<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
(RULE 14D-1)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
Johnston Industries, Inc.
(Name of Subject Company (Issuer))
JI Acquisition Corp.
(Names of Filing Persons (Offeror))
Common Stock, $.10 par value
(Title of Class of Securities)
479368102
(CUSIP Number of Class of Securities)
Roy R. Bowman
JI Acquisition Corp.
c/o CGW Southeast Partners IV, L.P.
Twelve Piedmont Center
Suite 210
Atlanta, Georgia 30305
(404) 816-3255
(Name, Address, and Telephone Numbers of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
-------------------
Copy to:
Sidney J. Nurkin, Esq.
Mark F. McElreath, Esq.
Alston & Bird LLP
One Atlantic Center
1201 W. Peachtree St.
Atlanta, Georgia 30309-3424
(404) 881-7000
-------------------
CALCULATION OF FILING FEE
Transaction valuation* Amount of filing fee
- ---------------------- --------------------
$32,138,616 $6,427.72
- ---------------------- --------------------
*For purposes of calculating amount of filing fee only. This amount assumes the
purchase of 10,712,872 shares of common stock of Johnston Industries, Inc. at
the offer price of $3.00 per share. The amount of the filing fee, calculated in
accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended,
equals 1/50 of 1% of the transaction value.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
---------------- ----------------
Form or Registration No.: N/A Date Filed: N/A
-------------- ------------------
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
<PAGE> 2
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting
the results of the tender offer: [ ]
<PAGE> 3
This Tender Offer Statement on Schedule TO is filed by JI Acquisition
Corp., a Delaware corporation (the "Purchaser") a wholly owned subsidiary of CGW
Southeast Partners IV, L.P. ("CGW"). This Schedule TO relates to the offer by
the Purchaser to purchase all outstanding shares of common stock, par value $.10
per share (the "Shares"), of Johnston Industries, Inc., a Delaware corporation
("Johnston"), at $3.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated April 7,
2000 (the "Offer to Purchase"), and in the related Letter of Transmittal, copies
of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively (which
together with any amendments or supplements thereto, collectively constitute
the "Offer"). The information set forth in the Offer to Purchase and the
related Letter of Transmittal is incorporated herein by reference with respect
to Items 1 through 11 of this Schedule TO.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
None of CGW, the Purchaser or, to the best knowledge of such corporations,
any of the persons listed on Schedule I to the Offer of Purchase, has during the
last five years (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdeameanors) or (ii) been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
<PAGE> 4
ITEM 12. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
(a)(1) Offer to Purchase dated April 7, 2000.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Text of Press Release issued by CGW and JI Acquisition on April 7,
2000.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitution Form W-9.
(a)(8) Form of Summary Advertisement dated April 7, 2000.
(a)(9) Text of press release issued by CGW and JI Acquisition on March 30,
2000; filed with the Securities and Exchange Commission under cover
of Schedule TO on March 30, 2000, and incorporated herein by
reference.
(a)(10) Text of press release issued by Johnston Industries, Inc. on April 7,
2000.
(b) None.
(d) Purchase Agreement, dated as of March 30, 2000, among CGW Southeast
Partners IV, L.P., JI Acquisition Corp. and Johnston Industries, Inc.
(g) None.
(h) None.
</TABLE>
6
<PAGE> 5
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not Applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
JI Acquisition Corp.
By: /s/ James A. O'Donnell
------------------------------
Name: James A. O'Donnell
------------------------------
Title: Secretary and Treasurer
------------------------------
Dated: April 7, 2000
7
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JOHNSTON INDUSTRIES, INC.
BY
JI ACQUISITION CORP.
A SUBSIDIARY OF
CGW SOUTHEAST PARTNERS IV, L.P.
AT
$3.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED.
We are making this offer pursuant to a Purchase Agreement dated as of
March 30, 2000, among CGW Southeast Partners IV, L.P., JI Acquisition Corp. and
Johnston Industries, Inc. The board of directors of Johnston Industries has
approved the Purchase Agreement and the offer and determined that the terms of
the offer are fair to you, the stockholders of Johnston. However, the board of
Johnston has decided to remain neutral in recommending whether you should accept
the offer and tender your shares.
Our offer is conditioned upon there being validly tendered and not
withdrawn prior to the expiration of the offer, 9.7% of the shares of common
stock currently outstanding on a fully diluted basis. When combined with the
9,000,000 shares of Johnston common and preferred stock we will purchase
directly from Johnston at the closing of the offer, we will become the majority
owner of the then issued and outstanding shares of Johnston's voting capital
stock. In addition, there are the other conditions to our offer which are
described in Section 14.
If you desire to tender all or any portion of your shares of common stock,
you should do one of the following:
- complete and sign the Letter of Transmittal (or facsimile thereof) in
accordance with the instructions in the Letter of Transmittal, mail or
deliver it and any other required documents to The Bank of New York, the
depositary, and either deliver the certificates for such shares to the
depositary or tender such shares pursuant to the procedures for
book-entry transfer as described in Section 3; or
- request your broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for you. Any stockholder whose shares
are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact the broker, dealer, commercial
bank, trust company or other nominee to tender such shares.
If you desire to tender your shares and your certificates representing
such shares are not immediately available, or if you cannot comply with the
procedures for book-entry transfer on a timely basis, you may tender such shares
by following the procedures for guaranteed delivery described in Section 3.
Questions and requests for assistance may be directed to MacKenzie
Partners, Inc., the information agent, at the location and telephone numbers on
the back cover of this Offer to Purchase. Requests for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the information agent or to brokers, dealers,
commercial banks or trust companies. You may also contact brokers, dealers,
commercial banks or trust companies for assistance concerning the offer.
April 7, 2000
<PAGE> 2
SUMMARY TERM SHEET
JI Acquisition Corp. is offering to purchase all of the outstanding common
stock of Johnston Industries, Inc. for $3.00 per share in cash. The following
are some of the questions you, as a stockholder of Johnston, may have and
answers to those questions. We urge you to read carefully the remainder of this
Offer to Purchase and the Letter of Transmittal because the information in this
summary term sheet is not complete. Additional important information is
contained in the remainder of this Offer to Purchase and the Letter of
Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is JI Acquisition Corp. We are a Delaware corporation formed for
the purpose of making a tender offer for all of the common stock of Johnston and
have carried on no activities other than in connection with the Purchase
Agreement among CGW Southeast Partners IV, L.P., JI Acquisition Corp. and
Johnston. We are a subsidiary of CGW, a Delaware limited partnership. See
Section 1 of this Offer to Purchase.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock of
Johnston. See Section 1.
HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $3.00 per share, net to you, in cash. If you are
the record owner of your shares and you tender your shares to us in the offer,
you will not have to pay brokerage fees or similar expenses. If you own your
shares through a broker or other nominee, and your broker tenders your shares on
your behalf, your broker or nominee may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply. See Sections 2 and 3.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender in the offer because the form of payment consists solely of
cash. CGW, our parent company, will provide us with the funds to purchase all
shares validly tendered and not withdrawn in the offer. We anticipate that a
significant portion of these funds will be obtained from existing resources and
through a capital call to the investors of CGW. The remainder of the funds
needed to purchase your shares will come from an investment in us by BancBoston
Capital, Inc. This investment is currently under negotiation and if it is not
completed prior to the expiration of the Offer, the terms of Purchase Agreement
will allow us to terminate the Offer. See Sections 10 and 14.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 Midnight, New York City time, on
Friday, May 5, 2000, to tender your shares in the offer. Further, if you cannot
deliver everything that is required in order to make a valid tender by that
time, you may be able to use a guaranteed delivery procedure, which is described
later in this Offer to Purchase. See Sections 1 and 3.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
We have agreed in the Purchase Agreement that, without the consent of
Johnston, we may extend the offer:
- - Beyond the scheduled expiration date if at that date any of the
conditions to our obligation to accept for payment and to pay for the
shares are not satisfied or waived.
<PAGE> 3
- - For a period of not more than ten business days beyond the initial
expiration date, if at that time less than 90% of the outstanding shares
of common stock have been tendered.
- - For any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission applicable to the
offer.
- - For any reason for a period of not more than ten business days beyond the
latest expiration date that would otherwise apply according to extensions
under the first three bullet points above.
If all conditions to the offer have been satisfied or waived, we will
accept for payment and pay for all shares validly tendered and not withdrawn at
such time (which shares may not thereafter be withdrawn).
See Section 1 of this Offer to Purchase for more details on our ability to
extend the offer.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform The Bank of New York (the
depositary for the offer) of that fact and will make a public announcement of
the extension not later than 9:00 a.m., New York City time, on the next business
day after the day on which the offer was scheduled to expire. See Section 1.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to purchase any shares that are validly tendered:
- - Unless the number of shares validly tendered and not withdrawn before the
expiration date of the offer, when added to the shares of Johnston common
and preferred stock that we will purchase directly from Johnston,
represents at least a majority of the then outstanding shares of voting
capital stock of Johnston, on a fully diluted basis. We call this
condition the "minimum condition."
- - If, among other things, there is a material adverse change in Johnston or
its business.
- - If the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 has not expired or been terminated.
- - If we have not finalized the investment in us by BancBoston and the
refinancing of Johnston's existing bank debt.
The offer is also subject to a number of other conditions. We can waive
any of the conditions to the offer without Johnston's consent. See Section 14.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal and any other documents
required by the Letter of Transmittal, to The Bank of New York, the depositary
for the offer, not later than the time the tender offer expires. If your shares
are held in street name, the shares can be tendered by your nominee through The
Depository Trust Company. If you are unable to deliver any required document or
instrument to the depositary by the expiration of the tender offer, you may gain
some extra time by having a broker, a bank or other fiduciary that is an
eligible institution guarantee that the missing items will be received by the
depositary within three New York Stock Exchange trading days. For the tender to
be valid, however, the depositary must receive the missing items within that
three trading day period. See Section 3.
UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw shares at any time until the offer has expired and, if we
have not accepted your shares for payment by Tuesday, June 6, 2000, you may
withdraw them at any time after that date until we accept shares for payment.
See Section 4.
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<PAGE> 4
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written, telegraphic or facsimile
transmission notice of withdrawal, with the required information to the
depositary while you still have the right to withdraw the shares. See Section 4.
WHAT DOES THE JOHNSTON BOARD OF DIRECTORS RECOMMEND REGARDING THE OFFER?
We are making the offer pursuant to the Purchase Agreement, which has been
approved by the Johnston board of directors. The board of directors of Johnston
(1) determined that the terms of the offer are fair to the stockholders of
Johnston, (2) approved the Purchase Agreement and the transactions contemplated
thereby, including the offer and (3) has decided to remain neutral in
recommending whether Johnston's stockholders should accept the offer and tender
their shares pursuant to the offer.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE JOHNSTON SHARES ARE
NOT TENDERED IN THE OFFER?
- If we accept for payment and pay for at least 90% of the outstanding
shares of Johnston voting capital stock on a fully diluted basis, a
subsidiary of JI will be merged with and into Johnston. If that merger
takes place, we will own all of the shares of Johnston common stock and
all remaining stockholders of Johnston (other than JI and any
stockholder properly exercising appraisal rights) will receive $3.00 per
share in cash. See Section 11.
- If we accept for payment and pay for less than 90% of the shares of
Johnston voting capital stock on a fully diluted basis, a subsidiary of
JI will be merged with and into Johnston. In contrast to the merger
described in the first bullet, in this instance those stockholders who
did not tender their shares will remain stockholders of Johnston.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described in the first bullet above takes place,
stockholders not tendering in the offer will receive the same amount of cash per
share that they would have received had they tendered their shares in the offer,
subject to any appraisal rights properly exercised under Delaware law.
Therefore, if the merger described in the first bullet takes place, the only
difference to you between tendering your shares and not tendering your shares is
that you will be paid earlier if you tender your shares. If the type of merger
described in the first bullet does not take place, however, the number of
stockholders and the number of shares of Johnston that are still in the hands of
the public may be so small that there no longer will be an active public trading
market (or, possibly, there may not be any public trading market) for Johnston's
common stock. Also, in that instance Johnston may cease making filings with the
SEC or otherwise may not be required to comply with the SEC rules relating to
publicly held companies.
