pursuant to, or result in the creation of
any Lien on any asset of Purchaser or Acquisition Sub under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Purchaser or
Acquisition Sub is a party or by which either of them or any of their respective
properties or assets may be bound or (c) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to Purchaser or Acquisition
Sub or any of their respective properties or assets, except in the case of (b)
or (c) for any such violations, breaches, defaults (or rights of termination,
amendment, cancellation or acceleration), Liens or failures to obtain consents
which would not individually or in the aggregate, have a Purchaser Material
Adverse Effect. As used in this Agreement, the term "Purchaser Material Adverse
Effect" shall mean any change or effect that is materially adverse to the
business, results of operations or condition (financial or otherwise) of
Purchaser or Acquisition Sub other than any change or effect that does not
affect Purchaser's or Acquisition Sub's ability to perform their respective
obligations under this Agreement.
Section 4.4 Proxy Statement. None of the information supplied by Purchaser
or Acquisition Sub in writing for inclusion in the Proxy Statement or the
Schedule 14D-9 will, at the respective times filed with the SEC and first
published or sent or given to holders of Shares, or at the time that it or any
amendment or supplement thereto is mailed to the Company's shareholders, at the
time of the Special Meeting or at the Effective Time, contain any untrue
statement of a material fact
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or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
Section 4.5 Financing. Purchaser and Acquisition Sub have available funds
sufficient in amount to consummate the Offer and Merger pursuant to this
Agreement.
Section 4.6 Brokers. Except as set forth in a disclosure letter to be
provided separately to the Company by Purchaser, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Offer and the Merger based upon arrangements made by or on
behalf of Purchaser.
Section 4.7 No Default. Neither Purchaser nor Acquisition Sub is in default
or violation (and no event has occurred which, with notice or the lapse of time
or both, would constitute a default or violation) of any term, condition or
provision of (a) its Articles of Incorporation or Bylaws, (b) any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which Purchaser or Acquisition Sub is now a party or by which
either of them or any of their respective properties or assets may be bound or
(c) any order, writ, injunction, decree, law, statute, rule or regulation
applicable to Purchaser or Acquisition Sub or any of their respective properties
or assets, except in the case of (b) or (c) for violations, breaches or defaults
that would not, individually or in the aggregate, have a Purchaser Material
Adverse Effect.
Section 4.8 Litigation. Except as would not reasonably be expected to have
a Purchaser Material Adverse Effect, there is no Litigation pending or, to the
knowledge of Purchaser, threatened against, affecting or involving Purchaser or
Acquisition Sub or any of their respective properties or assets before any
Governmental Entity, and neither Purchaser nor Acquisition Sub is subject to any
outstanding order, writ, injunction or decree.
Section 4.9 Compliance with Applicable Law. Purchaser and Acquisition Sub
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Purchaser Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect.
Purchaser and Acquisition Sub are in compliance with the terms of the Purchaser
Permits, except where the failure so to comply would not have a Purchaser
Material Adverse Effect. The businesses of Purchaser and Acquisition Sub are not
being and have not been conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for violations or possible
violations which, individually or in the aggregate, would not have a Purchaser
Material Adverse Effect. None of the directors, officers, agents,
representatives or employees of Purchaser or Acquisition Sub (in their capacity
as directors, officers, agents, representatives or employees) has taken any
action or made any omission which would violate any law, ordinance or regulation
of any Governmental Entity, except for violations or possible violations which,
individually or in the aggregate, would not have a Purchaser Material Adverse
Effect. No investigation or review by any Governmental Entity with respect to
Purchaser or Acquisition Sub or with respect to any of their respective
directors, officers, agents, representatives or employees
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(in regard to actions taken or omissions made in their capacity as directors,
officers, agents, representatives or employees) is pending or, to the knowledge
of Purchaser, threatened.
ARTICLE V -- COVENANTS
Section 5.1 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement, during the period from the date hereof until the
Effective Time, each of the Company and its Subsidiaries will conduct its
operations in the ordinary course of business consistent with past practice and
preserve intact its business organization and assets and maintain its rights and
franchises. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, until the Effective Time the
Company will not, and the Company will not permit its Subsidiaries to, without
the prior written consent of Purchaser (which will not be unreasonably withheld
or delayed):
(a) amend or propose to amend the charter, bylaws or other governing
instruments of the Company or any of its Subsidiaries;
(b) authorize for issuance, issue, sell, deliver, or agree or commit
to issue, sell or deliver, dispose of, encumber or pledge (whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any securities,
except as disclosed in Section 5.1(b) of the Company Disclosure Schedule or
as required by agreements with the Company's employees under the Company
Benefit Plans as in effect as of the date hereof, or amend any of the terms
of any such securities or agreements outstanding as of the date hereof,
except as specifically contemplated by this Agreement;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, or redeem or otherwise acquire any of its securities, except
intercompany cash dividends in the ordinary course of business;
(d) (i) incur or assume any long-term or short-term debt or issue any
debt securities, except for borrowings under existing lines of credit in
the ordinary course of business and in amounts not in excess of an
aggregate of $1,000,000 (on a consolidated basis); (ii) 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 consistent with past practice and in
amounts not material to the Company and its Subsidiaries, taken as a whole,
and except for obligations of wholly owned Subsidiaries of the Company to
the Company or to other wholly owned Subsidiaries of the Company; (iii)
make any loans, advances or capital contributions to, or investments in,
any other Person (other than to wholly-owned Subsidiaries of the Company or
customary advances to employees in the ordinary course of business
consistent with past practice for
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reasonable business expenses not to exceed an aggregate amount of $5,000
outstanding to any employee at any time) or make any change in its existing
borrowing or lending arrangements for or on behalf of any such Person,
whether pursuant to, a Company Benefit Plan or otherwise; (iv) pledge or
otherwise encumber shares of capital stock of the Company or any of its
Subsidiaries; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(e) adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, merger, restructuring or recapitalization of the Company or
any of its Subsidiaries;
(f) (i) make any change in the compensation payable or to become
payable to any of its officers, directors, employees, agents or consultants
(other than general increases in wages to employees in the ordinary course
consistent with past practice or other increases in each such instance as
disclosed in Section 5.1(f) of the Company Disclosure Schedule) or to
Persons providing management services; (ii) pay any severance or
termination cost or any bonus other than pursuant to written contracts in
effect on the date of this Agreement or disclosed in Section 5.1(f) of the
Company Disclosure Schedule or enter into or amend any severance agreements
with officers of the Company or any Subsidiary; (iii) make any loans to any
of its officers, directors, employees, affiliates, agents or consultants
(other than customary advances to employees in the ordinary course of
business consistent with past practice for reasonable business expenses not
to exceed an aggregate amount of $5,000 outstanding to any employee at any
time); (iv) adopt, amend or terminate any new or existing Company Benefit
Plan (other than as required by applicable law); (v) permit a new Option
Period (as such term is defined in the Employee Stock Purchase Plan) to
commence under the Employee Stock Purchase Plan after the Special Meeting;
or (vi) make any expenditures for business entertainment purposes for any
single event or occasion in excess of $1,000.
