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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS
THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. 1)1
SPURLOCK INDUSTRIES, INC.
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(Name of Issuer)
COMMON STOCK, NO PAR VALUE
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(Title of Class of Securities)
852190-10-7
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(CUSIP Number)
IRVINE R. SPURLOCK, 125 BANK ST.,
WAVERLY, VIRGINIA 23890; (804) 834-8980
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
DECEMBER 17, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 Pages)
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934, as amended (the "Act"), or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
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<PAGE>
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CUSIP No. 852190-10-7 SCHEDULE 13D Page 2 of 7 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Irvine R. Spurlock
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
Not Applicable
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) |_|
Not Applicable
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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NUMBER OF 7 SOLE VOTING POWER
SHARES 50,000
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8 SHARED VOTING POWER
BENEFICIALLY
3,409,800
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OWNED BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 50,000
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10 SHARED DISPOSITIVE POWER
PERSON WITH
3,359,800
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,409,800
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
Not Applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.2%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Amendment No. 1 to
Schedule 13D
Irvine R. Spurlock
Item 1: Security and Issuer.
No Change
Item 2: Identity and Background.
No Change except to Items 2(b) and 2(c). Mr. Irvine R.
Spurlock ("Mr. Spurlock") is no longer Chairman of the Board,
Chief Executive Officer of the Issuer and Spurlock Adhesives,
Inc., a subsidiary of the Issuer. Mr Spurlock is still
President of both Spurlock Industries, Inc. (the "Issuer") and
Spurlock Adhesives, Inc. The business address of Mr. Spurlock
is 125 Bank Street, Waverly, Virginia 23890.
Item 3: Source and Amount of Funds of Other Consideration.
The Schedule 13D filed in August 30, 1996 is amended by adding
the following: As of April 8, 1998, H. Norman Spurlock, Jr.,
resigned as an officer and director of Spurlock Industries,
Inc. (the "Issuer")and he no longer has an ownership interest
in the Spurlock Family Corporation, the general partner for
the Spurlock Family Limited Partnership. Harold N. Spurlock,
Sr. and Irvine R. Spurlock own the remaining shares of the
stock of the general partner of the limited partnership.
Mr. Irvine Spurlock previously had sole voting power and sole
dispositive power of 70,000 shares of common stock of the
Issuer in addition to 3,339,800 shares where he had shared
voting power and shared dispositive power. It was reported on
the schedule 13D filed August 30, 1996 that Mr. Irvine
Spurlock had 3,364,800 shares of shared voting and dispositive
power since the Spurlock Family Limited Partnership had the
right to acquire that amount of shares. However, 25,000 of the
3,364,800 shares of the common stock of the Issuer to which
the Partnership had a right to acquire were not conveyed to
the Partnership by H. Norman Spurlock, Jr. Consequently, the
Spurlock Family Limited Partnership then owned, and now owns
3,339,800 shares of the Issuer's common stock and Mr. Spurlock
has a beneficial interest (shared voting and dispositive
powers) in those shares. See Item 4 below.
Mr. Irvine Spurlock, as Settlor, established on December 17,
1998 a revocable trust entitled "Declaration of Living Trust
of Irvine R. Spurlock" (hereinafter, the "Trust"). See Exhibit
A attached. The Trustees of the Trust are Irvine R. Spurlock,
David Shane Smith and Lawrence Dieker. Mr. Spurlock conveyed
20,000 shares of the Common Stock of the Issuer he held in his
individual capacity to the Trust without consideration.
Item 4: Purpose of Transaction.
Mr. Irvine Spurlock's purpose in conveying the shares of
Common Stock to the Trust was to facilitate the execution of
the Voting Agreement (noted in Item 4(b) below) and to meet
Borden Chemical, Inc.'s requirements for entering into the
Amended and Restated Agreement and Plan of Merger dated
December 18, 1998 as Amended and Restated on January 25, 1999
(the "Merger Agreement") by and among Borden Chemical, Inc.
("Borden"), SII Acquisition Company and the Issuer. The Trust
gave
Page 3 of 7 Pages
<PAGE>
Borden the assurance that the parties to the Voting Agreement
would not change due to death.
(a) The Spurlock Family Limited Partnership
("Partnership") entered into an agreement in December
1998 which requires the transfer of 225,000 shares of
common stock of the Issuer owned by the Partnership
to Lee Rasmussen. Certain individuals have "put"
rights under the agreement which would require the
Spurlock Family Limited Partnership to purchase
certain shares of stock from the individuals at a
certain price as more specifically provided for in
the agreement attached as Exhibit B. The individuals
with "put" rights are: Lee Rasmussen, Beverly
Dittemore, Jeffrey T. Coats, Ernest Reeves, Christine
Olsen, Sheila Rasmussen, Vernon Rasmussen and Douglas
Richmond (hereinafter the "Rasmussen Group"). The
purpose of the transaction is to settle a lawsuit
filed by the Rasmussen Group disputing certain
actions taken by Harold N. Spurlock, Sr., Irvine R.
Spurlock, and H. Norman Spurlock, Jr. as officers and
directors of the Issuer. See Exhibit B Attached.
(b) Borden Chemical Company, Inc., a Delaware corporation
("Borden") and SII Acquisition Company, a Virginia
Corporation and a wholly owned subsidiary of Borden
entered an Agreement and Plan of Merger on December
18, 1998 with the Issuer which was subsequently
amended and restated on January 25, 1999.
Concurrently with the execution of the Agreement and
Plan of Merger, Mr. Spurlock, Irvine R. Spurlock,
Borden, SII Acquisition Company, The Spurlock Family
Limited Partnership, by its general partner The
Spurlock Family Corporation, Harold N. Spurlock, Sr.,
David Shane Smith and Lawrence Dieker, Trustees U/A
with Harold N. Spurlock, Sr. known as the "Harold N.
Spurlock, Sr. Declaration of Living dated December
17, 1998"; and Irvine R. Spurlock, David Shane Smith
and Lawrence Dieker, Trustees U/A with Irvine R.
Spurlock know as the "Irvine R. Spurlock Declaration
of Trust dated December 17, 1998," entered into a
Voting Agreement, a copy of which is attached hereto
as Exhibit C.
Except as noted above, there are no plans or proposals which
Mr. Irvine R. Spurlock may have which relate to or would
result in:
(a) the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such
as a merger, reorganization or liquidation, involving
the Issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of
assets of the Issuer or any of its subsidiaries;
Page 4 of 7 Pages
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(d) any change in the present board of directors
or management of the Issuer, including any plans or
proposals that change the number or term of directors
or to fill any existing vacancies on the board;
(e) any material change in the present
capitalization or dividend policy of the Issuer;
(f) any other material change in the Issuer's
business or corporate structure;
(g) changes in the Issuer's charter, bylaws or
instruments corresponding thereto or other actions
which may impede the acquisition of control of the
Issuer by any person;
(h) causing a class of securities of the Issuer
to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered
national securities association;
(i) a class of equity securities of the Issuer
to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered
national securities association;
(j) any action similar to any of those
enumerated above.
Item 5: Interest in Securities of the Issuer.
(a) The Aggregate number of shares of Common Stock
beneficially owned by Mr. Spurlock is 3,409,800
including an option to purchase 50,000 shares of the
common stock of the Issuer or 50.2% of issued and
outstanding shares of Common Stock including an
option to purchase 50,000 shares of the common stock
of the Issuer.
(b) Mr. Spurlock has the power to revoke the Trust noted
above and therefore the right to dispose of the
20,000 held in trust, except that unanimous consent
of the trustees is required to dispose of the trust
property until the Expiration Date as defined in the
Voting Agreement noted in Item 4(b) and attached as
Exhibit D. Mr. Spurlock has the shared power to
dispose of 3,339, 800 shares of common stock of the
Issuer held by the Partnership. Consequently, Mr.
Spurlock has the shared dispositive power over
3,359,800 shares of common stock of the Issuer. Mr.
Spurlock possess the shared power to vote 3,409,800
shares of the Common Stock of the Issuer.