We have agreed with Johnston that if we do not accept for payment and pay
for at least 90% of the shares such that we can accomplish the merger mentioned
in the first bullet above, we will use our best efforts to maintain a public
trading market for the Johnston common stock for a period of three years.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On March 30, 2000, the last trading day before we announced the
acquisition, the last sale price of Johnston common stock reported on the New
York Stock Exchange was $2.3125 per share. On April 6, 2000, the last trading
day before we commenced the tender offer, the closing price of Johnston common
stock reported on the New York Stock Exchange was $2.75. We encourage you to
obtain a recent quotation for shares of Johnston common stock in deciding
whether to tender your shares. For more information on the market value of the
Johnston common stock, see Section 6.
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<PAGE> 5
WHAT ARE CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING
SHARES?
The receipt of cash for shares pursuant to the tender offer will be a
taxable transaction for United States federal income tax purposes and possibly
for state, local and foreign income tax purposes as well. In general, a
stockholder who sells shares pursuant to the tender offer will recognize gain or
loss for United States federal income tax purposes equal to the difference, if
any, between the amount of cash received and the stockholder's adjusted tax
basis in the shares sold pursuant to the tender offer. If the shares exchanged
constitute capital assets in the hands of the stockholder, such gain or loss
will be capital gain or loss. In general, capital gains recognized by an
individual will be subject to a maximum United States federal income tax rate of
20% if the shares were held for more than one year, and if held for one year or
less they will be subject to tax at ordinary income tax rates. See Section 5.
TO WHOM MAY I SPEAK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You may call MacKenzie Partners, Inc., at (800) 322-2885 (toll free).
MacKenzie Partners is acting as the information agent for our tender offer. See
the back cover of this Offer to Purchase.
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<PAGE> 6
To the Holders of Common Stock of Johnston Industries, Inc.:
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions
of the offer, JI Acquisition Corp. will accept for payment and pay for all
shares of Johnston common stock validly tendered prior to the expiration date
and not withdrawn as described in Section 4 of this Offer to Purchase. The
expiration date shall mean 12:00 Midnight, New York City time, on Friday, May 5,
2000, unless and until JI, in accordance with the terms of the Purchase
Agreement, shall have extended the period of time for which the offer is open,
in which event expiration date shall mean the latest time and date at which the
offer, as so extended by JI, shall expire.
The offer is conditioned upon, among other things, the satisfaction of the
9.7% minimum tender condition and the expiration or termination of all waiting
periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder. For more information on conditions to
the offer, see Section 14. If such conditions are not satisfied prior to the
expiration date, JI reserves the right, but shall not be obligated to do any of
the following:
- decline to purchase any of the shares tendered and terminate the offer,
subject to the terms of the Purchase Agreement;
- waive any of the conditions to the offer, to the extent permitted by
applicable law and the provisions of the Purchase Agreement, and,
subject to complying with applicable rules and regulations of the
Securities and Exchange Commission, purchase all shares validly
tendered; or
- subject to the terms of the Purchase Agreement, extend the offer and,
subject to the right of stockholders to withdraw shares until the
expiration date, retain the shares which will have been tendered during
the period or periods for which the offer is extended.
Subject to the terms of the Purchase Agreement as described below, JI
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the period of time during which the offer is open and thereby
delay acceptance for payment of, and the payment for, any shares, by giving oral
or written notice of such extension to The Bank of New York, as the depositary.
In addition, JI may amend the offer in any respect, including, without
limitation, by increasing the consideration offered in the offer to holders of
shares and/or by decreasing the number of shares being sought in the offer, by
giving oral or written notice of such amendment to the depositary. The rights
reserved by JI in this paragraph are in addition to JI's rights to terminate the
offer as described in Section 14. Any extension, amendment or termination will
be followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date in accordance with the public announcement requirements of Rule
14d-4(d) under the Securities Exchange Act of 1934, as amended. Without limiting
the obligation of JI under such rule or the manner in which JI may choose to
make any public announcement, JI currently intends to make announcements by
issuing a release through MacKenzie Partners, Inc., the information agent for
this tender offer. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE TO BE PAID BY JI FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT.
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<PAGE> 7
The Purchase Agreement provides that JI will not amend the 9.7% minimum
tender condition, decrease the offer price, impose any further conditions to the
offer or amend any other condition of the offer, without the consent of
Johnston. Notwithstanding the foregoing, the Purchase Agreement provides that JI
may extend the offer under the following circumstances:
- if at the scheduled expiration date any of the conditions to the offer
have not been satisfied, including but not limited to any legal or
regulatory requirements under the Hart-Scott-Rodino Act;
- if less than 90% of the outstanding shares of Johnston have been validly
tendered, for a maximum of ten business days beyond the initial
expiration date;
- for any period required by any rule, regulation, interpretation or
position of the SEC or the staff of the SEC, applicable to the offer; or
- for any reason for a period of not more than ten business days beyond
the latest expiration date otherwise permitted by the above.
The Purchase Agreement further provides, however, that in no event may the
offer be extended beyond the date of termination of the Purchase Agreement, and
either party has the right to terminate the Purchase Agreement if the offer is
not completed by June 30, 2000.
JI will not make a subsequent offering period available after the offer
expires.
If JI extends the offer, or if JI is delayed in its purchase of or payment
for shares, whether before or after its acceptance for payment of shares, or is
unable to pay for shares pursuant to the offer for any reason, then, without
prejudice to JI's rights under the offer, The Bank of New York may retain
tendered shares on behalf of JI, and such shares may not be withdrawn except to
the extent tendering stockholders are entitled to withdrawal rights as described
in Section 4. However, the ability of JI to delay the payment for shares which
JI has accepted for payment is limited by Rule 14e-l(c) under the Exchange Act
which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of the offer.
If JI makes a material change in the terms of the offer or the information
concerning the offer or waives a material condition of the offer, JI will
disseminate additional tender offer materials and extend the offer to the extent
required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The
minimum period during which the offer must remain open following material
changes in the terms of the offer or information concerning the offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. In a public release, the SEC
has stated that in its view an offer must remain open for a minimum period of
time following a material change in the terms of the offer and that waiver of a
material condition, such as the minimum condition, is a material change in the
terms of the offer. The release states than an offer should remain open for a
minimum of five business days from the date a material change is first
published, sent or given to security holders and that, if material changes are
made with respect to information not materially less significant than the offer
price and the number of shares being sought, a minimum of ten business days may
be required to allow adequate dissemination and investor response. The
requirement to extend the offer will not apply to the extent that the number of
business days remaining between the occurrence of the change and the then-
scheduled expiration date equals or exceeds the minimum extension period that
would be required because of such amendment.
Johnston has provided JI with a stockholder list and security position
listings for the purpose of disseminating the offer to holders of shares. This
Offer to Purchase and the related Letter of Transmittal will be mailed by JI to
record holders of shares and will be furnished by JI to brokers, dealers, banks
and similar persons whose names, or the names of whose nominees, appear on the
stockholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of shares.
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<PAGE> 8
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to
the conditions of the offer, JI will accept for payment and will pay, promptly
after the expiration date, for all shares validly tendered prior to the
expiration date and not properly withdrawn in accordance with Section 4. All
determinations concerning the satisfaction of such terms and conditions will be
within JI's discretion, which determinations will be final and binding. For more
information on the terms and conditions of the offer, see Sections 1 and 14. JI
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of or payment for shares in order to comply in whole or in part with any
applicable law, including, without limitation, the Hart-Scott-Rodino Act. Any
such delays will be effected in compliance with Rule 14e-l(c) under the Exchange
Act (relating to a bidder's obligation to pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer).
In all cases, payment for shares accepted for payment pursuant to the
offer will be made only after timely receipt by The Bank of New York, the
depositary, of all of the following:
- certificates for such shares or a timely book-entry confirmation, as
described below, with respect thereto;
- a Letter of Transmittal or facsimile thereof, properly completed and
duly executed, with any required signature guarantees, or, in the case
of a book-entry transfer, an agent's message, as described below; and
- any other documents required by the Letter of Transmittal.
The per share consideration paid to any stockholder pursuant to the offer
will be the highest per share consideration paid to any other stockholder
pursuant to the offer.
For purposes of the offer, JI will be deemed to have accepted for payment,
and thereby purchased, shares properly tendered to JI and not withdrawn as, if
and when JI gives written notice to the depositary, of JI's acceptance for
payment of such shares. Payment for shares accepted for payment pursuant to the
offer will be made by deposit of the purchase price therefor with The Bank of
New York, which will act as agent for tendering stockholders for the purpose of
receiving payment from JI and transmitting payment to tendering stockholders.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY
JI FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
If any tendered shares are not purchased pursuant to the offer for any
reason, certificates for any such shares will be returned, without expense to
the tendering stockholder. In the case of shares delivered by book-entry
transfer of such shares into the depositary's account at the book-entry transfer
facility, as described below, pursuant to the procedures set forth in Section 3,
such shares will be credited to an account maintained at the book-entry transfer
facility, as promptly as practicable after the expiration or termination of the
offer.
JI reserves the right to transfer or assign, in whole or in part, to CGW
or to one or more affiliates of JI or CGW, the right to purchase shares tendered
pursuant to the offer, but any such transfer or assignment will not relieve JI
of its obligations under the offer and will in no way prejudice the rights of
tendering stockholders to receive payment for shares validly tendered and
accepted for payment pursuant to the offer.
3. PROCEDURE FOR TENDERING SHARES.
VALID TENDER
For shares to be validly tendered pursuant to the offer, either a properly
completed and duly executed Letter of Transmittal or facsimile thereof, together
with any required signature guarantees, or in the case of a book-entry transfer,
an agent's message, as described below, and any other required documents, must
be received by The Bank of New York, as depositary, at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the expiration date
and either certificates for tendered
-7-
<PAGE> 9
shares must be received by the depositary at one of such addresses or such
shares must be delivered pursuant to the procedures for book-entry transfer
described below, and a book-entry confirmation received by the depositary, in
each case, prior to the expiration date or the tendering stockholder must comply
with the guaranteed delivery procedures set forth below.
The Bank of New York will establish an account with respect to the shares
at The Depository Trust Company, referred to as the book-entry transfer
facility, for purposes of the offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
book-entry transfer facility's systems may make book-entry delivery of shares by
causing the book-entry transfer facility to transfer such shares into the
depositary's account in accordance with the book-entry transfer facility's
procedure for such transfer. However, although delivery of shares may be
effected through book-entry transfer into the depositary's account at the
book-entry transfer facility, the Letter of Transmittal, or facsimile thereof,
properly completed and duly executed, with any required signature guarantees, or
an agent's message, and any other required documents must, in any case, be
transmitted to, and received by, the depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the expiration date,
or the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of shares into the
depositary's account at the book-entry transfer facility as described above is
referred to herein as a book-entry confirmation. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term agent's message means a message transmitted by the book-entry
transfer facility to, and received by, The Bank of New York, as depositary, and
forming a part of a book-entry confirmation, which states that such book-entry
transfer facility has received an express acknowledgment from the participant in
such book-entry transfer facility tendering the shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that JI may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES
No signature guarantee is required on the Letter of Transmittal if the
Letter of Transmittal is signed by the registered holder(s) (this term includes
any participant in the book-entry transfer facility's systems whose name appears
on a security position listing as the owner of the shares), of shares tendered
therewith and such registered holder has not completed either the box entitled
Special Delivery Instructions or the box entitled Special Payment Instructions
on the Letter of Transmittal. In addition, no signature guarantee is required if
such shares are tendered for the account of a financial institution including
most commercial banks, savings and loan associations and brokerage houses that
is a participant in the Security Transfer Agent's Medallion Program, the New
York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program. Such institutions are referred to as eligible institutions.
In all other cases, all signatures on Letters of Transmittal must be guaranteed
by an eligible institution. See Instructions 1 and 5 to the Letter of
Transmittal. If the certificates for shares are registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made, or certificates for shares not tendered or not accepted for payment are
to be returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such
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<PAGE> 10
shares must be endorsed or accompanied by appropriate stock powers, in either
case, signed exactly as the name or names of the registered holders or owners
appear on the certificates, with the signatures on the certificates or stock
powers guaranteed as described above. For more information on signature
guarantees, see Instructions 1 and 5 to the Letter of Transmittal.