(g) acquire, sell, transfer, lease, encumber or dispose of any assets
outside the ordinary course of business or any assets which in the
aggregate are material to the Company and its Subsidiaries, taken as a
whole, or enter into any commitment or transaction outside the ordinary
course of business consistent with past practice which would be material to
the Company and its Subsidiaries, taken as a whole;
(h) except as may be required as a result of a change in law or in
GAAP, change any of the Tax or accounting principles or practices used by
it or make any material Tax election or amend any Tax Return previously
filed or settle any material Audit;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off
notes or accounts receivable other than in the ordinary course of business;
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(j) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any
contract or agreement other than in the ordinary course of business
consistent with past practice which would be material to the Company and
its Subsidiaries, taken as a whole; (iii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $25,000
or, in the aggregate, are in excess of $50,000; (iv) make any capital
expenditure or expenditures which, individually, is in excess of $25,000
or, in the aggregate, are in excess of $50,000, provided, however, that no
capital expenditures shall be made (A) to implement any information
technology projects, (B) for transportation equipment, or (C) in respect of
Field Marketing & Management, Inc.; (v) take any action whatsoever to
implement or install the XX Xxxxxxx Software Program at any location at
which the XX Xxxxxxx Software Program is not currently installed; or (vi)
enter into or amend any contract, agreement commitment or arrangement
providing for the taking of any action that would be prohibited hereunder;
(k) discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business of liabilities fully reflected or reserved against in, or
contemplated by, the consolidated 1999 Financial Statements (or the notes
thereto) of the Company and its Subsidiaries or incurred in the ordinary
course of business consistent with past practice;
(l) permit any insurance policy naming the Company as a beneficiary or
a loss payable payee to be canceled or terminated without notice to
Purchaser, unless the Company shall have obtained a comparable replacement
policy;
(m) enter into or amend any employment contract between the Company or
any Subsidiary and any Person having a base salary thereunder in excess of
$100,000 per year (unless such amendment is required by law) that the
Company or any Subsidiary does not have the unconditional right to
terminate without liability (other than liability for services already
rendered), at any time on or after the Effective Time;
(n) commence or settle any Litigation other than in accordance with
past practice and, with respect to any settlement, for an amount greater
than $100,000;
(o) enter into, modify, amend or terminate any Material Contract
(including any standstill agreement, loan contract with an unpaid balance
exceeding $100,000 or any of the agreements referred to in Section 5.10
hereof) or waive, release, compromise or assign any material rights or
claims, except for modifications, in the ordinary course of business and
consistent with past practice, to quantities specified in purchase orders;
(p) take any action that would adversely affect the ability of any
party to this Agreement to perform its covenants and agreements under this
Agreement;
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(q) take any action that would cause an event of default under any
Material Contract;
(r) cause (or permit to exist) any circumstances that would result in
a Company Material Adverse Effect; or
(s) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1(a) through 5.1(r) or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect as of the date when made.
Section 5.2 Acquisition Proposals. Except as hereinafter provided, neither
the Company nor any of its Subsidiaries shall, directly or indirectly, through
any officer, director, agent or otherwise, solicit, initiate or knowingly
encourage the submission of any proposal or offer from any Person (as
hereinafter defined) relating to any acquisition or purchase of all or (other
than in the ordinary course of business) a substantial portion of the assets of,
or a substantial equity interest in, the Company or any of its Subsidiaries or
any recapitalization, business combination or similar transaction with the
Company or any of its Subsidiaries (any such proposal or offer being an
"Acquisition Proposal") or participate in any negotiations regarding, or furnish
to any other Person any non-public information with respect to, or take any
other action to knowingly facilitate the making of an Acquisition Proposal.
Notwithstanding the foregoing provisions of this Section 5.2, (a) the Company
may engage in discussions or negotiations with a third party who seeks to
initiate such discussions or negotiations and may furnish such third party
information concerning the Company and its Subsidiaries, in each case only in
response to a request for such information or access which was not solicited,
initiated or knowingly encouraged by the Company or any of its affiliates, (b)
the Board or the Special Committee may take and disclose to the Company's
shareholders a position contemplated by Rule 14e-2 promulgated under the
Exchange Act and (c) following receipt of an Acquisition Proposal from a third
party, the Board or the Special Committee may withdraw or modify its
recommendation referred to in Section 1.12, but in each case referred to in the
foregoing clauses (a) through (c) only to the extent that the Board or the
Special Committee shall conclude in good faith after consultation with legal
counsel that the failure to take such action could reasonably be determined to
be a breach of the Board's or the Special Committee's fiduciary obligations to
the Company's shareholders under applicable law. In connection with any party's
Acquisition Proposal, the Company will enter into an appropriate confidentiality
agreement with such party. The Company will immediately cease all existing
activities, discussions and negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. From and after the execution of this
Agreement, the Company shall promptly notify Purchaser of the receipt of any
Acquisition Proposal, and, in any such notice to Purchaser, shall indicate in
reasonable detail the material terms thereof and the identity of the other party
or parties involved. Nothing in this Section 5.2 shall preclude the Company from
making any disclosure to its shareholders that is required under applicable law.