(c) As noted in Item 3 above, it was reported on item
5(c) of the schedule 13D filed August 30, 1996, that
the partnership had 3,364,800 shares of shared
Page 5 of 7 Pages
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voting and dispositive power since the Spurlock
Family Limited Partnership had the right to acquire
that amount of shares. However, 25,000 of the
3,364,800 shares of the common stock of the Issuer to
which the Partnership had a right to acquire were not
conveyed to the Partnership by H. Norman Spurlock,
Jr. Consequently, the Spurlock Family Limited
Partnership owns 3,359,800 shares of the Issuer's
common stock. As an officer, director and shareholder
of the Spurlock Family Corporation, the general
partner of the Partnership, Mr. Spurlock has shared
voting and dispositive power over those 3,339,800
shares.
See those transactions listed in Items 3 & 4.
(d) No change
(e) No change
Item 6: Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
See Items 3 & 4 above.
Item 7: Material to be Filed as Exhibits.
Exhibit A - Declaration of Living Trust of Irvine R. Spurlock
dated December 17, 1998.
Exhibit B - Settlement Agreement made in December, 1998
between Lee Rasmussen, et al. and Harold D. Spurlock, Sr.,
Irvine R. Spurlock, H. Norman Spurlock, Jr. and the Spurlock
Family Limited Partnership.
Exhibit C -Voting Agreement dated December 18, 1998 by and
between Borden Chemical, Inc., SII Acquisition Company;
Phillip S. Sumpter, Katherine G. Sumpter, Irvine R. Spurlock,
Harold N. Spurlock, Sr., Spurlock Family Corporation, Spurlock
Family Limited Partnership, the Harold N. Spurlock Declaration
of Living Trust Dated December 17, 1998 and the Irvine R.
Spurlock Declaration of Living Trust Dated December 17, 1998.
Page 6 of 7 Pages
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement on Schedule 13D is
true, complete and correct.
Date: February 28, 1999 /s/ Irvine R. Spurlock
------------------------------------
Irvine R. Spurlock
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (see 18 U.S.C. 1001).
<PAGE>
Exhibit A
DECLARATION OF LIVING TRUST
OF
IRVINE R. SPURLOCK
THIS DECLARATION OF LIVING TRUST is made this 17th day of December,
1998, by and between IRVINE R. SPURLOCK, individually, as Settlor (the
"Settlor"), and IRVINE R. SPURLOCK, DAVID SHANE SMITH and LAWRENCE DIEKER as
Trustees (the "Trustee").
ARTICLE I - NAME OF TRUST
This Trust shall, for convenience, be known as the "IRVINE R. SPURLOCK
DECLARATION OF LIVING TRUST DATED December 17, 1998", and it shall be referred
to as such in any instrument of transfer, deed, assignment, bequest or devise.
ARTICLE II - TRUST PROPERTY
The Settlor hereby declares that the Settlor has transferred to the
Trustee the shares of common stock of Spurlock Industries, Inc. listed in
Schedule "A" attached hereto and made a part hereof by this reference,
hereinafter referred to as "Trust Property" or "Trust Estate." The Trustee does
hereby acknowledge receipt and acceptance of said Trust Property, to be held and
administered by the Trustee, together with any other property which the Trustee
may at any time hereafter hold, acquire or add within the terms of this
<PAGE>
Declaration of Trust and for the uses and purposes and upon the terms and
conditions set forth herein.
ARTICLE III - ADDITIONAL PROPERTY
As long as this Declaration of Trust remains unrevoked, either the
Settlor or any other person, with the consent of the Trustee, may add other
property to the Trust hereby created, by transferring such property to the
Trustee hereunder by deed, assignment or other instruments of transfer or
bequest or devise and, if so added, such property shall be subject to the
provisions hereof, the same as if originally included hereunder.
ARTICLE IV - RIGHTS
AND POWERS RESERVED BY SETTLOR
As long as the Settlor is not adjudicated incompetent by a court of
competent jurisdiction, the Settlor shall have and possess, and hereby reserves
the following rights and powers, to be exercised in writing and effective when
delivered to the Trustee hereunder:
A. To revoke this Declaration of Trust and any Trust established
hereunder in whole or in part, whereupon the Trust Estate or the part thereof
affected thereby shall be distributed as the Settlor shall direct in writing.
B. To change the identity or number, or both, of the Trustees.
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C. To amend this Declaration of Trust in any particular.
D. To withdraw any or all Trust Property from this Declaration of
Trust.
Notwithstanding the above, the Settlor shall not be entitled to
exercise any of the rights or powers provided in this Article IV without the
unanimous consent of the Trustees until the Expiration Date, as that term is
defined in the Voting Agreement described in Article VI hereinafter, a copy of
which is attached hereto as Exhibit "A".
ARTICLE V - INCOME AND
PRINCIPAL DURING LIFETIME OF SETTLOR
During the lifetime of the Settlor and as long as the Settlor is not
adjudicated incompetent by a court of competent jurisdiction, the Trustee shall
pay over to or apply for the benefit of the Settlor, in monthly or other
convenient installments, all of the income of the Trust and such amounts of
principal as the Settlor shall demand in writing; or, in the absence of a
written demand, as the Trustee, in the Trustee's absolute discretion, deems
necessary or desirable to provide for the welfare and happiness of the Settlor.
Notwithstanding the preceding sentence, no stock shall be distributed to the
Settlor without the unanimous consent of the Trustees until the Expiration Date.
In the event that the Settlor should be declared incompetent by a court
of competent jurisdiction, the Trustee shall distribute so much of the income
and principal (subject
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to the restrictions pertaining to distributions of stock set forth above),
within the Trustee's discretion, as the Trustee shall deem necessary to provide
for the proper welfare, happiness, support, maintenance, health and other needs
of the Settlor.
ARTICLE VI - VOTING OF STOCK
This Trust is a party to a certain Voting Agreement dated December 17,
1998, by and between Borden Chemical, Inc., Phillip S. Sumpter, Katherine G.
Sumpter, Irvine R. Spurlock, Harold N. Spurlock, Sr., Harold N. Spurlock, Sr.
Declaration of Living Trust, Spurlock Family Corporation and Spurlock Family
Limited Partnership (the "Voting Agreement") and, as such, the Trustees shall
vote the shares of common stock of Spurlock Industries held by this Trust in
favor of the Merger and the Merger Agreement referred to therein, as required by
the terms of said Voting Agreement.
ARTICLE VII - DISTRIBUTION OF
TRUST ESTATE UPON THE SETTLOR'S DEATH
In the event of the death of the Settlor, the Trustees shall continue
to hold the shares of common stock of Spurlock Industries, Inc. in this Trust
and shall vote said shares in favor of the Merger and the Merger Agreement as
required by the terms of said Voting Agreement. Upon the Expiration date, the
entire remaining Trust estate shall be distributed
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absolutely to the Settlor's spouse, DAPHNE R. SPURLOCK, or if she is then
deceased, to her estate.
ARTICLE VIII - GENERAL PROVISIONS
The provisions of this Article shall apply to any and all Trusts
established hereunder, unless herein provided otherwise:
A. Payment to or for Incompetents or Minors. The Trustee may make
distributions for the benefit of any adult beneficiary hereunder directly to
that beneficiary or to his or her legal guardian, if he or she should be
incompetent, or in direct payment of his or her expenses of the types that the
Trustee is authorized to meet. The Trustee may make payments for the benefit of
any minor beneficiary to his or her natural guardian or to any other person
having care or custody of such minor, or in direct payment of his or her
expenses of the types the Trustee is authorized here to meet. The Trustee shall
not be obligated to see to the application of funds so disbursed, and the
receipt of the payee shall fully protect the Trustee, if the Trustee exercises
due care in selecting the person paid.
B. Restraint on Alienation. No income or principal payable to or
held for any beneficiary shall, while in the possession of the Trustee be
alienated, disposed of, or encumbered in any manner other than by Trustee action
authorized hereby. Throughout the duration of each Trust, no
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beneficiary thereof shall have the power, voluntarily or involuntarily, to sell,
alienate, convey, assign, transfer, mortgage, pledge, or otherwise dispose of or
encumber any principal or income thereof or any interest whatever therein until
physical distribution or payment is made to him or her, and no interest of any
beneficiary in or claim to any Trust assets or benefits shall be subject to the
claims of any of his or her creditors or to judgment, levy, execution,
sequestration, garnishment, attachment, bankruptcy or other insolvency
proceedings, or any other legal or equitable process. Nothing in this paragraph
shall interfere with the exercise of any right or power reserved to the Settlor
or expressly given herein to the Trustee, or any beneficiary.