GUARANTEED DELIVERY
If a stockholder desires to tender shares pursuant to the offer and such
stockholder's certificates for shares are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach The Bank of New York prior to
the expiration date, such stockholder's tender may be effected if all the
following conditions are met:
- such tender is made by or through an eligible institution, as described
below;
- a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by JI, is received by the depositary,
as provided below, prior to the expiration date; and
- the certificates for or a book-entry confirmation with respect to such
shares, together with a properly completed and duly executed Letter of
Transmittal or facsimile thereof, with any required signature
guarantees, or, in the case of a book-entry transfer, an agent's
message, and any other required documents are received by the depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A trading day is any day on which the New York
Stock Exchange is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to The Bank of
New York, as the depositary, or transmitted by telegram, facsimile transmission
or mail to the depositary and must include a guarantee by an eligible
institution in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for shares accepted
for payment pursuant to the offer will in all cases be made only after timely
receipt by the depositary of all of the following:
- certificates for, or a timely book-entry confirmation with respect to,
such shares;
- a Letter of Transmittal, or facsimile thereof, properly completed and
duly executed, with any required signature guarantees, or, in the case
of a book-entry transfer, an agent's message; and
- any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for shares or book-entry confirmations with
respect to shares are actually received by the depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY JI FOR
THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
JI upon the terms and subject to the conditions of the offer.
APPOINTMENT
By executing the Letter of Transmittal as set forth above, the tendering
stockholder will irrevocably appoint designees of JI, and each of them, as such
stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the shares tendered by such
stockholder and accepted for payment by JI and with respect to any and all other
shares or other securities or rights issued or issuable in respect of such
shares. All such proxies will be considered coupled with an interest in the
tendered shares. Such appointment will be effective when, and only to the extent
that, JI accepts for payment shares tendered by such stockholder as provided
herein. Upon such appointment, all prior powers of attorney, proxies and
consents given by such stockholder with respect to such shares or other
securities or rights will, without
-9-
<PAGE> 11
further action, be revoked and no subsequent powers of attorney, proxies,
consents or revocations may be given by such stockholder and, if given, will not
be deemed effective. The designees of JI will thereby be empowered to exercise
all voting and other rights with respect to such shares and other securities or
rights, including, without limitation, in respect of any annual, special or
adjourned meeting of the Johnston's stockholders, actions by written consent in
lieu of any such meeting or otherwise, as they in their sole discretion deem
proper. JI reserves the right to require that, in order for shares to be deemed
validly tendered, immediately upon JI's acceptance for payment of such shares,
JI must be able to exercise full voting, consent and other rights with respect
to such shares and other related securities or rights, including voting at any
meeting of stockholders.
DETERMINATION OF VALIDITY
All questions as to the validity, form, eligibility, including time of
receipt, and acceptance of any tender of shares will be determined by JI, in its
sole discretion, which determination will be final and binding. JI reserves the
absolute right to reject any or all tenders of any shares determined by it not
to be in proper form or the acceptance for payment of, or payment for which may,
in the opinion of JI's counsel, be unlawful. JI also reserves the absolute
right, in its sole discretion, subject to the provisions of the Purchase
Agreement, to waive any of the conditions of the offer or any defect or
irregularity in the tender of any shares of any particular stockholder, whether
or not similar defects or irregularities are waived in the case of other
stockholders. No tender of shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of JI, CGW, The Bank of New York, as the depositary, MacKenzie Partners, Inc.,
as the information agent, or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. JI's interpretation of the terms and
conditions of the offer including the Letter of Transmittal and the instructions
thereto will be final and binding.
BACKUP WITHHOLDING
In order to avoid "backup withholding" of U.S. federal income tax on
payments of cash pursuant to the offer, a stockholder surrendering shares in the
offer must, unless an exemption applies, provide the depositary with such
stockholder's correct taxpayer identification number on a Substitute Form W-9
and certify under penalties of perjury that such number is correct and that such
stockholder is not subject to backup withholding. If a stockholder does not
provide such stockholder's correct taxpayer identification number or fails to
provide the certifications described above, the Internal Revenue Service may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the offer may be subject to backup withholding of 31%. All
stockholders surrendering shares pursuant to the offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to JI and the depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Foreign stockholders, if
exempt, should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of shares are irrevocable. Shares tendered pursuant to the offer may be
withdrawn pursuant to the procedures described below at any time prior to the
expiration date and, unless theretofore accepted for payment and paid for by JI
pursuant to the offer, may also be withdrawn at any time after June 6, 2000.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by The Bank of New
York, as the depositary, at one of its addresses set forth on the back cover of
this Offer to Purchase and must specify the name of the person having tendered
the shares to be withdrawn, the number of shares to be withdrawn and the name of
the registered holder of the shares to be withdrawn, if different from the name
of the person who tendered the shares. If certificates for shares have been
delivered or otherwise identified to the depositary, then, prior to the
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<PAGE> 12
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the depositary and, unless such shares have
been tendered by an eligible institution, the signatures on the notice of
withdrawal must be guaranteed by an eligible institution. If shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of the
account at the appropriate book-entry transfer facility to be credited with the
withdrawn shares and otherwise comply with such book-entry transfer facility's
procedures. Withdrawals of tenders of shares may not be rescinded, and any
shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the offer. However, withdrawn shares may be retendered by again
following one of the procedures described in Section 3 any time prior to the
expiration date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by JI, in its sole discretion, which
determination will be final and binding. None of JI, CGW, the depositary, the
information agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for
shares pursuant to the offer will be a taxable transaction for U.S. federal
income tax purposes and also may be a taxable transaction under state, local or
foreign tax laws. In general, a stockholder who tenders shares in the offer will
recognize gain or loss for federal income tax purposes equal to the difference,
if any, between the amount of cash received and the stockholder's tax basis in
the shares sold. Such gain or loss generally will be capital gain or loss if the
shares disposed of were held as capital assets by the stockholder, and will be
long-term capital gain or loss if the shares disposed of were held for more than
one year at the date of sale.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the offer without regard to the particular
facts and circumstances of each stockholder of Johnston and is based on the
provisions of the Internal Revenue Code of 1986, as amended, Treasury Department
Regulations issued pursuant thereto and published rulings and court decisions in
effect as of the date hereof, all of which are subject to change, possibly with
retroactive effect. Special tax consequences not described herein may be
applicable to certain stockholders subject to special tax treatment (including,
but not limited to, insurance companies, tax-exempt organizations, financial
institutions or broker dealers, foreign stockholders and stockholders who have
acquired their shares pursuant to the exercise of employee stock options or
otherwise as compensation). ALL STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS
WITH RESPECT TO SPECIFIC TAX EFFECTS APPLICABLE TO THEM OF THE OFFER, INCLUDING
THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL
AND FOREIGN TAX LAWS.
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<PAGE> 13
6. PRICE RANGE OF SHARES OF JOHNSTON COMMON STOCK; DIVIDENDS ON
JOHNSTON COMMON STOCK. Johnston's common stock is traded on the New York Stock
Exchange under the symbol "JII." The following table sets forth, for each of the
fiscal years indicated, the high and low reported sales price per share on the
NYSE based on published financial sources.
<TABLE>
<CAPTION>
SALES PRICE
--------------------------
HIGH LOW
------- -------
<S> <C> <C>
1998
First Quarter $6.1250 $4.3125
Second Quarter 6.0000 4.5000
Third Quarter 4.6250 3.0625
Fourth Quarter 4.0000 2.8125
1999
First Quarter $3.3125 $2.0000
Second Quarter 2.6250 1.4375
Third Quarter 2.7500 1.6250
Fourth Quarter 2.6250 1.5625
2000
First Quarter $2.8125 $1.5625
</TABLE>
On March 30, 2000, the last full trading day prior to the first public
announcement of JI's intention to commence the offer, the last reported sales
price of the shares on the NYSE was $2.3125 per share. On April 6, 2000, the
last full trading day prior to the commencement of the offer, the last reported
sales price of the shares on the NYSE was $2.75 per share. STOCKHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
Johnston has advised JI that Johnston has not declared or paid any cash
dividends on its common stock since August 1997.
7. EFFECT OF THE OFFER ON THE MARKET FOR JOHNSTON'S COMMON STOCK;
STOCK LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
MARKET FOR THE SHARES
The purchase of shares pursuant to the offer will reduce the number of
holders of shares and the number of shares that might otherwise trade publicly
and, depending upon the number of shares so purchased, could adversely effect
the liquidity and market value of the remaining shares held by the public.
STOCK LISTING
Depending upon the number of shares purchased pursuant to the offer, and
the aggregate market value and per share price of any shares not purchased
pursuant to the offer, the shares may no longer meet the guidelines of the New
York Stock Exchange for continued listing. According to the NYSE's published
guidelines, the NYSE would consider delisting the shares if, among other things,
the number of recordholders of at least 100 shares each should fall below 1,200,
the number of publicly held shares (exclusive of holdings of officers, directors
and their families and other concentrated holdings of 10% or more) should fall
below 600,000 or the average market value over a consecutive 30 trading-day
period is less than $15,000,000 (exclusive of the described excluded holdings).
If, as a result of the purchase of shares pursuant to the offer or otherwise,
the shares no longer meet the requirements of the NYSE for continued listing and
the listing of the shares is discontinued, the market for the shares could be
adversely affected.
In addition, pursuant to the terms of the Purchase Agreement, Johnston has
agreed to sell to JI, 8,750,000 shares of common stock and 250,000 shares of
preferred stock convertible into common stock
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<PAGE> 14
without seeking stockholder approval for such issuance. According to the NYSE
guidelines, stockholder approval is required prior to the issuance of common
stock, if, among other things, the number of shares of common stock to be issued
is equal to or in excess of twenty percent of the number of shares of common
stock outstanding before the issuance of such stock. Therefore, as a result of
the transactions described in the Purchase Agreement, upon the closing of the
offer and the issuance of the additional shares of Johnston common and preferred
stock to JI, Johnston may receive a notification from the NYSE regarding the
potential delisting of the shares of common stock.
If the NYSE were to delist the shares, it is possible that the shares
would continue to trade on another securities exchange or in the
over-the-counter market and that price or other quotations would be reported by
such exchange or through a Nasdaq Stock Market or other sources. JI has agreed
that if it acquires less than 90% of the outstanding common stock it will use
its commercially reasonable best efforts to maintain a public trading market in
the common stock for a period of three years. The manner in which such market is
maintained, whether on an exchange or in the over-the-counter market, will
depend on the number of shares remaining in the public market and their value.
Further, the extent of the public market therefor and availability of such
quotations would depend upon such factors as the stockholders and/or the
aggregate market value of such securities remaining at such time, the interest
in maintaining a market in the shares on the part of securities firms, and the
possible termination of registration under the Exchange Act as described below
and other factors. JI cannot predict whether the reduction in the number of
shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the shares or whether it
would cause future market prices to be greater or less than the offer price.
According to Johnston's Annual Report on Form 10-K for the fiscal year
ended January 1, 2000, as of January 1, 2000, there were approximately 700
holders of record of shares. According to information provided by Johnston, as
of March 31, 2000, there were 10,712,872 shares outstanding.
EXCHANGE ACT REGISTRATION
The shares currently are registered under the Exchange Act. Registration
of the shares under the Exchange Act may be terminated upon application of
Johnston to the SEC if the shares are neither listed on a national securities
exchange nor held by 300 or more holders of record. Termination of registration
of the shares under the Exchange Act would substantially reduce the information
required to be furnished by Johnston to its stockholders and to the SEC and
would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act, the requirement
of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with stockholders' meetings and the related requirement of furnishing
an annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to going private transactions, no longer applicable to
Johnston. Furthermore, the ability of affiliates of Johnston and persons holding
restricted securities of Johnston to dispose of such securities pursuant to Rule
144 or Rule 144A promulgated under the Securities Act of 1933, as amended, may
be impaired or eliminated. If registration of the shares under the Exchange Act
were terminated, the shares would no longer be margin securities or be eligible
for continued listing on any stock exchange. JI may seek to cause Johnston to
apply for termination of registration of the shares under the Exchange Act as
soon after the completion of the offer as the requirements for such termination
are met. However, so long as JI is committed to maintain a public trading market
in the common stock as described above, JI has agreed to continue the
registration of the shares under the Exchange Act.