As used in this Agreement, "Person" shall mean a natural person, entity,
organization or association, including, but not limited to, a partnership,
corporation, limited liability company, business trust, joint stock
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company, trust, unincorporated association, joint venture, Governmental Entity,
group acting in concert or any person acting in a representative capacity.
Section 5.3 Access to Information. (a) Between the date hereof and the
Effective Time, the Company will give Purchaser and its authorized
representatives and Persons providing or committed to provide Purchaser with
financing for the Offer and the Merger and their representatives, reasonable
access to all employees, plants, offices, warehouses and other facilities and
properties and to all books and records of the Company and its Subsidiaries,
will permit Purchaser to make such inspections (including any physical
inspections or soil or groundwater investigations) as it may reasonably request
and will cause the Company's officers and those of its Subsidiaries to furnish
Purchaser with such financial and operating data and other information with
respect to the business and properties of the Company and any of its
Subsidiaries as Purchaser may from time to time reasonably request.
(b) Each of the Company and the Purchaser will hold and will cause its
consultants, advisors, representatives, agents and employees, including, without
limitation, its auditors, attorneys, financial advisors and other consultants
and advisors (including financing sources), to hold in confidence, unless
compelled to disclose by judicial or administrative process or, in the written
opinion of its legal counsel, by other requirements of law, all documents and
information concerning the other party furnished to it in connection with this
Agreement (except to the extent that such information can be shown to have been
(i) previously known by the disclosing party from sources other than the other
party, its directors, officers, representatives or affiliates, (ii) in the
public domain through no fault of the disclosing party or its affiliates or
(iii) later lawfully acquired by the disclosing party on a non-confidential
basis from other sources who are not known by the disclosing party to be bound
by a confidentiality agreement or otherwise prohibited from transmitting the
information to the disclosing party by a contractual, legal or fiduciary
obligation) and will not release or disclose such information to any other
Person, except its auditors, attorneys, financial advisors and other consultants
and advisors (including financing sources) in connection with this Agreement who
need to know such information. If the Merger is not consummated, such confidence
shall be maintained and, if requested by or on behalf of the Company or the
Purchaser, the other party hereto will, and will use all reasonable efforts to
cause its auditors, attorneys, financial advisors and other consultants, agents
and representatives to return or destroy all copies of written information
furnished by the Company or Purchaser, as applicable, for purposes of evaluating
the Merger. It is understood that each of the parties hereto shall be deemed to
have satisfied its obligation to hold such information confidential if it
exercises the same care as it takes to preserve confidentiality for its own
similar information.
(c) Prior to the consummation of the Merger, the Company and its
accountants, counsel, agents and other representatives shall cooperate with
Purchaser by providing information about the Company which is reasonably
necessary for Purchaser and its accountants, counsel, agents and other
representatives to prepare the syndication or other materials to be delivered to
potential financing sources in connection with the Merger and such other
documents and information with respect to such documents as may be reasonably
requested. Notwithstanding anything in this Agreement to the
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contrary, Purchaser may disclose, or cause its representatives to disclose, and
at the request of Purchaser, the Company shall disclose, information concerning
the Company and its Subsidiaries, and their respective businesses, assets and
properties, to prospective financing sources in connection with the Merger.
(d) Each party hereto agrees to give the other party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other party
or which has had or is reasonably likely to have a Company Material Adverse
Effect or a Purchaser Material Adverse Effect, as applicable.
Section 5.4 Additional Agreements; Reasonable Efforts. (a) Prior to the
consummation of the Merger upon the terms and subject to the conditions of this
Agreement, each of Purchaser, Acquisition Sub and the Company agree to use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the Merger as promptly as practicable, including,
but not limited to, (i) the preparation and filing of all forms, registrations
and notices required to be filed to consummate the Offer and the Merger and the
taking of such actions as are necessary to obtain any requisite approvals,
consents, orders, exemptions or waivers by any third party or Governmental
Entity, (ii) the satisfaction of the other parties' conditions to the
consummation of the Merger and (iii) obtaining consents of all third parties
necessary, proper or advisable for the consummation of the Offer and the Merger.
In addition, no party hereto shall take any action after the date hereof that
would reasonably be expected to materially delay the obtaining of, or result in
not obtaining, any permission, approval or consent from any Governmental Entity
necessary to be obtained prior to the consummation of the Offer or the Merger.
(b) Prior to the consummation of the Merger, each party hereto shall
promptly consult with the other parties hereto with respect to, provide any
necessary information with respect to and provide the other parties (or their
counsel) 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, the Offer and the Merger. Each party hereto
shall promptly inform the other parties of any communication from any
Governmental Entity regarding the Offer or the Merger. If any party hereto or
affiliate thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to the Offer or the
Merger, then such party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
parties, an appropriate response in compliance with such request. To the extent
that transfers of Company Permits are required as a result of execution of this
Agreement or consummation of the Offer or the Merger, the Company shall use
commercially reasonable efforts to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require Purchaser to (i) enter into any agreement with any
Governmental Entity or to consent to any order,
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decree or judgment requiring Purchaser to hold separate or divest, or to
restrict the dominion or control of Purchaser or any of its affiliates over, any
of the assets, properties or businesses of Purchaser, its affiliates or the
Company, in each case as in existence on the date hereof, or (ii) defend against
any Litigation brought by any Governmental Entity seeking to prevent the
consummation of the Merger.