C. Reliance by Third Parties. No grantee, purchaser, or other
person dealing with the Trustee while the Trustee is purporting to act in such
capacity under any power or authority granted the Trustee herein need inquire
into the initial existence of facts upon which the purported power or authority
depends or into the continued existence of the power, the expediency of the
transaction, or the proper application of the proceeds or other consideration.
D. Rule Against Perpetuities. Each Trust created hereunder shall in
any event terminate twenty-one (21) years after the death of the last survivor
of such of the beneficiaries of such Trust as were living upon the date of the
creation of that Trust and, thereupon, the property held
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in that Trust shall be distributed, discharged of Trust, to the beneficiary or
beneficiaries thereof.
E. Situs of Trust. This Declaration of Trust has been accepted by
the Trustee in the State of New York, and it shall be construed and regulated
and all rights under it shall be governed by the laws of the State of New York.
ARTICLE IX - TRUSTEES
A. Appointment of Trustee. IRVINE R. SPURLOCK, DAVID SHANE SMITH
and LAWRENCE DIEKER are hereby appointed as CoTrustees of the Trusts created
hereunder. Any one of the Trustees named herein may, at the unanimous direction
of the remaining Trustees, act on their behalf to bind the Trust and execute
such documents as may be necessary to carry out the intent of this Trust. The
Settlor recognizes that LAWRENCE DIEKER when acting as a Trustee may have
conflicts of interest based on his affiliation with Borden Chemical, Inc. The
Settlor hereby waives any conflicts LAWRENCE DIEKER (or any Successor Co-Trustee
designated by Borden Chemical, Inc. Pursuant to paragraph B. of this Article)
might have in serving as a Trustee hereunder.
B. Appointment of Successor Co-Trustees. In the event IRVINE R.
SPURLOCK, for any reason cannot serve as Trustee (including death and
incapacity), DAVID SHANE SMITH and LAWRENCE DIEKER shall serve as Successor
Co-Trustees hereunder. In the event LAWRENCE DIEKER, for any reason cannot serve
as Trustee, Settlor agrees to name as Successor CoTrustee any individual or
entity designated by Borden Chemical, Inc. to serve in place of LAWRENCE DIEKER.
In the event DAVID SHANE SMITH is unable to serve as Trustee, the Settlor hereby
designates HUGH M. FAIN, III as Successor CoTrustee.
C. Waiver of Bond. No Trustee appointed hereunder shall be required
to furnish any bond or other security in any jurisdiction for the faithful
performance of the Trustee's duties as such, the same being expressly waive
hereby.
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ARTICLE X - POWERS OF TRUSTEE
The Trustee or their successors, in their discretion and without any
leave or order of Court or other judicial proceedings and without bond, shall
have all powers provided to such fiduciaries under New York law.
ARTICLE XI - DEFINITIONS
Whenever used in this Declaration of Trust unless the context of any
passage thereof requires otherwise, the following definitions shall apply:
A. The term "Settlor" refers to IRVINE R. SPURLOCK.
B. The term "Trustee" refers to the singular or multiple Trustee;
or, upon the death of Settlor or upon his adjudication of incompetency by a
Court of competent jurisdiction to any successor or alternative trustee or their
successors.
C. The term "Trust Estate" refers to the property itemized and
described in Schedule "A" attached hereto, which the Settlor acknowledges he has
transferred, delivered, assigned and conveyed to the Trustees, together with
such other property that hereinafter may be transferred, assigned, conveyed,
bequeathed or devised to the Trustees by the Settlor or any other person,
including the proceeds from any insurance policies which are payable to the
Trustee.
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D. The term "income" shall mean net income, after the payment of
all Trust administration expenses, Trustees fees, and taxes other than
beneficiary income taxes.
E. The term "health" shall be construed to include medical, dental,
hospital, drug and nursing costs, as well as all expenses of invalidism and
costs of medically prescribed equipment and travel.
F. The term "maintenance, care and support" shall mean the
maintenance and support of the income beneficiaries, in accordance with their
accustomed manner of living.
G. The term "issue" shall mean descendants by blood and persons
conceived but not yet born.
ARTICLE XII - CONSTRUCTION OF DECLARATION
The headings and subheadings used throughout this Declaration of Trust
are for convenience only and have no significance in the interpretation of the
body of this Declaration of Trust, and the Settlor directs that they be
disregarding in construing the provisions of this Declaration of Trust. This
Declaration of Living Trust may be executed in any number of counterparts, each
of which shall be deemed an original. Facsimile signatures shall be binding as
originals and, in the event of facsimile signatures, the signatories promise and
agree to execute and deliver any additional instruments or pages with original
signatures, and to perform
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<PAGE>
any acts which may be necessary or reasonably necessary in order to give full
effect to this Declaration of Living Trust.
IN WITNESS WHEREOF, I, IRVINE R. SPURLOCK, as Settlor of the foregoing
Declaration of Trust, have hereunto set my hand and seal this 17th day of
December, 1998.
Signed, sealed and delivered
in the presence of:
/s/
- ----------------------------
/s/
- ---------------------------- /s/ IRVINE R. SPURLOCK
-----------------------------(SEAL)
IRVINE R. SPURLOCK, Settlor
COMMONWEALTH OF VIRGINIA
CITY/COUNTY OF Sussex , to-wit:
I HEREBY CERTIFY that on this day of before me, an officer duly
authorized in the State and City aforesaid to take acknowledgements, personally
appeared IRVINE R. SPURLOCK, to me known to be the person described in and who
executed the foregoing instrument as Settlor, and he acknowledged before me that
he executed the same for the purpose therein expressed.
WITNESS my hand and official seal in the City and State last aforesaid
this 17th day of December, 1998.
/s/ Peggy K. Seward
------------------------------------
NOTARY PUBLIC
My commission expires: 2-28-2002
------------------------------------
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<PAGE>
ACCEPTANCE OF TRUSTEE
The undersigned hereby accepts the Trusts imposed by the foregoing
Trust Agreement and agrees to serve as Trustee, upon the terms and conditions
therein set forth. Signed, sealed and delivered in the presence of:
Signed, sealed and delivered
in the presence of:
/s/
- ----------------------------
/s/
- ---------------------------- /s/ IRVINE R. SPURLOCK
-----------------------------(SEAL)
IRVINE R. SPURLOCK, Settlor
COMMONWEALTH OF VIRGINIA;
CITY/COUNTY OF Sussex , to-wit:
I HEREBY CERTIFY that on this day before me, an officer duly authorized
in the State and City aforesaid to take acknowledgements, personally appeared
IRVINE R. SPURLOCK, to me known to be the person described in and who executed
the foregoing instrument as Trustee, and he acknowledged before me that he
executed the same for the purposes therein expressed.
WITNESS my hand and official seal in the City and State last aforesaid
this 17th day of December, 1998.
/s/ Peggy K. Seward
------------------------------------
NOTARY PUBLIC
My commission expires: 2-28-2002
------------------------------------
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Signed, sealed and delivered
in the presence of:
/s/
- ----------------------------
/s/
- ---------------------------- /s/ DAVID SHANE SMITH
-----------------------------(SEAL)
DAVID SHANE SMITH, Trustee
COMMONWEALTH OF VIRGINIA;
CITY/COUNTY OF Richmond , to-wit:
I HEREBY CERTIFY that on this day before me, an officer duly authorized
in the State and City aforesaid to take acknowledgements, personally appeared
DAVID SHANE SMITH, to me known to be the person described in and who executed
the foregoing instrument as Trustee, and he acknowledged before me that he
executed the same for the purposes therein expressed.
WITNESS my hand and official seal in the City and State last aforesaid
this 17th day of December, 1998.
/s/
---------------------------------
NOTARY PUBLIC
My commission expires: 31 March 2002
---------------------------------
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<PAGE>
Signed, sealed and delivered
in the presence of:
/s/
- ----------------------------
/s/ /s/ LAWRENCE DIEKER
- ---------------------------- -----------------------------(SEAL)
LAWRENCE DIEKER, Trustee
STATE OF OHIO;
CITY/COUNTY OF , to-wit:
I HEREBY CERTIFY that on this day before me, an officer duly authorized
in the State and City aforesaid to take acknowledgements, personally appeared
LAWRENCE DIEKER, to me known to be the person described in and who executed the
foregoing instrument as Trustee, and he acknowledged before me that he executed
the same for the purposes therein expressed.