MARGIN REGULATIONS
The shares presently are margin securities under the regulations of the
Board of Governors of the Federal Reserve System, which status has the effect,
among other things, of allowing brokers to extend credit on the collateral of
such securities. Depending upon factors similar to those described above
regarding listing and market quotations, it is possible that, following the
offer, the shares would no longer
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<PAGE> 15
constitute margin securities for the purposes of the margin regulations of the
Federal Reserve Board and therefore could no longer be used as collateral for
loans made by brokers.
If registration of the shares under the Exchange Act were terminated, the
shares would no longer be margin securities.
8. CERTAIN INFORMATION CONCERNING JOHNSTON INDUSTRIES, INC.
GENERAL
The information concerning Johnston contained in this Offer to Purchase,
including that set forth below under the caption "Selected Financial
Information," has been furnished by Johnston or has been taken from or based
upon publicly available documents and records on file with the SEC and other
public sources. Neither JI nor CGW assumes responsibility for the accuracy or
completeness of the information concerning Johnston contained in such documents
and records or for any failure by Johnston to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to JI or CGW.
Johnston is a consolidated entity which includes its direct wholly owned
operating subsidiary, Johnston Industries Alabama, Inc., and its indirect wholly
owned subsidiaries, Johnston Industries Composite Reinforcements, Inc., Greater
Washington Investments, Inc., J.I. Georgia, Inc., and Autographix, Inc. Johnston
conducts its operations through four business units: (i) the Greige Fabrics
Division, (ii) the Finished Fabrics Division, (iii) the Fiber Products Division,
and (iv) Johnston Industries Composite Reinforcements.
Johnston is a leading designer, manufacturer and marketer of finished and
unfinished (greige) cotton, synthetic and blended fabrics used in a broad range
of industrial and consumer applications. Its products are sold to a number of
niche markets, including segments of the home furnishings, hospitality,
industrial, automotive and specialty markets. In addition, Johnston reprocesses
and markets waste textile fiber and off-quality fabrics for sale to a broad
range of specialty markets. Johnston also manufactures fabrics used in
engineered composite materials serving primarily the recreation and construction
markets.
Johnston is a Delaware corporation with its principal executive offices at
105 Thirteenth Street, Columbus, Georgia 31901. The telephone number of Johnston
at their offices is (706) 641-3140.
SELECTED FINANCIAL INFORMATION
Set forth below is certain selected consolidated financial information
with respect to Johnston, excerpted or derived from Johnston's Annual Reports on
Forms 10-K for the years ended January 1, 2000, January 2, 1999 and January 3,
1998 filed with the SEC pursuant to the Exchange Act.
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<PAGE> 16
More comprehensive financial information is included in such reports and
in other documents filed by Johnston with the SEC. The following summary is
qualified in its entirety by reference to such reports and other documents and
all of the financial information (including any related notes) contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the SEC in the manner set forth below.
JOHNSTON INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED
------------------------------------
JANUARY 1, JANUARY 2, JANUARY 3,
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales $264,036 $283,724 $332,537
Operating income 586 11,003 2,630
Loss from continuing operations
before income taxes (12,709) (1,799) (11,701)
Net loss (8,008) (608) (8,496)
Net loss per share (0.75) (0.06) (0.81)
Weighted average shares outstanding 10,722 10,722 10,562
BALANCE SHEET DATA:
Total assets $193,966 $219,539 $234,788
Long-term debt less current
maturities 2,429 51,109 61,688
Total stockholders' equity 40,251 48,274 49,124
</TABLE>
AVAILABLE INFORMATION
Johnston is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports, proxy
statements and other information with the SEC relating to its business,
financial condition and other matters. Information as of particular dates
concerning Johnston's directors and officers, their remuneration, options
granted to them, the principal holders of Johnston's securities and any material
interests of such persons in transactions with Johnston is required to be
disclosed in proxy statements distributed to Johnston's stockholders and filed
with the SEC. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
SEC located at Seven World Trade Center, Suite 1300, New York, NY 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies
of such information should be obtainable by mail, upon payment of the SEC's
customary charges, by writing to the SEC's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The SEC also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other
information. Such material should also be available for inspection at the
offices of the NYSE, located at 20 Broad Street, New York, New York 10005.
9. CERTAIN INFORMATION CONCERNING JI AND CGW.
GENERAL
JI, a Delaware corporation and currently a wholly owned subsidiary of CGW,
was organized for the purpose of acquiring Johnston and has conducted no
activities unrelated to such purpose since its organization. All of the issued
and outstanding shares of capital stock of JI are currently owned by CGW. The
principal executive offices of JI are located at the principal executive offices
of CGW. The telephone number of JI at such offices is (404) 816-3255.
CGW is a private equity investment firm which supports management teams in
acquisitions and recapitalizations of middle-market companies. CGW invests
through its managed partnerships, CGW
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<PAGE> 17
Southeast Partners I through IV. Since its formation in 1984, the firm has
focused exclusively on the middle-market. CGW has current equity capital under
management in excess of $750 million. CGW is a limited partnership formed under
the Delaware Revised Uniform Limited Partnership Act with its principal
executive offices at Twelve Piedmont Center, Suite 210, Atlanta, Georgia 30305.
Its telephone number at such offices is (404) 816-3255.
Neither JI nor CGW is registered under or subject to the provisions of the
Exchange Act.
SELECTED FINANCIAL INFORMATION
JI was only recently organized and at the date of this Offer to Purchase
has no operations, assets or liabilities.
CGW Southeast Partners IV, L.P. was formed on April 22, 1999. Set forth
below is certain selected consolidated financial information with respect to CGW
from the date of its formation through and as of December 31, 1999. This
financial information has been taken from the unaudited financial statements of
CGW which are attached to this Offer to Purchase as Schedule II.
CGW SOUTHEAST PARTNERS IV, L.P.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
Statement of Operations:
Revenue -- Interest income................................ $ 4
Total expenses............................................ 6,061
Net loss.................................................. (6,056)
Statement of Financial Position:
Assets.................................................... $ 29,008
Borrowings on line of credit.............................. 16,000
Total partner's equity.................................... 12,700
Total committed capital................................... 404,500
</TABLE>
CERTAIN INFORMATION
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of JI and CGW are set forth in Schedule I hereto.
Except as set forth in this Offer to Purchase regarding the purchase of
8,750,000 shares of Johnston common stock and the 250,000 shares of Johnston
preferred stock, neither JI, CGW, nor, to the best of their knowledge, any of
the persons listed on Schedule I, nor any associate or majority-owned subsidiary
of any of the foregoing, beneficially owns or has a right to acquire any shares,
and neither JI, CGW, nor, to the best of their knowledge, any of the persons or
entities referred to above, nor any of the respective executive officers,
directors or subsidiaries of any of the foregoing, has effected any transaction
in shares during the past 60 days.
Except as set forth in this Offer to Purchase, neither JI, CGW, nor, to
the best of their knowledge, any of the persons listed on Schedule I, has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of Johnston, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any securities of Johnston, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss, or
the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, none of JI, CGW, or any of their respective affiliates, nor, to the
best of their knowledge, any of the persons listed on
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Schedule I, has had, within the last two years, any business relationships or
transactions with Johnston or any of its executive officers, directors or
affiliates that would require reporting under the rules of the SEC. Except as
set forth in this Offer to Purchase, within the last two years, there have been
no contacts, negotiations or transactions between JI, CGW, or any of their
respective affiliates or, to the best of their knowledge, any of the persons
listed on Schedule I, and Johnston or its affiliates concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors or a sale or other transfer of a material amount of
assets.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by JI to purchase all of the shares
pursuant to the offer and the stock purchase from Johnston and to pay related
fees and expenses is expected to be approximately $60 million. JI plans to
obtain approximately $45 million of the necessary funds from the purchase of its
common stock by CGW and the remainder from a purchase of its common stock by
BancBoston Capital, Inc. JI and CGW are currently negotiating with BancBoston
concerning the investment by BancBoston in JI. If these negotiations are
successful, CGW and BancBoston will enter into a Securities Purchase Agreement
pursuant to which BancBoston will invest approximately $15 million in JI in
exchange for shares of the common stock of JI. The Securities Purchase Agreement
will contain provisions regarding the sale or transfer of that common stock,
representations concerning the representation on the board of directors of JI by
CGW and BancBoston, and customary registration rights with regard to the common
stock. If the negotiations with BancBoston are not successful, JI and CGW do not
currently have any alternative financing arrangements. Under the terms of the
Purchase Agreement, JI and CGW may terminate the offer if the BancBoston
financing is not successful.
In addition, JI and CGW have received a commitment letter dated March 30,
2000, from Congress Financial Corporation pursuant to which Congress has
committed, subject to the terms and conditions of the commitment letter, to
provide Johnston with a credit facility in an initial aggregate principal amount
of up to approximately $105.7 million, to be available for repayment of
outstanding amounts under Johnston's current credit facility and for general
corporate purposes.
11. BACKGROUND OF THE OFFER, PURPOSE OF THE OFFER, THE PURCHASE
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
The following description was prepared by JI, CGW and Johnston.
Information about Johnston was provided by Johnston and neither JI nor CGW takes
any responsibility for the accuracy or completeness of any information regarding
meetings or discussions in which CGW or its representatives did not participate.
BACKGROUND OF THE OFFER
In December 1998, Mr. Edwin A. Wahlen, Jr., a managing partner of CGW and
Mr. William A. Davies, a partner of CGW, made an initial visit to the offices of
Johnston to discuss a potential acquisition of Johnston by CGW.
On March 2, 1999, Messrs. Wahlen and Davies again travelled to the offices
of Johnston to further discuss a proposed transaction between Johnston and CGW.
At this meeting, CGW entered into a Confidentiality Agreement with Johnston,
pursuant to which, among other things, CGW agreed that any non-public
information made available to it would be held in strict confidence. CGW further
agreed to a three-year standstill with respect to initiating any purchase or
sale of any securities of Johnston, and with regard to influencing the voting of
any securities of Johnston, or otherwise seeking to control or influence
Johnston's management, unless Johnston provided its prior written consent.
On March 23, 1999, Mr. Davies met with representatives of Johnston at the
offices of Johnston to review Johnston's operational structure. Shortly
thereafter, CGW concluded that an acquisition of Johnston was not appropriate
for CGW at that time.
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On July 20, 1999, Mr. James A. O'Donnell, a partner of CGW, and Mr. Roy R.
Bowman, also a partner of CGW, visited the offices of Johnston to once again
discuss the possibilities of an investment by CGW in Johnston.
On August 4, 1999, Messrs. O'Donnell and Bowman visited the offices of
Johnston and also toured certain of the company's manufacturing facilities. At
this time further discussions of a potential investment or acquisition
transaction were held with the management of Johnston.
On August 9, 1999, Mr. D. Clark Ogle, president and chief executive
officer of Johnston, and Mr. James J. Murray, chief financial officer of
Johnston, visited CGW's offices in Atlanta, Georgia to meet with the partners of
CGW and discuss a potential investment in, or acquisition of, Johnston by CGW.
On August 23, 1999, CGW drafted and submitted to Johnston a letter of
interest. The letter of interest contained terms of the proposed investment in,
and acquisition of, Johnston.
In response to CGW's letter, the board of directors of Johnston held a
special meeting on August 30, 1999 to discuss the proposal. After discussing the
recent alternatives to an acquisition considered by management, none of which
had resulted in firm offers, the board determined to allow CGW to proceed with
due diligence. For purposes of additional negotiations with CGW, the board
appointed a special committee comprised of Messrs. John A. Friedman, J. Reid
Bingham, William J. Hart and Gaines R. Jeffcoat, authorizing this committee to
negotiate with CGW and evaluate any alternatives to the proposal.
Following this board meeting, Johnston announced that it had received an
unsolicited, tentative acquisition proposal involving a price of $3.00 per
share, indicating that the bidder would continue with due diligence.