Section 5.5 Public Announcements. Each of Purchaser and the Company agrees
that it will not issue any press release or otherwise make any public statement
with respect to this Agreement, the Offer or the Merger without the prior
consent of the other party, which consent shall not be unreasonably withheld or
delayed; provided, however, that such disclosure can be made without obtaining
such prior consent if (a) the disclosure is required by law or by obligations
pursuant to any listing agreement with any national securities exchange and (b)
the party making such disclosure has first used reasonable efforts to consult
with the other party about the form and substance of such disclosure.
Section 5.6 Indemnification. (a) Purchaser agrees that all rights to
indemnification or exculpation now existing in favor of the present and former
directors, officers, employees and agents of the Company and its Subsidiaries as
provided in their respective charters or bylaws or otherwise in effect as of the
date hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect and shall not be
amended, repealed or otherwise modified for a period of six and one-half (6 1/2)
years from the Effective Time in any manner that would affect adversely the
rights thereunder of individuals who prior to or at the Effective Time were such
present or former directors, officers, employees or agents of the Company or its
Subsidiaries.
(b) Purchaser shall cause the Surviving Corporation to maintain in effect
for not less than five (5) years from the Effective Time the policies of the
directors' and officers' liability and fiduciary insurance most recently
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable to the beneficiaries thereof
so long as such substitution does not result in gaps or lapses in coverage) with
respect to matters occurring prior to the Effective Time, provided that in no
event shall the Surviving Corporation be required to expend more than an amount
per year equal to 200% of the current annual premiums paid by the Company (the
"Premium Amount") to maintain or procure insurance coverage pursuant hereto, and
further provided that if the Surviving Corporation is unable to obtain the
insurance called for by this Section 5.6(b), the Surviving Corporation will
obtain the maximum insurance coverage obtainable for the Premium Amount per
year.
(c) After the Effective Time, Purchaser and the Surviving Corporation
shall, to the fullest extent that a Georgia corporation may now or hereafter
legally indemnify its own officers and directors, indemnify and hold harmless,
each present director or officer of the Company and each Subsidiary
(collectively, the "Indemnified Parties") against all costs and expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection
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with any claim, action, suit, proceeding or investigation (whether asserted or
commencing before or after the Effective Time), whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission in their capacity as an officer or director occurring before or at the
Effective Time (including, without limitation, the Merger and all actions taken
in contemplation of, or to effect the Merger), for a period of six and one-half
(6 1/2) years after the date hereof. Without limiting the generality of the
foregoing, in the event of any such claim, action, suit, proceeding or
investigation, (i) the Surviving Corporation or Purchaser, as the case may be,
shall pay as incurred, each Indemnified Party's legal and other expenses
(including costs of investigation and preparation), including the fees and
expenses of counsel selected by the Indemnified Party, which counsel shall be
reasonably satisfactory to the Surviving Corporation or Purchaser, promptly
after statements therefor are received and (ii) the Surviving Corporation and
Purchaser shall cooperate in the defense of any such matter; provided, however,
that neither the Surviving Corporation nor Purchaser shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed); and provided further that neither the
Surviving Corporation nor Purchaser shall be obligated pursuant to this Section
5.6(c) to pay the fees and expenses of more than one (1) counsel for all
Indemnified Parties in any single action, except to the extent that two (2) or
more of such Indemnified Parties shall have conflicting interests in the outcome
of such action; and provided further that, in the event that any claim for
indemnification is asserted or made within such six and one-half (6 1/2) year
period, all rights to indemnification in respect of such claim shall continue
until the disposition of such claim. The parties intend, to the extent not
prohibited by applicable law, that the indemnification provided for in this
Section 5.6(c) shall apply without limitation to negligent acts or omissions of
any Indemnified Party. Any determination to be made as to whether any
Indemnified Party has met any standard of conduct imposed by law shall be made
by legal counsel reasonably acceptable to such Indemnified Party, Purchaser and
the Surviving Corporation, retained at the Surviving Corporation's expense. The
Surviving Corporation or Purchaser shall pay all expenses, including counsel
fees and expenses, that any Indemnified Party may incur in enforcing the
indemnity and other obligations provided for in this Section 5.6.
Notwithstanding the foregoing, Purchaser and the Surviving Corporation shall
have no additional indemnification obligations hereunder with respect to any
costs that would otherwise be covered under the Surviving Corporation's
directors' and officers' liability and fiduciary insurance policies.
(d) In the event the Surviving Corporation or Purchaser or any of their
respective successors or assigns after the Effective Time (i) consolidates with
or merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
the Surviving Corporation or Purchaser, as the case may be, shall assume the
obligations set forth in this Section 5.6.
(e) This Section 5.6 is intended to benefit the Indemnified Parties and the
other Persons otherwise covered by this Section 5.6 and their respective heirs,
executors and personal representatives and shall be binding on the successors
and assigns of Purchaser and the Surviving Corporation. This Section 5.6 shall
not limit or otherwise adversely affect any rights any Indemnified Party or any
other Person otherwise covered by this Section 5.6 may have under any agreement
with
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the Company or any Subsidiary or the Company's or any Subsidiary's respective
Certificate or Articles of Incorporation or Bylaws.
(f) In consideration for the indemnification rights set forth herein, the
Company shall request prior to the Effective Time general releases from all
directors and former directors (who were directors at any time after October 31,
1997) and officers of the Company and the Subsidiaries releasing Purchaser, the
Company and the Subsidiaries and their officers, directors, employees and agents
of any claim that they or any of them may have against Purchaser, the Company or
its Subsidiaries (and their officers, directors, employees and agents),
exclusive of employment compensation obligations or obligations arising under
this Section 5.6.