WITNESS my hand and official seal in the City and State last aforesaid
this day of December, 1998.
/s/
------------------------------------
NOTARY PUBLIC
My commission expires:
------------------------------------
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<PAGE>
SCHEDULE "A"
TO THE FOREGOING DECLARATION OF LIVING TRUST OF
IRVINE R. SPURLOCK
1. 20,000 shares of common stock of Spurlock Industries, Inc.
/s/
- ---------------------------------
/s/ /s/ IRVINE R. SPURLOCK
- ---------------------------------- ----------------------------(SEAL)
IRVINE R. SPURLOCK
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<PAGE>
Exhibit B
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT, made this 15th day of December, 1998, is by
and between LEE RASMUSSEN, BEVERLY DITTEMORE, JEFFREY T. COATS, ERNEST REEVES,
CHRISTINE OLSEN, SHEILA RASMUSSEN, VERNON RASMUSSEN and DOUGLAS RICHMOND
(collectively hereinafter the "Rasmussen Group"), HAROLD N. SPURLOCK, SR.,
IRVINE R. SPURLOCK and H. NORMAN SPURLOCK, JR. (the "Spurlocks") and THE
SPURLOCK FAMILY LIMITED PARTNERSHIP, a Virginia limited partnership (hereinafter
the "SFLP").
WHEREAS, the Rasmussen Group consists of eight individuals who own
common stock and, as to some members of the Rasmussen Group, common stock
options, in a Virginia corporation known as SPURLOCK INDUSTRIES, INC. (the
"Corporation"); and
WHEREAS, the Spurlocks are limited partners of the SFLP and are also
current or former Officers and/or Directors of the Corporation; and
WHEREAS, the Rasmussen Group and the Spurlocks are currently engaged in
a dispute with respect to certain actions undertaken by the Spurlocks in their
capacities as Officers and/or Directors of the Corporation; and
WHEREAS, the Rasmussen Group has filed a Complaint in the United States
District Court for the District of Colorado (Civil
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Action No. 97-D-2214) in which the Rasmussen Group seeks, on behalf of
themselves and on behalf of the Corporation and its shareholders, a money
judgment and other relief as set forth therein against the Spurlocks and other
parties (the "Litigation"); and
WHEREAS, the Spurlocks dispute the allegations contained in the
Litigation; and
WHEREAS, the parties hereto have reached an agreement that will settle
all outstanding claims that exist between the Rasmussen Group and the Spurlocks.
NOW, THEREFORE, the parties hereto execute this Settlement Agreement to
provide for the settlement of any and all claims against the Spurlocks by the
Rasmussen Group; to provide for the dismissal with prejudice of the Litigation;
and to provide for the execution of a Mutual Release by and between the
Rasmussen Group, the Spurlocks and the SFLP.
W I T N E S S E T H:
1. Dismissal of Pending Lawsuit. Upon the approval of the
settlement of the derivative claims asserted in the Litigation by the Court, and
by the Corporation's shareholders, as required by the Court, the Rasmussen Group
agree to execute appropriate
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documents, including a Final Order of Dismissal (the "Order"), which may need to
be filed with the United States District Court for the District of Colorado (the
"Court") to provide for the dismissal with prejudice of the Litigation. In the
event such an Order is not entered by the Court, or said Order does not become
final as set forth hereinbelow, this Settlement Agreement shall be null and
void.
2. Conveyance of Stock to Lee Rasmussen. Subject to the approval of
this Settlement Agreement by the Corporation, on or before the tenth business
day after the day upon which the Order shall have become final (i.e., the tenth
business day after date of expiration of the applicable appeal period with
respect to the Order), the SLFP shall convey and deliver to Lee Rasmussen, free
and clear of any liens or encumbrances, 225,000 shares of the Corporation's
common stock which are presently owned by the SFLP.
3. "Puts" of Stock for Members of Rasmussen Group. Upon the earlier
of: (a) the one year anniversary of the tenth business day after the day upon
which the Order shall have become final, or (b) the disbursal of the proceeds
derived from a sale of the Corporation (or substantially all of its operating
assets) to its shareholders, the following members of the Rasmussen Group shall
have the right to "put" to the SFLP, at a price of $2.50 per share,
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the number of shares of common stock in the Corporation owned by such
individuals as of the execution of this Agreement and listed opposite their
names:
BEVERLY DITTEMORE - 1,500 shares
JEFFREY T. COATS - 4,000 shares
ERNEST REEVES - 4,825 shares
CHRISTINE OLSEN - 6,000 shares
SHEILA RASMUSSEN - 9,000 shares
VERNON RASMUSSEN - 26,500 shares
DOUGLAS RICHMOND - 170,648 shares
LEE RASMUSSEN - 837,783 shares
The "put" rights described herein relate only to the shares of stock
identified herein (the "Identified Shares") so that should any of the
individuals listed above elect to sell, assign or otherwise transfer any of the
Identified Shares prior to exercising their "put" rights, such "put" rights
shall expire as to any such Identified Shares that have been sold, assigned or
otherwise transferred. In the event the "put" rights are exercised upon a
disbursal of proceeds from a sale as described in subparagraph (b) herein, then
the obligation of the SFLP shall be limited to paying the difference between the
price per share from the sale transaction received by the individuals listed
above as to their Identified Shares and $2.50 per share. Upon the election of
any of the Rasmussen Group to exercise any of their "puts" pursuant to
subparagraph (a) herein, the SFLP shall pay $2.50 per share for any
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such shares "put" to the SFLP, any such shares shall be transferred to the SFLP
and the transferring member of the Rasmussen Group shall warrant and represent
that the shares of stock being "put" to the SFLP are not encumbered in any way.
No more than twenty five percent (25%) of the total shares owned by any of the
above individuals may be "put" to the SFLP pursuant to subparagraph (a) herein
during any one calender quarter. To the extent that any portion of such 25% is
not "put" to the SFLP during a particular calender quarter, such unused portion
may be carried over to succeeding calender quarters so that a cumulative
percentage of shares may be "put" to the SFLP.
4. Warranties. With respect to any shares of stock conveyed and
delivered to Lee Rasmussen hereunder, and with respect to any "puts" conveyed
and delivered to the Rasmussen Group hereunder, the parties hereto represent,
acknowledge and agree that:
(a) Lee Rasmussen, and all of the members of the Rasmussen
Group, are acquiring the shares and puts as an investment for their own
accounts, as principals, and not with a view towards the resale or distribution
thereof; they have no intention, agreement or arrangement to divide their
interests in the shares or puts with others or to assign, transfer or otherwise
dispose of any
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or all of the shares or puts unless and until the shares and puts are registered
or an exemption from such registration is available under applicable federal and
state securities laws.
(b) Lee Rasmussen, and all members of the Rasmussen Group,
either alone or together with their representatives, have such knowledge and
experience in financial and business matters that they are capable of evaluating
the Corporation and the merits and risks associated with ownership of the shares
and puts.
(c) Neither the Corporation, nor the Spurlocks, nor the
SFLP, nor any person acting on behalf of them have made any offer of the shares
or puts by means of any form of general solicitation or general advertising.
(d) Lee Rasmussen and all other members of the Rasmussen
Group have been furnished with a copy of the Corporation's Form 10- K for the
fiscal year ended December 31, 1997, and copies of the Corporation's Form 10-Q
for the quarters ended March 31, 1998 and June 30, 1998, and have been afforded
the opportunity to obtain any additional information necessary to make an
informed decision regarding ownership of the shares and puts.
(e) Lee Rasmussen, and all other members of the Rasmussen
Group, agree that the stock certificates representing their shares will bear a
restrictive legend prohibiting transfers
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thereof except in compliance with applicable federal and state securities laws
and will not be transferred of record except upon adequate evidence of
compliance therewith. The Corporation may require that Lee Rasmussen, and all
other members of the Rasmussen Group, provide the Corporation with an opinion of
counsel satisfactory to the Corporation that the transfers of stock and puts as
contemplated herein comply with applicable federal and state securities laws.
Stop transfer instructions will be issued to the Corporation's transfer agent
with respect to the Shares.
(f) Each member of the Rasmussen Group hereby
unconditionally releases the Spurlocks and the SFLP from any and all liability
that may arise out of the transfer and conveyance of the Corporation's common
stock hereunder or the fulfillment of the obligations of the SFLP under this
Agreement relating to a put of those securities by any member of the Rasmussen
Group.