Notwithstanding this release, Johnston did not receive any serious indications
of interest from other bidders.
In August, 1999, following the delivery of its letter of interest to
Johnston, CGW began its due diligence process and hired certain consultants and
advisors, including environmental consultants, legal advisors and accounting
advisors.
On September 7, 1999, Messrs. O'Donnell and Bowman made a due diligence
visit to the offices of Johnston to review certain financial and operational
diligence materials.
On September 24, 1999, Messrs. O'Donnell and Bowman traveled to Johnston's
offices for further due diligence review as well as to meet with Mr. Harold
Harvey, President of the Greige Fabrics and Finished Fabrics divisions of
Johnston. The discussions with Mr. Harvey concerned the operational aspects of
Johnston's business.
On September 27 and 28, 1999, Mr. Murray met with representatives of CGW
at the offices of CGW to further review the operational structure of Johnston.
Mr. Murray was joined by Mr. Ogle on September 29, 1999 for a continuation of
such discussions.
On October 4, 1999, CGW submitted a non-binding proposal to Johnston to
acquire a controlling interest in Johnston through a purchase of its common
stock.
On October 18, 21, and 25, 1999, the Johnston board held special meetings
to receive reports from the special committee concerning negotiations with CGW
and to discuss the October 4 proposal letter. Mr. Friedman reported that due
diligence had been completed. The proposal letter and a special committee
proposal for an alternative structure to the transaction were discussed. Recent
additional efforts by members of the board and management to determine if other
potential strategic buyers were interested in a transaction were also discussed.
The board then authorized the special committee to instruct Johnston's counsel
to meet with CGW and its counsel to discuss alternative transaction structures.
On October 18, 1999, CGW began arrangements for the financing of the
proposed transaction with Johnston, including initial contact with BancBoston
and Congress Financial Corporation.
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On October 28, 1999, counsel to Johnston met with CGW and their counsel at
the offices of CGW to discuss various alternative structures for a transaction
with Johnston, including the possibility of a direct capital infusion in
Johnston by CGW.
On November 17, 1999, Messrs. O'Donnell and Bowman met at CGW's offices
with certain members of the special committee of the Board of Directors of
Johnston to discuss the non-binding proposal, certain issues relating thereto
and a timetable for consummation of the transaction.
On November 23, 1999, Messrs. O'Donnell and Bowman traveled to Johnston's
offices to continue their financial and operational due diligence review of
Johnston.
On December 7, 1999, Messrs. O'Donnell and Bowman traveled to Opp, Alabama
to inspect Johnston's manufacturing operations at its Opp and Micolas, Alabama
mills.
On December 14, 1999, Messrs. O'Donnell and Bowman traveled to Johnston's
offices to meet with Mr. Bill Henry, Vice President of Johnston. Discussions
with Mr. Henry focused on overall operational matters.
On January 5, 2000, Messrs. O'Donnell and Bowman and representatives from
BancBoston traveled to Johnston's offices to meet with Mr. Ogle and Mr. Murray
to discuss the overall transaction, certain financial and operational due
diligence matters, and BancBoston's participation in the transaction. On January
25, 2000, Messrs. O'Donnell and Bowman traveled to Johnston's offices to
complete their operational and financial due diligence review of Johnston.
On February 21, 2000, Messrs. Bingham and Hart met with Messrs. Cravey,
O'Donnell and Bowman at the offices of CGW to discuss certain terms and
conditions of the proposed transaction.
During January, February, and March, counsels to Johnston and CGW prepared
and negotiated the Purchase Agreement and related documents setting forth the
structure of the proposed transaction, during which time various negotiations
were held by the special committee and CGW through counsel regarding various
terms of the transaction.
In February 1999, Mr. Friedman, a member of the special committee of the
Johnston board of directors, became ill and, as a result, his participation in
the transaction ended.
On March 28, 1999, the special committee received an oral report from The
Robinson-Humphrey Company, LLC as to the opinion they were prepared to render to
the board of directors regarding the fairness of the consideration to be
received by the public stockholders. Thereafter, the special committee, certain
members of management and counsel met with CGW and its counsel at CGW's offices
to discuss final outstanding matters regarding the proposed transaction.
On March 29, 2000, The Robinson-Humphrey Company, LLC delivered to
Johnston's board of directors its written opinion to the effect that the
consideration to be received by the public stockholders of Johnston in the offer
was fair to such stockholders from a financial point of view as of March 29,
2000. The opinion of The Robinson-Humphrey Company, LLC is set forth in full as
an exhibit to Johnston's Schedule 14D-9, which is being mailed to the
stockholders of Johnston concurrently with this Offer to Purchase. The
stockholders of Johnston are urged to read that opinion in its entirety.
At a special meeting held on March 29, 2000, the Johnston board of
directors reviewed the transactions and, following presentations by senior
officers and financial and legal advisors of Johnston, approved the Purchase
Agreement and the offer. One member of the board of directors of Johnston
abstained from voting on the Purchase Agreement and the offer due to conflicts
and/or perceived conflicts of interest. The board of directors for Johnston
decided to remain neutral in recommending whether the stockholders of Johnston
should accept the offer and tender their shares.
In the evening of March 30, 2000, the parties executed a Purchase
Agreement. On March 31, 2000 (prior to the opening of the stock market on the
first business day following execution of the Purchase Agreement) the parties
publicly announced the proposed transaction.
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PURPOSE OF THE OFFER
The purpose of the offer and the Purchase Agreement is to enable JI and
CGW to acquire control of, and possibly the entire equity interest in, Johnston.
The offer is being made pursuant to the Purchase Agreement and is intended to
increase the likelihood that such control will be effected.
Stockholders of Johnston who sell their shares in the offer will cease to
have any equity interest in Johnston and to participate in its earnings and any
future growth. If the offer is consummated, the stockholders who tender their
shares will no longer have an equity interest in Johnston and instead will have
only the right to receive cash consideration pursuant to the Purchase Agreement.
Similarly, the stockholders of Johnston who tender their shares will not bear
the risk of any decrease in the value of Johnston after selling their shares in
the offer.
The primary benefit of the offer to the stockholders of Johnston is that
such stockholders are being afforded an opportunity to sell all of their shares
for cash at a price which represents a premium of approximately 30% over the
closing market price of the shares on the last full trading day prior to the
initial public announcement of the offer.
THE PURCHASE AGREEMENT
The following is a summary of certain provisions of the Purchase
Agreement. The summary is qualified in its entirety by reference to the Purchase
Agreement which is incorporated herein by reference and a copy of which has been
filed with the SEC as an exhibit to the Schedule TO. The Purchase Agreement may
be examined and copies may be obtained at the places and in the manner set forth
in Section 9 of this Offer to Purchase.
The Offer. The Purchase Agreement provides that as promptly as reasonably
practicable JI will commence the offer and that, upon the terms and subject to
the prior satisfaction or waiver of the conditions of the offer, JI will
purchase all shares validly tendered pursuant to the offer. The Purchase
Agreement provides that, without Johnston's consent, JI will not amend or waive
the minimum condition, decrease the offer price, or impose any further
conditions to the offer or amend any condition of the offer in a manner adverse
to the holders of shares. Notwithstanding the foregoing, the Purchase Agreement
provides that JI may, without Johnston's consent, extend the offer under the
following circumstances:
- if at the scheduled expiration date any of the conditions to the offer
have not been satisfied, including but not limited to any legal or
regulatory requirements under the Hart-Scott-Rodino Act;
- from time to time for a period of not more than ten business days beyond
the initial expiration date (which initial expiration date shall be
twenty business days following the commencement of the offer), if at
that time less than 90% of the outstanding shares of Johnston common
stock have been tendered;
- for any period required by any rule, regulation, interpretation, or
position of the SEC or the staff of the SEC, applicable to the offer;
and
- for a period of not more than ten business days beyond the latest
expiration date that would otherwise apply according to extensions under
the first three bullet points above.
The Purchase Agreement further provides, however, that in no event may the
offer be extended beyond the date of termination of the Purchase Agreement, and
either party has the right to terminate the Purchase Agreement if the offer is
not completed by June 30, 2000.
At the time that JI pays for the shares of Johnston common stock that were
validly tendered and accepted, JI has also agreed, subject to the terms and
conditions of the Purchase Agreement, to purchase 8,750,000 shares of Johnston
common stock and 250,000 shares of Johnston preferred stock, each for $3.00 per
share, for an aggregate purchase price of $27 million. The preferred stock is to
be designated as Series A preferred stock and will vote together with the common
stock on all matters brought before
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Johnston's stockholders. The Series A preferred stock will also be convertible
at any time, at the option of JI, into shares of common stock as long as there
are sufficient shares of authorized common stock available for issuance.
The Mergers. Following the consummation of the offer, the Purchase
Agreement provides that, subject to the terms and conditions thereof, at the
election of CGW and in accordance with Delaware law, in the event that CGW shall
acquire, directly or indirectly, at least 90% of the outstanding shares of
Johnston voting capital stock on a fully diluted basis, at the time CGW pays for
the shares, a wholly owned subsidiary of JI shall be merged with and into
Johnston and, as a result of this short-form merger, Johnston, as the surviving
corporation, shall exist as a wholly owned subsidiary of JI.
At the effective time of the short-form merger each issued and outstanding
share (other than shares that are owned by Johnston as treasury stock, any
shares owned by CGW, JI, or their affiliates, or any shares which are held by
stockholders exercising appraisal rights under Delaware law) will be converted
into the right to receive the price per share paid pursuant to the offer. In
addition, each issued and outstanding share of the common stock of the wholly
owned subsidiary of JI will be converted into one share of common stock of
Johnston and, except for shares owned by CGW, JI or their affiliates, shall
constitute the only outstanding shares of capital stock of Johnston.
The Purchase Agreement also provides that, subject to the terms and
conditions thereof, at the election of CGW and in accordance with Delaware law,
in the event that CGW shall acquire, directly or indirectly, less than 90% of
the outstanding shares of Johnston voting capital stock, at the time CGW pays
for the shares, a wholly owned subsidiary of JI shall be merged with and into
Johnston, and, as a result of this merger Johnston will be the surviving
corporation and a subsidiary of JI. In contrast to the short-form merger
described above, in this instance the stockholders who did not tender their
shares will remain stockholders of Johnston.
Johnston's Board of Directors. The Purchase Agreement provides that
promptly after the purchase by JI of shares pursuant to the offer, JI shall be
entitled to designate such number of directors, rounded up to the next whole
number, on Johnston's board of directors as is equal to the product of the total
number of directors on Johnston's board of directors (giving effect to the
directors designated by JI) multiplied by the percentage that the number of
shares of capital stock beneficially owned by JI or CGW bears to the total
number of shares of capital stock then outstanding. Johnston will, upon request
of JI, promptly take all actions necessary to cause JI's designees to be elected
as directors of Johnston, including increasing the size of Johnston's board of
directors or securing the resignations of such number of its incumbent
directors, or both.
Options and Restricted Stock. Immediately after JI has accepted for
payment all shares validly tendered and not withdrawn prior to the expiration
date, each outstanding option to purchase shares, other than certain designated
options with exercise prices below the price per share offered in this offer,
granted under Johnston's Amended and Restated Stock Incentive Plan for Key
Employees and Non-Employee Directors, whether or not then exercisable or vested,
shall be canceled by Johnston. Each holder of a canceled option shall be
entitled to receive from JI at the same time as payment for shares is made by JI
in connection with the offer, in consideration for the cancellation of such
option, an amount, if any, in cash equal to the product of (a) the number of
shares previously subject to such option and (b) the excess, if any, of the
offer price over the exercise price per share previously subject to such option.