Section 5.7 State Takeover Laws. The Company shall take all necessary steps
to exempt the Merger from, or if necessary to challenge the validity or
applicability of Sections 14-2-1110 through 14-2-1133 of the GBCC.
Section 5.8 Rights Agreement. The Company shall take all necessary action
(including, if required, redeeming all of the outstanding Rights (as defined in
the Rights Agreement) or amending or terminating the Rights Agreement) so that
(a) the entering into of this Agreement and consummation of the Merger do not
and will not result in any Person becoming able to exercise any Rights under the
Rights Agreement or enabling or requiring the Rights to be separated from the
shares of Common Stock to which they are attached or to be triggered or to
become exercisable and (b) no Rights are outstanding at the Effective Time.
Section 5.9 Disclosure Schedule Supplements. From time to time after the
date of this Agreement and prior to the Effective Time, the Company will
supplement or amend the Company Disclosure Schedule with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in the
Company Disclosure Schedule or which is necessary to correct any information in
a schedule or in any representation and warranty of the Company which has been
rendered inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of the Company contained in this Agreement in
order to determine the fulfillment of the conditions set forth in Article VI,
the Company Disclosure Schedule shall be deemed to include only that information
contained therein on the date of this Agreement and shall be deemed to exclude
any information contained in any subsequent supplement or amendment thereto.
Section 5.10 Change of Control Agreements. The Company has change of
control agreements with the Persons listed in Section 5.10 of the Company
Disclosure Schedule which provide certain benefits upon (a) consummation of the
Merger and/or (b) a termination of employment following the Effective Time.
Purchaser shall take all appropriate steps necessary to, and will, give
reasonable advance notice prior to the acceptance for payment and payment for
Shares tendered in the Offer of its then present intention to continue
employment, or not to continue employment, to each such Person, provided,
however, it is acknowledged that such expression of present intention by
Purchaser does not create any rights in favor of any such Person and shall not
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constitute a binding commitment of Purchaser. The Company has previously made
written disclosure to Purchaser of the total estimated amount payable to such
Persons for all obligations owed to them under all contractual and Company
Benefit Plan arrangements assuming that the employment of each such Person was
terminated during the year in which the Effective Time occurred.
ARTICLE VI -- CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect the Merger.
(a) The respective obligations of each party hereto to effect the Merger is
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part to
the extent permitted by applicable law:
(i) Shareholder Approval. Except as provided in Section 1.13, the
Merger and this Agreement shall have been approved and adopted by the
affirmative vote of the shareholders of the Company by the requisite vote.
(ii) Statutes, Court Orders. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or enforced by any court or Governmental Entity of competent
jurisdiction which prohibits, restrains, enjoins or restricts the
consummation of the Merger; and there shall be no order or injunction of a
court of competent jurisdiction in effect precluding consummation of the
Merger.
(iii) Regulatory Approvals. All consents of, filings and registrations
with, and notifications to, all Governmental Entities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by law for
consummation of the Merger shall have expired.
(iv) Consents and Approvals. Each party hereto shall have obtained any
and all consents required for consummation of the Merger (other than those
referred to in Section 6.1(a)(iii)) or for the preventing of any default
under any contract or permit of such party which, if not obtained or made,
is reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect or a Purchaser Material Adverse Effect, as
applicable.
(v) Purchase of Shares in Offer. Acquisition Sub shall have purchased
Shares of Company Common Stock sufficient to meet the Minimum Condition
pursuant to the Offer.
(b) The obligation of the Company to effect the Merger is also subject to
the satisfaction (or waiver) at or prior to the Closing of each of the following
additional conditions:
(i) Accuracy of Representations and Warranties. All representations
and warranties made by Purchaser and Acquisition Sub herein shall be true
and correct in all material respects (except for representations and
warranties qualified by materiality or Purchaser Material Adverse Effect
which shall be correct in all respects) when made and as
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of the Effective Time, with the same force and effect as though such
representations and warranties had been made on and as of the Effective
Time, except for changes permitted or contemplated by this Agreement and
except for representations and warranties that are made as of a specified
date or time, which shall be true and correct in all material respects
(except for representations and warranties qualified by materiality or
Purchaser Material Adverse Effect which shall be correct in all respects)
only as of such specific date or time.
(ii) Compliance with Covenants. Purchaser and Acquisition Sub shall
have performed in all material respects all obligations and agreements, and
complied in all material respects with all covenants, contained in this
Agreement to be performed or complied with by them prior to or as of the
Effective Time.
(iii) Officer's Certificate. The Company shall have received a
certificate of Purchaser and Acquisition Sub, dated as of the Closing Date,
signed by an executive officer of each of Purchaser and Acquisition Sub to
evidence satisfaction of the conditions set forth in Section 6.1(b)(i) and
(ii).
(c) The respective obligations of Purchaser and Acquisition Sub to effect
the Merger is also subject to the satisfaction (or waiver) at or prior to the
Closing of each of the following additional conditions:
(i) Accuracy of Representations and Warranties. All representations
and warranties made by the Company herein shall be true and correct in all
material respects (except for representations and warranties qualified by
materiality or Company Material Adverse Effect which shall be correct in
all respects and except that the representations and warranties set forth
at Section 3.2(a) shall be true and correct in all respects) when made and
as of the Effective Time, with the same force and effect as though such
representations and warranties had been made on and as of the Effective
Time, except for changes permitted or contemplated by this Agreement and
except for representations and warranties that are made as of a specified
date or time, which shall be true and correct in all material respects
(except for representations and warranties qualified by materiality or
Company Material Adverse Effect which shall be correct in all respects)
only as of such specific date or time.