5. Execution of Mutual Release of All Claims. Simultaneous with the
execution of this Settlement Agreement, the Rasmussen Group, the Spurlocks and
the SFLP shall execute a Mutual Release of All Claims identical in form and
substance to that certain Mutual Release attached hereto as Exhibit "A".
6. No Admission. This Settlement Agreement shall not be construed
as or deemed to be evidence of any admission on the part
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of the Spurlocks or the SFLP, or any of its partners, of any liability or
wrongdoing whatsoever, or of the truth of the averments made by the Rasmussen
Group in the Litigation, or an admission of any lack of merit in their defenses,
nor shall this Settlement Agreement, be offered or received in evidence for any
purpose other than for the purposes of the settlement and its effectuation and
the Order which it contemplates, and, without limitation, it shall not be used
as an admission of any wrongful or illegal activity on the part of any person or
of any liability whatsoever by any member of the SFLP, or as an admission of
damage to any person.
7. Applicable Law. This Settlement Agreement shall be construed in
accordance with the laws of the Commonwealth of Virginia.
8. Binding Effect. This Settlement Agreement shall be binding upon
each member of the Rasmussen Group, the Spurlocks and the SFLP, their successors
and assigns. This Settlement Agreement shall inure to the benefit of the parties
hereto, their respective heirs, executors, administrators, personal
representatives, successors and assigns.
9. Other Documents. Each party hereto promises and agrees to
execute and deliver any instruments and to perform any acts
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which may be necessary or reasonably requested in order to give full effect to
this Settlement Agreement.
10. Multiple Counterparts. This Settlement Agreement may be executed
in multiple counterpart copies which taken together shall constitute one and the
same agreement even though no one copy bears all parties' signatures. Facsimile
signatures shall have full effect and binding authority on the parties as
original signatures.
IN WITNESS WHEREOF, the parties have caused this Settlement Agreement
to be executed this 15th day of December, 1998.
THE RASMUSSEN GROUP:
/s/ Lee Rasmussen
------------------------------------
Lee Rasmussen
/s/ Douglas Richmond
------------------------------------
Douglas Richmond
/s/ Jeffrey T. Coats
------------------------------------
Jeffrey T. Coats
/s/ Ernest Reeves
------------------------------------
Ernest Reeves
/s/ Vernon Rasmussen
------------------------------------
Vernon Rasmussen
/s/ Sheila Rasmussen
------------------------------------
Sheila Rasmussen
/s/ Beverly Dittemore
------------------------------------
Beverly Dittemore
/s/ Christine Olsen
------------------------------------
Christine Olsen
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THE SPURLOCKS:
/s/ Harold N. Spurlock
------------------------------------
Harold N. Spurlock
/s/ Irvine R. Spurlock
------------------------------------
Irvine R. Spurlock
/s/ H. Norman Spurlock, Jr.
------------------------------------
H. Norman Spurlock, Jr.
THE SPURLOCK FAMILY LIMITED
PARTNERSHIP
By: /s/ Harold N. Spurlock
---------------------------------
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EXHIBIT "A"
MUTUAL RELEASE OF ALL CLAIMS
This Mutual Release is entered into this day of December, 1998, by
and among LEE RASMUSSEN, BEVERLY DITTEMORE, JEFFREY T. COATS, ERNEST REEVES,
CHRISTINE OLSEN, SHEILA RASMUSSEN, VERNON RASMUSSEN and DOUGLAS RICHMOND
(collectively hereinafter the "Rasmussen Group"), HAROLD N. SPURLOCK, SR.,
IRVINE R. SPURLOCK and H. NORMAN SPURLOCK, JR. (the "Spurlocks") and THE
SPURLOCK FAMILY LIMITED PARTNERSHIP, a Virginia limited partnership (hereinafter
the "SFLP").
W I T N E S S E T H:
That for and in consideration of $10.00 and other valid consideration,
the Rasmussen Group, their successors, heirs and assigns, and anyone claiming by
or through them, hereby release and forever discharge the Spurlocks and SFLP,
their successors, heirs and assigns, from any and all claims, demands, actions,
causes of action, suits at law or in equity, past or present, of any kind or
connection, whether known or unknown, which could arise out of or exist in
connection with certain actions undertaken by the Spurlocks in their capacities
as Directors of Spurlock Industries, Inc. (the "Corporation") that are the basis
of a Complaint filed
<PAGE>
and currently pending in the United States District Court for the District of
Colorado (Civil Action No. 97-D-2214) (the "Litigation"), and all other
controversies which might arise out of or be related to the aforesaid
Litigation, and any alleged actions or agreements in any way related thereto.
The undersigned members of the Rasmussen Group agree to indemnify the
Spurlocks and SFLP and hold them harmless from any loss, liability, damage
and/or expense, including attorney's fees, which may be incurred by the
Spurlocks or SFLP by reason of any claim or cause of action asserted by any
person claiming to be an assignee any member of the Rasmussen Group, or in any
way claiming through any member of the Rasmussen Group.
Without limiting the foregoing, all of the members of the Rasmussen
Group represent and warrant that they have consulted with their respective tax
and legal advisors and are cognizant of and appreciate the potential tax and
legal consequences of the transactions provided in this Mutual Release of All
Claims and that certain Settlement Agreement entered into by and between the
parties the same date herewith. The undersigned further warrant and represent
that they are the sole owners of any of the alleged claims or causes of action
which are or may be the subject of this Release, that no one else has any
interest in any of such claims or
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causes of action, that they have read and fully understand the terms of this
Release, and that they have executed this Release after consultation with
counsel of their own choice, and they will execute such further documents as may
be reasonably requested to evidence or effect the releases and indemnities set
forth herein.
AND FURTHER, the Spurlocks and SFLP, their heirs and assigns, and
anyone claiming by or through them, hereby release and forever discharge all of
the members of the Rasmussen Group, their successors, heirs and assigns, from
any and all claims, demands, actions, causes of action, suits at law or in
equity, past or present, of any kind or connection, whether known or unknown,
which could arise out of or exist in connection with those certain actions
undertaken by the Spurlocks as Directors of the Corporation, including
specifically those actions which serve as the basis for the Litigation, and all
other controversies which might arise out of or be related to the Litigation,
and any alleged actions or agreements in any way related thereto.
The undersigned Spurlocks and SFLP agree to indemnify all members of
the Rasmussen Group and hold them harmless from any loss, liability, damage
and/or expense, including attorney's fees, which may be incurred by them by
reason of any claim or cause of action asserted by any person claiming to be an
assignee of the
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Spurlocks or SFLP, or in any way claiming through the Spurlocks or SFLP.
Without limiting the foregoing, the Spurlocks and SFLP represent and
warrant that they have consulted with their tax advisors and legal
representatives and are cognizant of and appreciate the potential tax and legal
consequences of the transactions provided in this Mutual Release of All Claims
and that certain Settlement Agreement entered into by and between the parties
the same date herewith. The Spurlocks further warrant and represent that they
are the sole owners of any of the alleged personal claims or causes of action
which are or may be the subject of this Release, that no one else has any
interest in any of such personal claims or causes of action, that they have read
and fully understand the terms of this Release, and that they have executed this
Release after consultation with counsel of their own choice, and they will
execute such further documents as may be reasonably requested to evidence or
effect the releases and indemnities set forth herein.
The parties agree that this Mutual Release shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia.
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By this MUTUAL RELEASE, the parties hereto intend to release and
forever discharge each other jointly, severally and otherwise from any and all
claims, demands, actions, causes of action, and suits at law or in equity either
may have against each other in whatever capacity, jointly, severally or
otherwise, from the beginning of time to the date hereof in connection with the
Litigation. This said Release shall not apply, however, with respect to any
default which may occur in the future with respect to that certain Settlement
Agreement executed by and between the parties dated the same date herewith. This
Mutual Release may be executed in any number of counterparts, each of which
shall be deemed an original.
This Mutual Release of All Claims may be executed in multiple
counterpart copies which taken together shall constitute one and the same
release even though no one copy bears all parties'
signatures.
WITNESS the following signatures this day of December, 1998.