Interim Operations; Covenants. Pursuant to the Purchase Agreement,
Johnston covenants and agrees that, between the date of the Purchase Agreement
and the earlier of the termination of the Purchase Agreement or the time of the
election or appointment of JI's designees to Johnston's board of directors,
unless CGW will otherwise agree in writing, the following:
- the business of Johnston and its subsidiaries will be conducted only in,
and Johnston and subsidiaries will not take any action except in, the
usual, regular and ordinary course of business;
- Johnston will use all reasonable efforts to preserve intact its business
organization and material assets and maintain its material rights;
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- Johnston will not, and will not permit any subsidiary to take any action
that would (a) materially adversely affect the ability of any party to
obtain any consents required for the offer, (b) cause any of the
conditions to the offer not to be satisfied, or (c) materially adversely
affect the ability of any party to perform its covenants and agreements
under the Purchase Agreement; and
- Johnston will not:
(a) amend the Certificate of Incorporation, Bylaws or other governing
instruments of Johnston or its subsidiaries, or
(b) incur any additional debt obligation or other obligation for
borrowed money in excess of an aggregate of $100,000 except in the ordinary
course of the business consistent with past practices, or impose, or suffer
the imposition, on any material asset of Johnston or its subsidiaries of
any lien or permit any such lien to exist; or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of Johnston or its subsidiaries, or declare or pay any
dividend or make any other distribution in respect of Johnston's capital
stock; or
(d) except pursuant to the Purchase Agreement or upon the exercise of
stock options outstanding as of March 30, 2000, issue, sell, pledge,
encumber, authorize the issuance of, enter into any contract to issue,
sell, pledge, encumber, or authorize the issuance of, or otherwise permit
to become outstanding, any additional shares of Johnston common stock or
any other capital stock of Johnston or its subsidiaries, or any stock
appreciation rights, or any option, warrant, or other equity right; or
(e) adjust, split, combine or reclassify any capital stock of Johnston
or its subsidiaries or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Johnston common
stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber (x) any shares of capital stock of any subsidiary of Johnston
(unless any such shares of stock are sold or otherwise transferred to
another subsidiary of Johnston) or (y) any asset having a book value in
excess of $25,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) purchase any securities or make any material investment, either by
purchase of stock of securities, contributions to capital, asset transfers,
or purchase of any assets, in any person other than a wholly owned
subsidiary of Johnston, or otherwise acquire direct or indirect control
over any person, other than in connection with (i) foreclosures in the
ordinary course of business, or (ii) the creation of new wholly owned
subsidiaries organized to conduct or continue activities otherwise
permitted by the Purchase Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of Johnston or its subsidiaries, except in accordance with past
practice or as required by law; pay any severance or termination pay or any
bonus other than pursuant to written policies or written contracts in
effect on March 30, 2000; and enter into or amend any severance agreements
with officers of Johnston or its subsidiaries; grant any material increase
in fees or other increases in compensation or other benefits to directors
of Johnston or its subsidiaries except in accordance with past practice; or
(h) enter into or amend any employment contract between Johnston or
its subsidiaries and any person (unless such amendment is required by law)
that does not contain the unconditional right on the part of Johnston or
its subsidiary to terminate without liability (other than liability for
services already rendered), at any time on or after the date JI pays for
the shares of Johnston common stock tendered in this offer; or
(i) adopt any new employee benefit plan of Johnston or its
subsidiaries or terminate or withdraw from, or make any material change in
or to, any existing employee benefit plans of Johnston or its subsidiaries
other than any such change that is required by law or that, in the opinion
of counsel, is necessary or advisable to maintain the tax qualified status
of any such plan, or make any distributions from such employee benefit
plans, except as required by law, the terms of such plans or consistent
with past practice; or
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(j) make any significant change in any tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in tax laws or regulatory accounting requirements or
GAAP; or
(k) commence any litigation other than in accordance with past
practice, or settle any litigation involving any liability of Johnston or
its subsidiaries for material money damages or restrictions upon the
operations of Johnston or its subsidiaries; or
(l) enter into, modify, amend or terminate any material contract or
waive, release, compromise or assign any material rights or claims; or
(m) authorize any of, or commit or agree to take any of, the foregoing
actions.
Pursuant to the Purchase Agreement, subject to a confidentiality
agreement, from the date of the Purchase Agreement to the purchase by JI of
shares pursuant to the offer, Johnston will provide CGW, during normal business
hours and upon reasonable notice, access to all financial, operating and other
data and information regarding the business of Johnston as CGW reasonably
requests.
No Solicitation. Pursuant to the Purchase Agreement, Johnston has agreed
that neither Johnston nor any of its affiliates will, directly or indirectly,
initiate, solicit, encourage or knowingly facilitate (including by way of
furnishing information) any inquiries or the making of any acquisition proposal.
Johnston and its board of directors shall be permitted:
- to the extent applicable, to comply with Rule 14d-9 and Rule 14e-2 under
the Exchange Act with regard to an acquisition proposal, and
- to engage in any discussions or negotiations with, or provide any
information to, any person in response to an unsolicited bona fide
written acquisition proposal by any such person, if and only to the
extent that:
(a) Johnston's board of directors concludes in good faith and
consistent with its fiduciary duties to Johnston's stockholders under
applicable law that such acquisition proposal could reasonably be expected
to result in a superior proposal,
(b) prior to providing any information or data to any person in
connection with an acquisition proposal by any such person, Johnston's
board of directors receives from such person an executed confidentiality
agreement containing confidentiality terms at least as stringent as those
contained in the confidentiality agreement between Johnston and CGW, and
(c) prior to providing any information or data to any person or
entering into discussions or negotiations with any person, Johnston's board
of directors notifies CGW and JI promptly of such inquiries, proposals or
offers received by, any such information requested from, or any such
discussions or negotiations sought to be initiated or continued with, any
of its representatives indicating, in connection with such notice, the name
of such person and the material terms and conditions of any inquiries,
proposals or offers.
Johnston agrees that it will promptly keep CGW informed of the status and
terms of any such proposals or offers and the status and terms of any such
discussions or negotiations.
For purposes of this provision of the Purchase Agreement, a superior
proposal is defined to include any proposal:
- made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or
similar transaction, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of
Johnston common stock then outstanding or all or substantially all the
assets of Johnston,
- which the board of directors of Johnston determines in its good faith
judgment that such proposal, if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory
aspects of the proposal and the person making the proposal, and
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- which would, if consummated, result in a more favorable transaction to
the stockholders of Johnston than the offer, taking into account, to the
extent relevant, the long-term prospects and interests of Johnston and
its stockholders.
Indemnification and Insurance. Pursuant to the Purchase Agreement, CGW
and JI have agreed that:
- For a period of three years after the date on which JI purchases the
shares tendered in the offer, JI will, and will cause Johnston to,
indemnify, defend and hold harmless the present and former directors,
officers, employees and agents of Johnston and its subsidiaries against
all liabilities arising out of actions or omissions relating to the
service or services of those persons occurring at or prior to the date
on which JI purchases the shares tendered in the offer, to the fullest
extent permitted under Delaware law and by Johnston's Certificate of
Incorporation and Bylaws as in effect on March 30, 2000.
- JI will, or will cause Johnston to, use its reasonable efforts to
maintain in effect for a period of three years after the date on which
JI purchases the shares tendered in the offer, Johnston's existing
directors' and officers' liability insurance policy with respect to
claims arising from facts or events which occurred prior to the date on
which JI purchases the shares, and covering persons who are currently
covered by such insurance; provided, that neither JI nor Johnston is
obligated to make aggregate premium payments for such three-year period
which exceed 150% of the annual premium payments on Johnston's current
policy in effect as of March 30, 2000.
Representations and Warranties. Pursuant to the Purchase Agreement,
Johnston has made customary representations and warranties to CGW and JI with
respect to, among other things, its organization, capitalization, financial
statements, public filings, conduct of business, employee benefit plans,
intellectual property, labor matters, compliance with laws, tax matters,
litigation, environmental matters, tangible property, material contracts and
undisclosed liabilities.
Termination; Fees. The Purchase Agreement and the offer may be terminated
at any time prior to the effective date:
- by mutual written consent of CGW and Johnston;
- by either CGW or Johnston if JI has not accepted for payment all shares
tendered pursuant to the offer by June 30, 2000, if the offer shall have
expired without any shares of Johnston common stock being purchased or
if any court or other governmental authority shall have issued an order,
decree or ruling or taken any other action, which permanently restrains,
enjoins or otherwise prohibits the acceptance for payment of, or payment
for, shares tendered pursuant to the offer and such order, decree,
ruling or other action shall have become final and non-appealable;
- by CGW if: (a) due to an occurrence not involving a breach by CGW or JI
of their obligations under the Purchase Agreement that results in a
failure to satisfy any condition of the offer, JI shall have failed to
commence the offer as soon as reasonably practical following the date of
the initial public announcement of the offer, or (b) Johnston shall have
breached in any material respect any representation, warranty, covenant
or other agreement in the Purchase Agreement or the agreements governing
the investment by BancBoston or the refinancing of Johnston's debt by
Congress Financial Corporation which cannot be cured prior to the date
JI pays for the shares tendered in the offer; and
- by Johnston if (a) JI has failed to commence the offer as soon as
reasonably practical following the initial date of the public
announcement of the offer, (b) CGW or JI shall have breached in any
material respect any representation, warranty, covenant or other
agreement in the Purchase Agreement which cannot be cured prior to 30
days after Johnston gave JI and CGW notice of such breach, or (c) prior
to the purchase of shares pursuant to the offer, the board of directors
of
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Johnston approves or recommends a superior proposal and enters into a
definitive contract regarding such superior proposal.
Pursuant to the Purchase Agreement, Johnston shall pay CGW a fee equal to
$3,000,000, plus all of CGW's reasonable expenses (up to a maximum of $4,000,000
for such fee and all expenses), if:
- the Purchase Agreement is terminated pursuant the board of directors of
Johnston entering into a superior proposal; or
- the offer shall have expired without any shares of Johnston common stock
being purchased or if JI shall have not accepted for payment all shares
of Johnston common stock tendered by June 30, 2000, and prior to that
time a superior proposal is announced.
CGW shall be entitled to receive its reasonable expenses in the event
that:
- the Purchase Agreement is terminated by CGW due to Johnston having
breached in any material respect any representation, warranty, covenant
or other agreement in the Purchase Agreement or the agreements governing
the investment by BancBoston or the refinancing of Johnston's debt by
Congress Financial Corporation which cannot be cured prior to the date
JI pays for the shares tendered in the offer.
Johnston shall be entitled to receive its reasonable expenses in the event
that:
- JI has failed to commence the offer as soon as reasonably practical
following the initial date of the public announcement of the offer; or
- CGW or JI shall have breached in any material respect any
representation, warranty, covenant or other agreement in the Purchase
Agreement which cannot be cured prior to 30 days after Johnston gave JI
and CGW notice of such breach.
Except as described above, all costs and expenses incurred in connection
with the Purchase Agreement and the offer shall be paid by the party incurring
such expenses, whether or not the offer is consummated.
12. PLANS FOR JOHNSTON; OTHER MATTERS.
PLANS FOR JOHNSTON
JI and CGW are conducting a detailed review of Johnston and its assets,
corporate structure, operations, properties, policies, management and personnel
and will consider, subject to the terms of the Purchase Agreement, what, if any,
changes would be desirable in light of the circumstances which exist upon
completion of the offer. Such changes could include changes in Johnston's
business, corporate structure, board of directors or management, although,
except as disclosed in this Offer to Purchase, neither JI nor CGW has any
current plans with respect to any of such matters. The Purchase Agreement
provides that, promptly after the purchase by JI of the shares pursuant to the
offer, JI has the right to designate such number of directors, rounded up to the
next whole number, on Johnston's board of directors as is equal to the product
of the total number of directors on Johnston's board of directors (giving effect
to the directors designated by JI) multiplied by the percentage that the number
of shares beneficially owned by JI bears to the total number of shares of
capital stock then outstanding. See Section 11.
Except as disclosed in this Offer to Purchase, neither CGW nor JI has any
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, relocation of
operations, or sale or transfer of assets, involving Johnston or any of its
subsidiaries, or any material changes in Johnston's corporate structure,
business or composition of its management or personnel.