(ii) Compliance with Covenants. The Company shall have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants, contained in this Agreement to be
performed or complied with by it prior to or as of the Effective Time
(except that the covenant set forth in Section 5.1(a) shall have been
performed in all respects).
(iii) Officer's Certificate. Purchaser shall have received (A) a
certificate of the Company, dated as of the Closing Date, signed by an
executive officer of the Company, to evidence satisfaction of the
conditions set forth in Section 6.1(c)(i) and (ii) and (B) certified copies
of resolutions duly adopted by the Board and the Company's shareholders
evidencing
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the taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
Merger.
(iv) Rights Agreement. A Triggering Event (as defined in the Rights
Agreement) shall not have occurred, and the Rights shall not have become
(A) non-redeemable or (B) exercisable for capital stock of Purchaser upon
consummation of the Merger.
ARTICLE VII -- TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time notwithstanding any
requisite approval and adoption of this Agreement and approval of the Merger by
the shareholders of the Company:
(a) by mutual written consent duly authorized by the Board of
Directors of the Company and the Board of Directors of each of Acquisition
Sub and Purchaser; or
(b) by Purchaser or the Company if (i) any court or Governmental
Entity of competent jurisdiction shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement (including the
denial of any consent of a Governmental Entity required for consummation of
the Merger) and such order, decree, ruling or other action is or shall have
become final and nonappealable or (ii) if shares of Company Common Stock
shall not have been purchased pursuant to the Offer on or prior to October
31, 2000; provided, however, that the right to terminate this Agreement
under this Section 7.1(b)(ii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of Acquisition Sub to purchase shares of
Company Common Stock pursuant to the Offer on or before such date; or
(c) by Purchaser if neither Purchaser nor Acquisition Sub is in
material breach of this Agreement and either (i) prior to the purchase of
shares of Company Common Stock pursuant to the Offer, the Board shall have
withdrawn, modified, failed to reaffirm or changed (including by amendment
of the Company's Schedule 14D-9) its recommendation or approval in respect
of the Offer, this Agreement or the Merger, or shall have adopted any
resolution to effect the foregoing, or shall have affirmed, recommended or
authorized entering into any other Acquisition Proposal; or (ii) prior to
the purchase of shares of Company Common Stock pursuant to the Offer, it
shall have been publicly disclosed, or Purchaser shall have learned, that
any person, entity or "group" (as that term is defined in Section 13(d)(3)
of the Exchange Act), other than Purchaser or its affiliates or any group
of which any of them is a member, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
more than 14.9% of any class or series of capital stock of the Company
(including the Shares), through the acquisition of stock, the formation of
a group or otherwise, or shall have been granted an option, right, or
warrant, conditional
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or otherwise, to acquire beneficial ownership of more than 14.9% of any
class or series of capital stock of the Company (including the Shares); or
(d) by Purchaser if, prior to the purchase of Company Common Stock
pursuant to the Offer, there shall have been a breach of the Company's
representation set forth in Section 3.2(a) or covenant set forth in Section
5.1(c) or a material breach of any of the Company's other representations,
warranties or covenants which breach cannot be or has not been cured within
ten (10) days following receipt of written notice of such breach; or
(e) by the Company if, prior to the purchase of Shares sufficient to
meet the Minimum Condition pursuant to the Offer, there shall have been a
material breach of any of Purchaser's representations, warranties or
covenants which breach cannot be or has not been cured within ten (10) days
of the receipt of written notice thereof; or
(f) by the Purchaser if, due to an event that if occurring after the
commencement of the Offer, would result in a failure to satisfy any of the
conditions set forth in Annex B hereto, Acquisition Sub shall have failed
to commence the Offer on or prior to the tenth (10th) business day after
the public announcement of this Agreement (the "Offer Deadline"); provided
that Purchaser may not terminate this Agreement pursuant to this Section
7.1(f) if Purchaser or Acquisition Sub (x) is in material breach of this
Agreement or (y) has not exercised such right by the close of business on
or before the tenth (10th) business day following the Offer Deadline; or
(g) by the Company if, prior to the purchase of Shares sufficient to
meet the Minimum Condition by Acquisition Sub pursuant to the Offer, a
Person or group (other than Purchaser or any of its affiliates) shall have
made a bona fide Acquisition Proposal that the Board or the Special
Committee determines in good faith that failing to accept or recommend to
the Company's shareholders such Acquisition Proposal could reasonably be
determined to constitute a breach of the fiduciary duties of the Board or
the Special Committee to the Company's shareholders under applicable law
after consultation with (i) a nationally recognized investment banking firm
regarding the financial superiority of the Acquisition Proposal and (ii)
legal counsel; provided that such termination under this clause (g) shall
not be effective until payment of the fee required by Section 7.3 hereof;
or
(h) by Purchaser if Acquisition Sub shall have terminated the Offer,
or the Offer shall have expired without Acquisition Sub purchasing any
shares of Company Common Stock thereunder; provided that Purchaser may not
terminate this Agreement pursuant to this Section 7.1(h) if (x) Acquisition
Sub has failed to purchase shares of Company Common Stock in the Offer in
violation of the material terms thereof or (y) Acquisition Sub has not
exercised such right by the close of business on or before the fifth (5th)
business day following the termination or expiration of the Offer in
accordance with its terms; or
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(i) by the Company if Acquisition Sub or any of its affiliates shall
have failed to commence the Offer on or prior to the Offer Deadline other
than due to an event that if occurring after the commencement of the Offer,
would result in a failure to satisfy any of the conditions set forth in
Annex B hereto; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.1(i) if the Company is in material breach of
this Agreement.