THE RASMUSSEN GROUP:
----------------------------------
Lee Rasmussen
----------------------------------
Beverly Dittemore
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----------------------------------
Jeffrey T. Coats
----------------------------------
Ernest Reeves
----------------------------------
Christine Olsen
----------------------------------
Sheila Rasmussen
----------------------------------
Vernon Rasmussen
----------------------------------
Douglas Richmond
THE SPURLOCKS:
----------------------------------
Harold N. Spurlock
----------------------------------
Irvine R. Spurlock
----------------------------------
H. Norman Spurlock, Jr.
THE SPURLOCK FAMILY LIMITED
PARTNERSHIP
By:
-------------------------------
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Exhibit C
VOTING AGREEMENT
VOTING AGREEMENT, dated as of December 18, 1998, between
BORDEN CHEMICAL, INC., a Delaware corporation (the "Parent"), and S II
ACQUISITION COMPANY, a Virginia corporation and a wholly owned subsidiary of the
Parent (the "Sub"), on the one hand, and PHILLIP S. SUMPTER and KATHERINE G.
SUMPTER ( collectively "Sumpter"), IRVINE R. SPURLOCK and HAROLD N. SPURLOCK,
SR. (the "Spurlock Controlling Persons"), SPURLOCK FAMILY CORPORATION, a
Virginia corporation ("Spurlock Corporation"), SPURLOCK FAMILY LIMITED
PARTNERSHIP, a Virginia limited partnership (the "Partnership"), Trustees under
agreement, dated December 17, 1998, with Harold N. Spurlock, Sr., known as the
"HAROLD N. SPURLOCK, SR. DECLARATION OF LIVING TRUST DATED DECEMBER 17, 1998"
(the "H. Spurlock Trust"), and Trustees under agreement, dated December 17,
1998, with Irvine R. Spurlock, known as the "IRVINE R. SPURLOCK DECLARATION OF
LIVING TRUST DATED DECEMBER 17, 1998" (the "I. Spurlock Trust" and, together
with Sumpter, the Partnership, and the H. Spurlock Trust, the "Shareholders"),
on the other hand.
RECITALS
Concurrently herewith, the Parent, the Sub and Spurlock
Industries, Inc., a Virginia corporation (the "Company"), are entering into a
Agreement and Plan of Merger dated the date hereof (the "Merger Agreement";
capitalized terms used but not defined herein shall have the meanings set forth
in the Merger Agreement), providing for the merger of the Sub with and
<PAGE>
into the Company (the "Merger"), upon the terms and subject to the conditions
set forth in the Merger Agreement.
As of the date hereof, each Shareholder beneficially owns the
number of shares of no par value common stock (the "Company Common Stock") of
the Company set forth opposite its or his name on the signature page of this
Agreement (the "Existing Shares" and, together with any shares of Company Common
Stock acquired after the date hereof and prior to the termination hereof,
whether upon the exercise of options, conversion of convertible securities or
otherwise, the "Shares").
As of the date hereof, the Corporation is the sole general
partner of the Partnership. As of the date hereof, the Spurlock Controlling
Persons collectively own 100% of the shares of common stock of the Corporation
and have the sole power to control the voting of the 3,339,800 Existing Shares
owned by the Partnership.
As a condition to their willingness to enter into the Merger
Agreement and make the Offer, the Parent and the Sub have required that each
Shareholder enter into this Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Covenants of Each Shareholder. Until the termination of
this Agreement in accordance with Section 2, each Shareholder and Spurlock
Corporation, severally and not jointly, agrees as follows:
(a) Voting. Each Shareholder hereby agrees that at any
meeting of the shareholders of the Company called to vote upon the
Merger and the Merger Agreement
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or at any adjournment thereof or in any other circumstances upon which
a vote or other approval with respect to the Merger and the Merger
Agreement is sought, each Shareholder shall (and the Spurlock
Controlling Persons and Spurlock Corporation shall cause the
Partnership to) vote the Shares in favor of the Merger, the adoption by
the Company of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement. The agreements set forth in the immediately preceding
sentence shall equally apply if such approvals were to be sought by the
solicitation of written consents.
At any meeting of the shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholders' vote, consent or other approval is sought, each
Shareholder shall (and the Spurlock Controlling Persons and Spurlock
Corporation shall cause the Partnership to) vote the Shares against
(and the Shareholders shall not, and the Spurlock Controlling Persons
and Spurlock Corporation shall cause the Partnership not to, execute
consents with respect to) (i) any action or agreement that would result
in a breach in any material respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the
Merger Agreement and (ii) any action or agreement (other than the
Merger Agreement or the transactions contemplated thereby) that would
materially impede, interfere with, delay, postpone or attempt to
discourage the Merger, including, but not limited to: (A) any
extraordinary corporate transaction (other than the Merger Agreement
and the Merger), such as a merger, consolidation or other business
combination involving the Company and its
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subsidiaries, any sale or transfer of a material amount of assets of
the Company and its subsidiaries or Company Common Stock, any
reorganization, recapitalization or liquidation of the Company and its
subsidiaries or any other takeover proposal; (B) any change in the
management or board of directors of the Company, except as otherwise
agreed to in writing by the Sub; (C) any material change in the present
capitalization or dividend policy of the Company; (D) any amendment to
the Company's Articles of Incorporation or Bylaws or other proposal or
transaction involving the Company or the Subsidiary, which amendment or
other proposal or transaction which changes in any manner the voting
rights of any class of the Company's capital stock or is intended or
could reasonably be expected to materially impede, frustrate, prevent,
delay or nullify (1) the ability of the Company to consummate the
Merger or (2) any of the transactions contemplated by this Agreement or
the Merger Agreement or (E) any other material change in the Company's
corporate structure or business. Each Shareholder further agrees not to
commit or agree to take any action inconsistent with the foregoing.
(b) Transfer Restrictions. Subject to those matters set forth
on Schedule II hereto, each Shareholder, severally and not jointly,
agrees not to, and the Spurlock Controlling Persons and Spurlock
Corporation shall cause the Partnership not to, (i) sell, transfer,
encumber, pledge, assign or otherwise dispose of (including by gift)
("Transfer"), or enter into any contract, option or other arrangement
or understanding (including any profit sharing arrangement) with
respect to the Transfer of, any of the Shares or any interest therein
to any person other than pursuant to the terms hereof or the Merger
Agreement, (ii) except as contemplated hereby, grant any proxy or power
of attorney with respect to the matters set forth in Section 1(a)
above, enter into any voting arrangement or
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understanding or otherwise transfer voting power with respect to the
Shares, in each case with respect to such matters, (iii) take any
action that would make any of its representations or warranties
contained herein untrue or incorrect or have the effect of preventing
or disabling such Shareholder from performing its obligations under
this Agreement or (iv) commit or agree to take any of the foregoing
actions.
(c) Proxy. Each Shareholder hereby grants to the Parent, and
to each officer of the Parent, a revocable proxy to vote the Shares as
indicated in Section 1(a) and hereby revokes any proxy previously
granted by such Shareholder with respect to the Shares. Notwithstanding
the foregoing, neither Parent nor any officer of Parent shall exercise
its proxy rights hereunder to the extent that the Shareholder granting
such proxy rights attends the meeting of the shareholders of the
Company at which any action indicated in Section 1(a) is to be voted
upon and votes the Shares in person in accordance with Section 1(a).
(d) Appraisal Rights. Each Shareholder hereby irrevocably
waives any rights of appraisal or rights to dissent from the Merger
that such Shareholder may have.
(e) The Partnership; The Corporation; and The Trusts.
(i) The Spurlock Controlling Persons and Spurlock
Corporation shall not (A) amend, or permit the amendment of, the terms
of the partnership agreement or other organizational documents of the
Partnership in any manner that would adversely affect the performance
by the Partnership of its obligations under this Agreement or
materially impede, frustrate, prevent, delay or nullify the Merger or
any of the transactions contemplated by this Agreement or the Merger
Agreement, (B) Transfer or enter into any
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contract, option or other arrangement or understanding with respect to
the Transfer of, their interests in the Partnership to any person to
the extent that such Transfer would adversely affect the performance by
the Partnership of its obligations under this Agreement or the ability
of the Spurlock Controlling Persons to control the voting of the Shares
owned by the Partnership or (C) adopt a plan of liquidation or
dissolution of the Partnership or otherwise terminate the Partnership.