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OTHER MATTERS
Short-Form Merger. Section 253 of the Delaware General Corporation Law
provides that, if a corporation owns at least 90% of the outstanding shares of
each class of another corporation, the corporation holding such stock may merge
itself into such other corporation without any action or vote on the part of the
board of directors or the stockholders of such other corporation (known as a
short-form merger). In the event that CGW, JI and any of their affiliates
acquire in the aggregate at least 90% of the shares of Johnston's voting capital
stock, pursuant to the offer or otherwise, then, at the election of CGW, a
short-form merger could be effected without any approval of the board of
directors or the stockholders of Johnston, subject to compliance with the
provisions of Section 253 of the DGCL. Even if CGW, JI of their affiliates do
not own 90% of the outstanding shares following consummation of the offer, CGW
and JI could seek to purchase additional shares in the open market or otherwise
in order to reach the 90% threshold and employ a short-form merger. The per
share consideration paid for any shares so acquired may be greater or less than
that paid in the offer.
Appraisal Rights. Under the DGCL, holders of shares tendered pursuant to
the offer do not have appraisal rights as a result of the offer. In connection
with the short-form merger, however, stockholders of the Company may have the
right to dissent and demand appraisal of their shares under the DGCL. Under the
DGCL, dissenting stockholders who comply with the applicable statutory
procedures will be entitled to receive a judicial determination of the fair
value of their shares (exclusive of any element of value arising from the
accomplishment or expectation of the short-form merger) and to receive payment
of such fair value in cash, together with a fair rate of interest, if any. Any
such judicial determination of the fair value of the shares could be based upon
considerations other than or in addition to the offer price, the consideration
per share to be paid in the short-form merger and the market value of the
shares, including asset values and the investment value of the shares.
Stockholders should recognize that the value so determined could be higher or
lower than the price per share paid pursuant to the offer or the consideration
per share to be paid in the short-form merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF THE DGCL.
The foregoing description of the DGCL is not necessarily complete and is
qualified in its entirety by reference to the DGCL.
Rule 13E-3. The short-form merger would have to comply with any
applicable Federal law operative at the time. Rule 13e-3 under the Exchange Act
is applicable to certain going private transactions; however, JI believes that
Rule 13e-3 will not be applicable to the short-form merger. If Rule 13e-3 were
applicable to the short-form merger, it would require, among other things, that
certain financial information concerning Johnston, and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority stockholders in such a transaction, be filed with the SEC
and disclosed to minority stockholders prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Purchase Agreement provides that, prior to the
time the designees of JI have been elected to the board of directors of
Johnston, Johnston will not:
- except as provided in the Purchase Agreement, or pursuant to the
exercise of stock options outstanding as of March 30, 2000, issue, sell,
pledge, encumber, authorize the issuance of, enter into any contract to
issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of
Johnston's common stock or any other capital stock of any Johnston
subsidiary, or any stock appreciation rights, or any option, warrant, or
other equity right; or
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- adjust, split, combine or reclassify any capital stock of Johnston or
its subsidiaries or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Johnston
common stock, or sell, lease, mortgage or otherwise dispose of or
otherwise encumber (a) any shares of capital stock of any subsidiary of
Johnston, or (b) any asset having a book value in excess of $25,000
other than in the ordinary course of business for reasonable and
adequate consideration; or
- repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly
or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of Johnston or its subsidiaries, or declare
or pay any dividend or make any other distribution in respect of
Johnston's capital stock.
14. CONDITIONS OF OFFER.
Notwithstanding any other provision of the offer, JI shall not be required
to accept for payment or pay for any shares tendered pursuant to the offer, and
may terminate or amend the offer and may postpone the acceptance for payment of
and payment for shares tendered, if the minimum condition shall not have been
satisfied, any applicable waiting period under the Hart-Scott-Rodino Act shall
not have expired or been terminated prior to the expiration of the offer, or at
any time on or after the date of the Purchase Agreement, and prior to the
acceptance for payment of shares, any of the following conditions shall exist:
- there shall have been instituted, threatened or pending any
litigation brought by any governmental entity or other person, or before
any court or governmental authority, in each case that has a reasonable
likelihood of success, (a) challenging the acquisition by CGW or JI of any
shares, directly or indirectly seeking to restrain or prohibit or otherwise
make more costly the making or consummation of the offer, or seeking to
obtain from Johnston, CGW or JI any damages that are material in relation
to Johnston and its subsidiaries, taken as a whole, (b) seeking to prohibit
or limit the ownership or operation by Johnston, CGW or any of their
respective subsidiaries of any material portion of the business or assets
of Johnston, CGW or any of their respective subsidiaries, or to compel
Johnston, CGW or any of their respective subsidiaries to dispose of or hold
separate any material portion of the business or assets of Johnston, CGW or
any of their respective subsidiaries, as a result of the offer, (c) seeking
to impose or to confirm limitations on the ability of CGW or any of its
subsidiaries effectively to acquire or hold or to exercise full rights of
ownership of the shares tendered in the offer, including without limitation
the right to vote any shares acquired or owned by CGW or any of its
subsidiaries on all matters properly presented to the stockholders of
Johnston, or the right to vote any shares of capital stock of any
subsidiary directly or indirectly owned by Johnston, (d) seeking to
prohibit CGW or any of its subsidiaries from effectively controlling in any
material respect the business or operations of Johnston or any of its
subsidiaries, or (e) which otherwise is reasonably likely to have a
material adverse effect on Johnston and its subsidiaries;
- there shall be any law threatened, proposed or enacted with respect
to, or deemed applicable to, or any consent withheld with respect to, (a)
CGW, Johnston or any of their respective subsidiaries or (b) the offer, by
any governmental entity or before any court or governmental authority, that
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (a) through (d) of the first bullet
above;
- there shall have occurred any development that is reasonably likely
to result in a material adverse effect on Johnston and its subsidiaries;
- there shall have occurred (a) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange or
in the Nasdaq Stock Market for a period in excess of 24 hours, (b) a
decline of at least 25% in either the Dow Jones Average of Industrial
Stocks or the Standard & Poor's 500 index from March 30, 2000, or a
material disruption of or material adverse change in financial, banking or
capital market conditions that could materially adversely affect
syndication of loan facilities, (c) any material adverse change in United
States currency exchange rates or a suspension of, or limitation on, the
markets therefor, (d) a declaration of a banking
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moratorium or any suspension of payments in respect of banks in the United
States, (e) any limitation (whether or not mandatory) by any domestic
government or governmental, administrative or regulatory authority or
agency on, or any other event that could reasonably be expected to
materially adversely affect the extension of credit by banks or other
lending institutions, (f) a commencement of a war or armed hostilities or
other national or international calamity that has a material adverse effect
on CGW, JI, Johnston or any of their subsidiaries or affecting or delaying
the consummation of the offer, or (g) in the case of any of the foregoing
existing on the date of the Purchase Agreement, a material acceleration or
worsening thereof;
- (a) it shall have been publicly disclosed or JI shall have otherwise
learned that beneficial ownership of more than 20% of the outstanding
shares of Johnston's common stock has been acquired by any corporation
(including Johnston or any of its subsidiaries or affiliates), partnership,
person or other entity or group, other than JI or any of its affiliates, or
(b) (A) the board of directors of Johnston or any committee thereof shall
have approved or recommended any acquisition proposal or any other
acquisition of shares other than the offer, or (B) Johnston shall have
entered into an agreement with respect to an acquisition proposal or (C)
the board of directors of Johnston or any committee thereof shall have
resolved to do any of the foregoing;
- any of the representations and warranties of Johnston set forth in
the Purchase Agreement that are qualified as to materiality shall not be
true and correct, or any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made at the time of
such determination;
- Johnston shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of Johnston to be performed or complied with by it under the
Purchase Agreement;
- the Purchase Agreement shall have been terminated in accordance with
its terms or the offer shall have been terminated with the consent of
Johnston;
- all consents of and notices to or filings with governmental
authorities and third parties required in connection with the offer shall
not have been obtained or made;
- JI shall not have received financing in an amount necessary to
consummate the offer and the purchase of Johnston common and preferred
stock, including the payment of fees and expenses relating to the those
transactions, on terms and conditions reasonably satisfactory to JI and
CGW; or
- CGW and JI shall not have received confirmation from Johnston that
each of the financial institutions that have made loans to employees of
Johnston to purchase shares of Johnston common stock, which are guaranteed
by Johnston, shall have agreed to restructure the loans on terms reasonably
acceptable to CGW and JI, including the pledge by each borrower under the
loans of all shares of Johnston common stock held by such borrower and
purchased with the proceeds of the loan, to the lender to secure the loans;
provided, however, that any employee borrower who chooses to tender their
shares of Johnston common stock acquired with the loans, will not have
their loan restructured and instead it will remain due and payable in
accordance with its original terms.
The foregoing conditions are for the sole benefit of JI and CGW and may be
asserted by JI or CGW regardless of the circumstances giving rise to any such
condition or may be waived by JI or CGW in whole or in part at any time and from
time to time in their sole discretion. The failure by CGW or JI at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
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15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on information provided by
Johnston, none of Johnston, JI or CGW is aware of any license or regulatory
permit that appears to be material to the business of Johnston and its
subsidiaries, taken as a whole, that might be adversely affected by JI's
acquisition of shares (and the indirect acquisition of the stock of Johnston's
subsidiaries) as contemplated herein or of any approval or other action by a
domestic or foreign governmental, administrative or regulatory agency or
authority that would be required for the acquisition and ownership of the shares
(and the indirect acquisition of the stock of Johnston's subsidiaries) by JI as
contemplated herein. Should any such approval or other action be required, JI
and CGW presently contemplate that such approval or other action will be sought,
except as described below under "State Takeover Laws". While, except as
otherwise described in this Offer to Purchase, JI does not presently intend to
delay the acceptance for payment of or payment for shares tendered pursuant to
the offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to Johnston's
business or that certain parts of Johnston's business might not have to be
disposed of or other substantial conditions complied with in the event that such
approvals were not obtained or such other actions were not taken or in order to
obtain any such approval or other action. If certain types of adverse action are
taken with respect to the matters discussed below, JI could decline to accept
for payment or pay for any shares tendered. See Section 14 for certain
conditions to the offer, including conditions with respect to governmental
actions.
STATE TAKEOVER LAWS
A number of states have adopted laws that purport, to varying degrees, to
apply to attempts to acquire corporations that are incorporated in, or that have
substantial assets, stockholders, principal executive offices or principal
places of business or whose business operations otherwise have substantial
economic effects in, such states. Johnston, directly or through subsidiaries,
conducts business in a number of states throughout the United States, some of
which have enacted such laws.
In Edgar v. MITE Corp., the Supreme Court of the United States invalidated
on constitutional grounds the Illinois Business Takeover Statute which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of
America, the Supreme Court held that the State of Indiana could, as a matter of
corporate law, constitutionally disqualify a potential acquiror from voting
shares of a target corporation without the prior approval of the remaining
stockholders where, among other things, the corporation is incorporated in, and
has a substantial number of stockholders in, the state. Subsequently, in TLX
Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they apply to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v.
McReynolds, a Federal District Court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit.
Johnston is incorporated under the laws of the State of Delaware. In
general, Section 203 of the DGCL prevents an "interested stockholder" (including
a person who has the right to acquire 15% or more of the corporation's
outstanding voting stock) from engaging in a "business combination" (defined to
include mergers and certain other actions) with a Delaware corporation for a
period of three years following the date such person became an interested
stockholder. Johnston's Board approved for purposes of Section 203 the entering
into by JI, CGW and Johnston of the Purchase Agreement and the consummation of
the transactions contemplated thereby and has taken all appropriate action so
that Section 203, with respect to Johnston, will not be applicable to CGW and JI
by virtue of such actions.
If any government official or third party should seek to apply any state
takeover law to the offer or the short-form merger or other business combination
between JI or any of its affiliates and Johnston, JI
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will take such action as then appears desirable, which action may include
challenging the applicability or validity of such statute in appropriate court
proceedings. In the event it is asserted that one or more state takeover
statutes is applicable to the offer or the short-form merger and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
offer or the short-form merger, JI might be required to file certain information
with, or to receive approvals from, the relevant state authorities or holders of
shares of Johnston's common stock, and JI might be unable to accept for payment
or pay for shares tendered pursuant to the offer, or be delayed in continuing or
consummating the offer or the short-form merger. In such case, JI may not be
obligated to accept for payment or pay for any tendered shares of Johnston's
common stock.