Section 7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or shareholders, other
than (a) the provisions of this Section 7.2 and Sections 5.3(b), 7.3 and Article
VIII hereof and (b) to the extent that, and for so long as, Acquisition Sub may
exercise the Option under the Tender and Option Agreement, the Company shall not
take action so as to make the Rights Agreement or the restrictions of Sections
14-2-1110 through 14-2-1133 of the GBCC applicable thereto. Nothing contained in
this Section 7.2 shall relieve any party from liability for any breach of this
Agreement.
Section 7.3 Fees and Expenses. (a) Except as otherwise provided in this
Section 7.3, each of the parties hereto shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with this Agreement and
the Merger, including filing and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants and counsel, except that the filing fee in connection with any HSR
Act filing or any other required consent or approval shall be shared equally by
Purchaser and Company.
(b) Notwithstanding the foregoing:
(i) if this Agreement is terminated by Purchaser pursuant to
Section 7.1(d),
(ii) if the Merger is not consummated as a result of the failure of
Company to satisfy any of the conditions set forth in
Section 6.1(c), or
(iii) if this Agreement is terminated by Purchaser pursuant to
Section 7.1(c)(i) or the Company pursuant to Section 7.1(g),
then Company shall promptly pay Purchaser the sum of (A) $1 million, which
amount represents the best estimate by the parties hereto of the value of
the management time, overhead, opportunity costs and other unallocated
costs of Purchaser incurred by or on behalf of Purchaser in connection with
this Agreement and the Merger which cannot be calculated with certainty,
plus (B) all the out-of-pocket costs and expenses of Purchaser, including
costs of counsel, investment bankers, actuaries and accountants up to but
not exceeding an additional $2 million in the aggregate.
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(c) If no payment is due under Section 7.3(b) and the Agreement is
terminated or the Merger is not consummated, then the Company shall
promptly pay Purchaser all the out-of-pocket costs and expenses of
Purchaser, including costs of counsel, investment bankers, actuaries and
accountants, up to but not exceeding $2 million in the aggregate unless
(i) the Agreement is terminated pursuant to Section 7.1(a) or 7.1(e),
or
(ii) the Merger is not consummated because the conditions set forth at
Section 6.1(b) are not satisfied.
(d) If, after the date of this Agreement and within twelve (12) months
following
(i) any termination of this Agreement
(1) by Purchaser pursuant to Section 7.1(c) or 7.1(d), or
(2) by Company pursuant to Section 7.1(g), or
(ii) failure to consummate the Merger by reason of any failure of
Company to satisfy the conditions enumerated in Section 6.1(c),
any third party shall acquire, merge with, combine with, purchase a
significant amount of assets of (including a significant amount of assets
of, or the stock of, any Subsidiary), or engage in any other business
combination with, or purchase any equity securities involving an
acquisition of 20% or more of the voting stock of, the Company on terms
that are financially superior to those of the Offer, or enter into any
letter of intent or agreement to do any of the foregoing (collectively, a
"Superior Business Combination"), such third party that is a party to the
Superior Business Combination shall pay to Purchaser, (A) upon execution of
such letter of intent or agreement relating to such Superior Business
Combination, the sum of (i) $1 million, which amount represents the best
estimate by the parties hereto of the value of the management time,
overhead, opportunity costs and other unallocated costs of Purchaser
incurred by or on behalf of Purchaser in connection with this Agreement and
the Offer which cannot be calculated with certainty, plus (ii) all the
out-of-pocket costs and expenses of Purchaser, including costs of counsel,
investment bankers, actuaries and accountants up to but not exceeding an
additional $2 million in the aggregate, and (B) upon the consummation of
any Superior Business Combination that occurs within the later of 24 months
from the date hereof or 12 months from the date of such letter of intent or
agreement, an amount in cash equal to the product of $8 million and the
percentage of the Company assets or equity securities acquired in the
Superior Business Combination, which sum represents additional compensation
for Purchaser's loss (including expenses) as a result of this Agreement not
being consummated. The amounts owed under the preceding clauses (A) and (B)
shall be reduced by any amounts previously paid to Purchaser pursuant to
subsection (b), (c) or (d) of this Section 7.3. In no event shall the
aggregate amount paid to Purchaser
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pursuant to all provisions of this Section 7.3 exceed $8 million. In the
event such third party shall refuse to pay such amounts within ten days of
demand therefor by Purchaser, the amounts shall be an obligation of Company
and shall be paid by Company promptly upon notice to Company by Purchaser.
(e) Nothing contained in this Section 7.3 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a party hereto
of the terms of this Agreement or otherwise limit the rights of the nonbreaching
party.
Section 7.4 Amendment. Subject to applicable law, this Agreement may be
amended by action taken by the Company and Purchaser at any time before or after
approval of the Merger by the shareholders of the Company but, after any such
approval, no amendment shall be made which requires the approval of such
shareholders under applicable law without such approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of the parties
hereto.
Section 7.5 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document,
certificate or writing delivered pursuant hereto or (c) waive compliance by the
other party with any of the agreements, covenants or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE VIII -- MISCELLANEOUS
Section 8.1 Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time.
Section 8.2 Entire Agreement; Assignment. This Agreement (a) constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
(including, without limitation, that certain Confidentiality Agreement, as
amended, between the Company and an affiliate of Purchaser) and (b) shall not be
assigned by operation of law or otherwise.
Section 8.3 Validity. If any provision of this Agreement, or the
application thereof to any Person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other Persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
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Section 8.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing (including by facsimile with
written confirmation thereof) and unless otherwise expressly provided herein,
shall be delivered during normal business hours by hand, by Federal Express,
United Parcel Service or other nationally recognized overnight commercial
delivery service, or by facsimile notice, confirmation of receipt received,
addressed as follows, or to such other address as may be hereafter notified by
the respective parties hereto:
(a) If to Purchaser or Acquisition Sub:
Guardian Fiberglass, Inc.