(ii) The Spurlock Controlling Persons shall not (A)
amend, or permit the amendment of, the terms of the Articles of
Incorporation, by-laws or other organizational documents of Spurlock
Corporation in any manner that would adversely affect the performance
by Spurlock Corporation of its obligations under this Agreement or
materially impede, frustrate, prevent, delay or nullify the Merger of
any of the transactions contemplated by this Agreement or the Merger
Agreement, (B) Transfer or enter into any contract, option or other
arrangement or understanding with respect to the Transfer of, their
interests in Spurlock Corporation to any person to the extent that such
Transfer would adversely affect the performance by Spurlock Corporation
of its obligations under this Agreement or the ability of the Spurlock
Controlling Persons to control the voting of the Shares owned by the
Partnership or (C) adopt a plan of liquidation or dissolution of
Spurlock Corporation or otherwise terminate Spurlock Corporation.
Spurlock Corporation shall not issue, sell or deliver any shares of its
capital stock or any other voting securities in any manner that would
adversely affect the performance by Spurlock Corporation of its
obligations under this Agreement or the ability of the Spurlock
Controlling Persons to control the voting of the Shares owned by the
Partnership.
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(iii) Without the prior written consent of the Parent,
Harold N. Spurlock, Sr., with respect to the H. Spurlock Trust, and
Irvine R. Spurlock, with respect to the I. Spurlock Trust, shall not
(A) revoke, (B) change the identity or number, or both, of the Trustees
of, (C) amend in any manner or (D) withdraw any or all of the Trust
Property (as defined in the respective Declaration of Trust) from, such
Trust.
2. Termination. Except to the extent expressly provided in
Section 3 hereof, this Agreement, the Parent's right to vote the Shares covered
hereby pursuant to the proxy granted hereunder, and the Shareholders'
obligations to vote pursuant hereto shall terminate on the first to occur of (a)
the Effective Time, (b) the date on which the Merger Agreement is terminated
pursuant to Section 8.1 thereof and (c) written notice of termination of this
Agreement by the Parent and the Sub to the Shareholders (the "Expiration Date"),
and shall thereafter be void and have not further effect.
3. Payment to Parent Upon Sales of Company Following
Termination. If (A) the Merger Agreement is terminated for any reason other than
by the Company pursuant to Section 8.1(b)(iv) of the Merger Agreement or by
Parent and Company pursuant to Section 8.1(a) of the Merger Agreement and (B)
within twelve months thereafter the Company enters into an agreement with
respect to any Third Party Acquisition (as defined in the Merger Agreement),
which Third Party Acquisition subsequently occurs and (C) pursuant to such Third
Party Acquisition any Shareholder receives consideration having a "fair market
value" on a per share basis in excess of $3.40 per share (the "per share excess
amount") (equitably adjusted in a manner reasonably satisfactory to the
Shareholders and Parent to reflect any share split, share distribution,
combination, spin-off, recapitalization, reclassification or other similar
transaction by the
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Company), then each such Shareholder shall pay to Parent, within three business
days following receipt of such consideration, an amount in cash equal to the
product of (x) such Shareholder's number of Existing Shares, plus any shares of
Company Common Stock acquired from the date hereof through Expiration Date,
multiplied by (y) the percentage of such Shareholder's shares of Company Common
Stock as of the date of such Third Party Acquisition which are exchanged for
such consideration, multiplied by (z) the per share excess amount. For the
avoidance of doubt, the per share excess amount shall be payable, from time to
time, in accordance with this Section 3 upon the occurrence of each Third Party
Acquisition. Notwithstanding anything herein to the contrary, the parties agree
that the obligations of this Section 3 only expressly survive the Expiration
Date.
For purposes of this Section 3, "fair market value" of the
consideration shall mean the consideration per share (whether cash or non-cash)
to be received by any Shareholder in connection with a Third Party Acquisition;
provided that if the consideration received by such Shareholder in connection
with a Third Party Acquisition shall be other than cash, (i) in the case of
securities listed on a national securities exchange or traded on the NASDAQ
National Market ("NASDAQ"), the per share value of such consideration shall be
equal to the closing price per share listed on such national securities exchange
or NASDAQ on the date the Third Party Acquisition is consummated and (ii) in the
case of consideration in a form other than such securities, the per share value
shall be determined in good faith as of the date the Third Party Acquisition is
consummated by the Parent and the Shareholders, or, if Parent and the
Shareholders cannot reach agreement, by a nationally recognized investment
banking firm
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reasonably acceptable to the parties, which determination shall be conclusive
for all purposes of this Agreement.
4. Representations and Warranties of the Shareholders. Each
Shareholder and Spurlock Corporation (each hereafter a "person") hereby,
severally and not jointly, hereby represents and warrants to the Parent as of
the date hereof in respect of himself or itself as follows:
(a) Authority. Such person has all requisite legal capacity,
power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered
by such person and constitutes a valid and binding obligation of such
person enforceable in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, and equitable principles (whether considered in a
proceeding in equity or at law). The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated
hereby and compliance by such person with the terms hereof will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under, permit the termination
of any provision of or result in the termination of or the acceleration
of the maturity or performance of, or result in the creation or
imposition of any lien upon any of the assets or properties of such
person under, (i) any provision of any agreement, instrument, permit,
concession, franchise, license, judgment, order, notice, decree,
statute, law, ordinance, rule or regulation applicable to such person
or to such person's property or assets, other than the
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Pledge Agreement (with respect to which a consent has been received
from the Subsidiary to the execution, delivery and performance of this
Agreement) or (ii) in the case of Spurlock Corporation, the
Partnership, the H. Spurlock Trust or the I. Spurlock Trust, the
charter, by-laws or other constitutive documents of such person. If
such person is married and such person's Shares constitute community
property or otherwise need spousal or other approval to be legal, valid
and binding, this Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, the
person's spouse, enforceable against such spouse in accordance with its
terms. No trust of which such person is a trustee requires the consent
of any beneficiary to the execution and delivery of this Agreement or
to the consummation of the transactions contemplated hereby. No filing
with, and no permit, authorization, consent or approval of, any
Governmental Authority or any other person is necessary for the
execution of this Agreement by such person or the performance by such
person of its obligations hereunder. Spurlock Corporation is the sole
general partner of the Partners; the Spurlock Controlling Persons are
the sole shareholders of Spurlock Corporation.
(b) The Shares. Such person is the record holder or
beneficial owner of the number of the Existing Shares as is set forth
opposite such person's name on the signature page hereto. On the date
hereof, the Existing Shares set forth opposite such person's name on
the signature page hereto constitute all of the outstanding shares of
Company Common Stock beneficially (without respect to any attribution
rules under applicable securities laws and without respect to any
unexercised options) owned by such person. Such person does not have
record or beneficial ownership of any shares of Common Stock
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not set forth on the signature page hereto. Subject to the limitations
set forth on Schedule II hereto, applicable federal securities laws and
the terms of this Agreement, such person has sole power of disposition
with respect to all of the Existing Shares set forth opposite such
person's name in Part I of Schedule I hereto and sole voting power with
respect to the matters set forth in Section 1 hereof and sole power to
demand dissenter's or appraisal rights, in each case with respect to
all of the Existing Shares set forth opposite such person's name in
Part II of Schedule I hereto, with no restrictions on such rights.
Subject to the limitations set forth on Schedule II hereto, applicable
federal securities laws and the terms of this Agreement, such person
will have sole power of disposition with respect to Shares other than
Existing Shares, if any, which become beneficially owned by such person
and will have sole voting power with respect to the matters set forth
in Section 1 hereof and sole power to demand dissenter's or appraisal
rights, in each case with respect to all Shares other than Existing
Shares, if any, which become beneficially owned by such person with no
restrictions on such rights.
(c) Except as set forth in Schedule II hereto, such person's
Shares and the certificates representing such Shares are now and at all
times during the term hereof will be held by such person, or by a
nominee or custodian for the benefit of such person, free and clear of
all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances, proxies or agreements
arising hereunder.
(d) No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection
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with the transactions contemplated hereby based upon arrangements made
by or on behalf of such Shareholder in his or her capacity as such.
(e) Such person understands and acknowledges that the Parent
and the Sub are entering into the Merger Agreement in reliance upon
such person's execution and delivery of this Agreement with the Parent
and the Sub.