0000 Xxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx, Chairman
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx PLLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: D. Xxxxxxx XxXxxxxx
Facsimile No.: (000) 000-0000
(b) If to the Company:
Xxxxxxx Xxxxxx Building Products, Inc.
00000 Xxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxx, Chairman and CEO
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxx, Esq.
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxx Building Products, Inc.
00000 Xxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx, Vice President and General Counsel
Facsimile No.: (000) 000-0000
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Section 8.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without regard to
the principles of conflicts of law thereof. The parties hereto hereby agree and
consent to be subject to the exclusive jurisdiction of the United States
District Court for the District of Georgia in any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the Merger. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by law, (a) any objection
that it may now or hereafter have to laying venue of any suit, action or
proceeding brought in such court and (b) any claim that any suit, action or
proceeding brought in such court has been brought in an inconvenient forum.
Section 8.6 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 8.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Section 5.6 and this Article VIII,
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.
Section 8.8 Signatures. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement. Copies of signatures transmitted
via facsimile shall constitute original signatures for all purposes of this
Agreement.
Section 8.9 Definitions. For purposes of this Agreement, the term
"knowledge" shall mean with respect to the Company the actual knowledge of the
executive officers of the Company and the term "affiliate(s)" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act. When a reference is made in
this Agreement to an Article, Section, Exhibit or Schedule, such reference shall
be to an Article, Section, Exhibit or Schedule to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation."
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
XXXXXXX XXXXXX BUILDING PRODUCTS, INC.
By: /s/ XXXXXX X. XXXX
-----------------------------------
Name: Xxxxxx X. Xxxx
---------------------------------
Title: Chairman & CEO
---------------------------------
GUARDIAN FIBERGLASS, INC.
By: /s/ XXXXX X. XXXXX
-----------------------------------
Name: Xxxxx X. Xxxxx
---------------------------------
Title: Chairman
---------------------------------
CAB MERGER CORP.
By: /s/ XXXXX X. XXXXX
-----------------------------------
Name: Xxxxx X. Xxxxx
---------------------------------
Title: Chairman
---------------------------------
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ANNEX B
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and in addition to (and not
in limitation of) Acquisition Sub's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Acquisition Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Acquisition Sub's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may terminate the
Offer as to any Shares not then paid for, if (i) the applicable waiting period
under the HSR Act has not expired or terminated prior to the expiration of the
Offer, (ii) the Minimum Condition has not been satisfied or waived or (iii) if
at any time on or after April 28, 2000, and before the time for payment for
Shares, any of the following events shall exist:
(a) any domestic or foreign Federal, state or local governmental,
regulatory or administrative agency or authority or legislative body or
commission shall have instituted any action, proceeding, application, claim
or suit, or shall have promulgated, entered, enforced, enacted, issued or
made expressly applicable to the Offer or the Merger any statute, rule,
regulation, judgment, order or injunction which directly or indirectly (1)
challenges, seeks to make illegal, prohibits or makes illegal, or imposes
any material adverse limitations on, Purchaser's or Acquisition Sub's
ownership or operation (or that of any of their respective subsidiaries or
affiliates) of all or a material portion of the businesses or assets of
Purchaser or Acquisition Sub taken as a whole, or of the Company or its
Subsidiaries taken as a whole, or compels Purchaser or Acquisition Sub or
their affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or its subsidiaries, taken as a whole,
(2) challenges, seeks to make illegal, prohibits or makes illegal the
acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer or the Merger, (3) restricts the ability of
Acquisition Sub, or renders Acquisition Sub unable, to accept for payment,
pay for or purchase some or all of the Shares, (4) imposes material
limitations on the ability of Purchaser or Acquisition Sub to exercise full
rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by Acquisition Sub on all matters presented to
the Company's shareholders, (5) seeks to obtain or obtains material damages
as a result of the transactions contemplated by the Offer or the Merger, or
(6) seeks to require divestiture by Purchaser or Acquisition Sub or any of
their subsidiaries or affiliates of any Shares, and in the case of (5) or
(6) above, is likely to have a Company Material Adverse Effect, provided
that Acquisition Sub shall have used reasonable efforts to cause any such
judgment, order or injunction to be vacated or lifted;
(b) the Company shall have breached its representations and
warranties, or failed to perform or comply with any of its covenants and
agreements contained in the Merger Agreement, which breach or failure shall
have a Company Material Adverse Effect;
B-1
63
(c) the Merger Agreement shall have been terminated in accordance with
its terms;
(d) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that any person, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Purchaser or its affiliates or
any group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 14.9% of any class or series of capital stock of the
Company (including the Shares), through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted an option,
right or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 14.9% of any class or series of capital stock of the Company
(including the Shares); or (ii) any person or group shall have entered into
a definitive agreement or agreement in principle with the Company with
respect to an Acquisition Proposal or other business combination with the
Company;
(e) the Company's Board of Directors shall have withdrawn, modified,
failed to reaffirm or changed (including by amendment of the Schedule
14D-9) its approval or recommendation of the Offer, this Agreement or the
Merger in a manner adverse to Purchaser or Acquisition Sub or shall have
adopted any resolution to effect the foregoing, or shall have affirmed,
recommended or authorized entering into any other Acquisition Proposal,
which in the judgment of Acquisition Sub, in any such case, and regardless of
the circumstances (including any action or inaction by Purchaser or Acquisition
Sub other than a material breach of this Agreement by Purchaser or Acquisition
Sub) giving rise to such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Acquisition Sub and
may be waived by Acquisition Sub, in whole or in part, at any time and from time
to time in the discretion of Acquisition Sub. The failure by Acquisition Sub at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
Should the Offer be terminated pursuant to any of the foregoing provisions,
all tendered Shares not theretofore accepted for payment shall forthwith be
returned to the tendering shareholders.
B-2