5. Additional Shares. Each Shareholder hereby agrees, while
this Agreement is in effect, to promptly notify the Parent of the number of any
new shares of Company Common Stock acquired by such Shareholder, if any, after
the date hereof.
6. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
7. Repayment of Notes and Advances by the Partnership. On or
prior to the Closing Date, the Spurlock Controlling Persons and Spurlock
Corporation shall cause the Partnership to, and the Partnership shall, repay,
cause to be repaid, or make arrangements satisfactory to Parent to repay out of
its share of the Merger Consideration through direct offsets pursuant to which
the Surviving Corporation shall withhold the amounts referred to below in
satisfaction of such obligations, in full, (i) the remaining principal amount
(and all accrued but unpaid interest thereon) and all other amounts due in
respect of the remaining principal amount (and all accrued but unpaid interest
thereon) and all other amounts due in respect of the Subsidiary Note and that
certain Collateral Promissory Note payable by Irvine R. Spurlock and H.
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Norman Spurlock, Jr. to Lloyd B. Putman in the original principal amounts of
$210,176.72 and (ii) all other unpaid amounts in respect of any loans or
advances made by Company or the Subsidiary to Irvine R. Spurlock or his wife
prior to the Closing Date.
8. Repayment of Note and Advances by Harold N. Spurlock, Sr.
On or prior to the Closing Date, Harold N. Spurlock, Sr. shall repay, cause to
be repaid, or make arrangements reasonably satisfactory to Parent to repay out
of his share or the Partnership's share of the Merger Consideration through
direct offsets pursuant to which the Surviving Corporation shall withhold the
amounts referred to below in satisfaction of such obligations, in full, (i) the
remaining principal amount (and all accrued but unpaid interest thereon) and all
other amounts due in respect of that certain Collateral Promissory Note, dated
as of June 30, 1995, payable to the Subsidiary in the original principal amount
of $112,500 and (ii) all other unpaid amounts in respect of any loans or
advances made by Company or the Subsidiary to Harold N. Spurlock, Sr., H. Norman
Spurlock, Jr. or Daniel Spurlock prior to the Closing Date.
9. Stop Transfer Order. In furtherance of this Agreement,
concurrently herewith, each Stockholder shall and hereby does authorize the
Company's counsel to notify the Company's transfer agent that there is a stop
transfer order with respect to all of the Existing Shares and that this
Agreement places limits on the voting and transfer of such shares. Each
Shareholder agrees that within ten business days after the date hereof, such
Stockholder will no longer hold any Shares in "street name" or in the name of
any nominee.
10. Assignment. Neither this Agreement nor any of the
rights,, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, except that
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the Parent or the Sub may assign, in its sole discretion, any of or all its
rights, interests or obligations under this Agreement to any direct wholly owned
subsidiary of the Parent or Borden, Inc., a New Jersey corporation, but no such
assignment shall relieve the Parent or the Sub, as the case may be, of any of
its obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
11. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
12. Entire Agreement, No Third-Party Beneficiaries. This
Agreement (including the documents referred to herein) (a) constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and (b) is not intended to confer upon any person other than the
parties any rights or remedies.
13. Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
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14. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia, without
giving effect to the conflict of laws provisions thereof.
(SIGNATURES ON NEXT PAGE)
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IN WITNESS WHEREOF, the Parent, the Sub, the Spurlock
Controlling Persons and the Shareholders have caused this Agreement to be duly
executed as of the day and year first above written.
Borden Chemical, Inc.
By: /s/
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SII Acquisition Company
By: /s/
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Number of Existing Shares Spurlock Family Limited Partnership
3,339,800
By: Spurlock Family Corporation, its sole
general partner
By: /s/ Harold N. Spurlock, Sr.
----------------------------------------
Name: Harold N. Spurlock, Sr.
----------------------------------
Title: President
---------------------------------
Number of Existing Shares: /s/ Phillip S. Sumpter
30,000 -------------------------------------------
Phillip S. Sumpter
/s/ Katherine G. Sumpter
-------------------------------------------
Katherine G. Sumpter
Number of Existing Shares Trustees U/A with Harold N. Spurlock, Sr.
Held by H. Spurlock Trust:
306,000 By: /s/ David Shane Smith
----------------------------------------
David Shane Smith, Trustee
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Number of Existing Shares Trustees U/A with Irvine R. Spurlock
Held by I. Spurlock Trust:
20,000 By: /s/ David Shane Smith
----------------------------------------
David Shane Smith, Trustee
Spurlock Family Corporation
By: /s/ Harold N. Spurlock, Sr.
----------------------------------------
Name: Harold N. Spurlock, Sr.
----------------------------------
Title: President
---------------------------------
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/s/ Harold N. Spurlock, Sr.
-------------------------------------------
Harold N. Spurlock, Sr.
/s/ Irvine R. Spurlock
-------------------------------------------
Irvine R. Spurlock
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SCHEDULE I
Part I -- Number of Existing Shares with Sole Dispositive Power
Name of Shareholder Number of Existing Shares
- ------------------- -------------------------
The Spurlock Family Limited Partnership 0*
Phillip S. and Katherine G. Sumpter 30,000
The I. Spurlock Trust 20,000
The H. Spurlock Trust 306,000*
Part II -- Number of Existing Shares with Sole Voting Power
and Sole Power to Demand Dissenter's or Appraisal Rights
Name of Shareholder Number of Existing Shares
- ------------------- -------------------------
The Spurlock Family Limited Partnership 3,339,800*
Phillip S. and Katherine G. Sumpter 30,000
The I. Spurlock Trust 20,000
The H. Spurlock Trust 306,000*
* 2,325,000 of the Partnership's Existing Shares are pledged to the Subsidiary
and 1,014,800 of the Partnership's Existing Shares are pledged to Mr. Lloyd B.
Putman; in addition, the Partnership's Existing Shares, while not pledged in
support of such obligations, are subject to the contractual obligations to
transfer 225,000 shares of Common Stock to Lee Rasmussen; and, in addition, the
H. Spurlock Trust has assumed the contractual obligation of Harold N. Spurlock,
Sr. to transfer up to 180,000 shares of Common Stock to William A. Patterson and
Neil Tucker, all as described on Schedule II hereto.
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SCHEDULE II
1. 2,325,000 of the Existing Shares owned by the Partnership are
pledged to Spurlock Adhesives, Inc. (which holds the certificates evidencing
such shares) to secure the payment of the Subsidiary Note pursuant to the terms
of that certain Pledge Agreement, dated April 8, 1998. The Pledge Agreement also
subjects to the pledge thereunder any additional Shares received by the
Partnership pursuant to any distribution by Company with respect to the pledged
shares. Pursuant to the Pledge Agreement, without the prior consent of the
Subsidiary, the Partnership is prohibited from transferring the pledged shares
or any rights therein and is prohibited from becoming a party to or otherwise
bound by any agreement which restricts in any manner the rights of any present
or future holder with respect to such shares.
2. 1,014,800 of the Existing Shares owned by the Partnership are
pledged to Lloyd B. Putman (who holds the certificates evidencing such shares)
to secure the repayment of that certain Collateral Promissory Note payable by
Irvine R. Spurlock and H. Norman Spurlock, Jr. in the original principal amounts
of $210,176.72. The shares pledged to secure this obligation may not be
transferred without the consent of Lloyd B. Putman and, in the event of any
event of default under the Collateral Promissory Note which is not cured as
provided thereunder, Lloyd B. Putman shall become entitled to vote the shares
and to sell the shares to satisfy the unpaid balance under the Collateral
Promissory Note.
3. In connection with the settlement of certain claims made by Lee
Rasmussen in connection with the complaint filed in the Derivative Suit, the
Partnership has agreed to transfer to Lee Rasmussen 225,000 of the Existing
Shares owned by the Partnership.
4. Pursuant to that certain Settlement Agreement, dated the ___ day of
November, 1998, by and between Corporate Strategies, Inc., a South Carolina
corporation, William A. Patterson, Neil Tucker and Harold N. Spurlock, Harold N.
Spurlock, Sr. agreed to transfer 80,000 (subject to adjustment to up to 90,000)
shares of Common Stock to each of William A. Patterson and Neil Tucker in
accordance with the terms and conditions set forth in such Settlement Agreement.
The H. Spurlock Trust has assumed the above-referenced obligation of Harold N.
Spurlock, Sr.
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