ANTITRUST
The offer is subject to the Hart-Scott-Rodino Act, which provides that
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the Department of
Justice and the Federal Trade Commission and certain waiting period requirements
have been satisfied.
JI and Johnston expect to file soon their Notification and Report Forms
with respect to the offer under the Hart-Scott-Rodino Act. The waiting period
under the Hart-Scott-Rodino Act with respect to the offer will expire at 11:59
p.m., New York City time, on the fifteenth day after the date JI's form is filed
unless early termination of the waiting period is granted. However, the
Antitrust Division or the FTC may extend the waiting period by requesting
additional information or documentary material from JI or Johnston. If such a
request is made, such waiting period will expire at 11:59 p.m., New York City
time, on the tenth day after substantial compliance by JI with such request.
Only one extension of the waiting period pursuant to a request for additional
information is authorized by the Hart-Scott-Rodino Act. Thereafter, such waiting
period may be extended only by court order or with the consent of JI. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. JI will not
accept for payment shares tendered pursuant to the offer unless and until the
waiting period requirements imposed by the Hart-Scott-Rodino Act with respect to
the offer have been satisfied.
The FTC and the Antitrust Division frequently scrutinize the legality
under the antitrust laws of transactions such as JI's acquisition of shares
pursuant to the offer. At any time before or after JI's acquisition of shares,
the Antitrust Division or the FTC could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the acquisition of shares pursuant to the offer or otherwise
or seeking divestiture of shares acquired by JI or divestiture of substantial
assets of JI, CGW, or their affiliates. Private parties, as well as state
governments, may also bring legal action under the antitrust laws under certain
circumstances. Based upon an examination of publicly available information
relating to the businesses in which JI, CGW, and Johnston are engaged, JI and
CGW believe that the acquisition of shares by JI will not violate the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the offer or
other acquisition of shares by JI on antitrust grounds will not be made or, if
such a challenge is made, of the result. See Section 14 for certain conditions
to the offer, including conditions with respect to litigation and certain
governmental actions.
FEDERAL RESERVE BOARD REGULATIONS
Regulations U and X of the Federal Reserve Board restrict the extension or
maintenance of credit for the purpose of buying or carrying margin stock,
including shares of Johnston common stock, if the credit is secured directly or
indirectly by margin stock. Such secured credit may not be extended or
maintained in an amount that exceeds the maximum loan value of all the direct
and indirect collateral securing the credit, including margin stock and other
collateral. All financing for the offer will be structured so as to be in full
compliance with these regulations.
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16. FEES AND EXPENSES.
CGW has acted as financial advisor to JI in connection with the proposed
acquisition of Johnston. As a result, JI will pay, or cause Johnston to pay, an
advisory fee in connection with the transactions contemplated by the Purchase
Agreement of approximately $2.1 million.
JI has retained MacKenzie Partners, Inc. to act as the information agent
and The Bank of New York to act as the depositary in connection with the offer.
Such firms each will receive reasonable and customary compensation for their
services. JI has also agreed to indemnify each such firm against certain
liabilities in connection with their services, including certain liabilities
under federal securities laws.
JI will not pay any fees or commissions to any broker or dealer or other
person (other than the information agent) for making solicitations or
recommendations in connection with the offer. Brokers, dealers, banks and trust
companies will be reimbursed by JI for customary mailing and handling expenses
incurred by them in forwarding material to their customers.
17. MISCELLANEOUS.
The offer is being made to all holders of shares of Johnston common stock
other than Johnston. JI is not aware of any jurisdiction in which the making of
the offer or the tender of shares in connection therewith would not be in
compliance with the laws of such jurisdiction. If JI becomes aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, JI will make a good faith effort to comply with any such law.
If, after such good faith effort, JI cannot comply with any such law, the offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of shares residing in such jurisdiction. In any jurisdiction where the
securities, blue sky or other laws require the offer to be made by a licensed
broker or dealer, the offer shall be deemed to be made on behalf of JI by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of CGW or JI not contained herein or in the Letter of
Transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized.
JI and CGW have filed with the Commission the Schedule TO pursuant to
Regulation M-A under the Exchange Act, furnishing certain additional information
with respect to the offer. The Schedule TO and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the offices of the SEC
and the National Association of Securities Dealers, Inc. in the manner set forth
in Section 9 of this Offer to Purchase (except that they will not be available
at the regional offices of the Commission).
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JI ACQUISITION CORP.
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF CGW AND JI
1. DIRECTORS AND EXECUTIVE OFFICERS OF CGW.
JI Acquisition Corp. is a subsidiary of CGW Southeast Partners IV, L.P.
CGW Southeast Partners IV, L.P. is a Delaware limited partnership.
The general partner of CGW Southeast Partners IV, L.P. is CGW Southeast
IV, L.L.C., a Delaware limited liability company.
The manager of CGW Southeast IV, L.L.C. is CGW, Inc., a Georgia
corporation.
The following table sets forth the name, business address and present
principal occupation or employment, and material occupations, positions, offices
or employment for the past five years, of each director, executive officer and
shareholder of CGW, Inc.
Unless otherwise indicated, each such person is a citizen of the United
States of America and the business address of each such person is c/o CGW
Southeast Partners IV, L.P., Twelve Piedmont Center, Suite 210, Atlanta, Georgia
30305. Unless otherwise indicated, each such person has held his or her present
occupation as set forth below, or has been an executive officer of CGW, or the
organization indicated, for the past five years.
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
Roy R. Bowman Mr. Bowman is currently the President of JI
Acquisition Corp. as well as a Vice President of
CGW, Inc. Prior to joining CGW in 1999, Mr. Bowman
served as a Managing Director for the
Pricewaterhouse Coopers Business Regeneration
Services Group from 1993 through 1999. From 1989 to
1993 he was a Senior Vice President and Managing
Director of Buccino & Associates, Inc., a national
turnaround consulting firm. Previously, he served
for eight years as President of Carwood
Manufacturing Company and Duckhead Apparel, Inc.
Earlier, he served for seven years as Chief
Financial Officer of Formfit Rogers, Inc. of
Nashville, Tennessee. He holds a BS from
Mississippi State University (1966) and an MBA
from Georgia State University (1971).
Richard L. Cravey Mr. Cravey is currently the sole Director of JI
Acquisition Corp. Mr. Cravey is also currently a
Director, Vice President, Secretary and shareholder
of CGW, Inc. Prior to the formation of Cravey &
Co., a predecessor to CGW, in 1984, Mr. Cravey
served for two years as Senior Vice President for
Acquisitions for Southeastern Capital Corporation,
an American Stock Exchange-listed company primarily
engaged in acquiring and operating businesses in
leveraged transactions. From 1976 through 1983, Mr.
Cravey was Vice President and Manager of the
Citicorp Industrial Credit Corporation Southeast
and Southwest regions. Mr. Cravey holds a BS (1968)
from Georgia Tech and an MBA (1974) from Georgia
State University.
Richard L. Cravey, Jr Mr. Cravey is currently a Vice President of CGW,
Inc. Prior to joining CGW, from March 1995 through
1996, Mr. Cravey held an
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<PAGE> 34
Associate position at ING Capital of Atlanta,
Georgia. Mr. Cravey received a BA from Furman
University (1990) and an MBA from Emory University
(1993).
William A. Davies Mr. Davies is currently a Vice President of CGW,
Inc., and has been employed with CGW during the
last five years. Prior to joining CGW, Mr. Davies
was a Vice President with Westinghouse Credit
Corporation from 1984 through 1991, where he was
primarily engaged in making equity and subordinated
debt investments. Before joining Westinghouse
Credit, Mr. Davies was a commercial banking officer
with Pittsburgh National Bank and Equibank in
Pittsburgh, Pennsylvania. Mr. Davies received a BS
(1968) and an MBA (1974) from Indiana University.
Garrison M. Kitchen Mr. Kitchen is currently a Vice President of CGW,
Inc., and has been employed with CGW during the
last five years. Prior to joining CGW in 1994, Mr.
Kitchen was a Managing Director in the investment
banking department of The Robinson Humphrey
Company, Inc. From 1984 to 1985, Mr. Kitchen was a
Vice President with Bear, Stearns & Co. in Atlanta.
From 1981 through 1984, Mr. Kitchen was with the
investment banking department of Dean Witter
Reynolds Inc. in Atlanta. Mr. Kitchen holds a BS in
Economics from the Wharton School of the University
of Pennsylvania (1981) and is a Chartered Financial
Analyst.
Michael D. Long Mr. Long is currently a Vice President of CGW, Inc.
Prior to joining CGW in 1998, Mr. Long was the CEO
of Pac Pizza, LLC, a 148-unit Pizza Hut franchisee.
Mr. Long was also an investor in the company
through a private equity partnership, L&G
Financial, which was formed in 1995 and based in
Austin, Delaware. From 1977 to 1995, Mr. Long held
various positions with NationsBank in its
Corporate, Energy, Syndication and Commercial
Banking Groups. He holds a BS (1974) in
Finance/Accounting and an MBA (1975) from Oklahoma
State University.
Bart A. McLean Mr. McLean is currently a Vice President of CGW,
Inc., and has been employed with CGW during the
last five years. Prior to joining CGW, Mr. McLean
was a Principal with Allsop Venture Partners in St.
Louis from 1987 through 1992. Allsop Venture was
focused on investing in and acquiring smaller
middle-market companies. From 1983 through 1987,
Mr. McLean was a Vice President of Republic Venture
Group, the venture capital subsidiary of Republic
Bank - Dallas. He was employed as a lending officer
in Republic Bank's energy banking group from 1981
to 1983. Mr. McLean holds a BS from the University
of Delaware (1979) and an MBA from Indiana
University (1981).
Sidney J. Nurkin Mr. Nurkin is currently an Assistant Secretary of
CGW, Inc. Mr. Nurkin is also currently, and has
been since 1994, a partner in Alston & Bird LLP. He
concentrates his practice on mergers and
acquisitions, leveraged buyouts, corporate finance,
and corporate governance. His professional
activities include membership in the Atlanta and
American Bar Associations and the State Bar of
Georgia. Mr. Nurkin is a former Chairman of the
Corporate and Banking Law Section of the State Bar
of Georgia and former member of the
I-2
<PAGE> 35
Committee on Corporate Laws of the Business Law
Section of the American Bar Association. He is
presently a member of the Committee on Corporate
Practice of the American Bar Association. Mr.
Nurkin holds a Bachelor of Science degree from Duke
University and an LLB from the Duke University
School of Law.
James A. O'Donnell Mr. O'Donnell is currently the Secretary and
Treasurer of JI Acquisition Corp. as well as a Vice
President of CGW, Inc. Mr. O'Donnell is also
currently a Director of Bestway, Inc. Mr. O'Donnell
joined CGW in 1995. Beginning in 1989 and 1991,
respectively, Mr. O'Donnell became a general
partner of O'Donnell & Masur, L.P. and a general
partner of Sherry Lane Partners, L.P., both private
equity partnerships. From 1983 through 1988, he was
President and Chief Executive Officer of First
Republic Venture Group and its predecessor,
InterFirst Venture Corp., a venture capital firm.
From 1981 to 1982 Mr. O'Donnell was a Senior Vice
President and Manager of the Corporate Finance
Department for InterFirst Bank in Dallas. Prior to
InterFirst Bank, he served as a Regional Investment
Manager for The Equitable Life Assurance Society of
the US. He holds a BA from Rhodes College (1974),
an MBA (1974) from the Wharton School of the
University of Pennsylvania (1978) and is a
Chartered Financial Analyst.
Edwin A. Wahlen, Jr Mr. Wahlen is currently a Director, President and
Treasurer of CGW, Inc. Mr. Wahlen is also a
shareholder of CGW, Inc., as well as a Director of
Cameron Ashley Building Products, Inc. Prior to
joining CGW, Mr. Wahlen was a Senior Vice President
in the investment banking department of Dean Witter
Reynolds, Inc. from 1977 to 1985. From 1973 to
1977, Mr. Wahlen was an officer in the Atlanta
office of the corporate banking department of the
First National Bank of Chicago and from 1970 to
1973, he served as a member of the investment
banking department of Interstate Securities
Corporation. Mr. Wahlen received a BS from Georgia
Tech (1970), holds an MBA from the University of
North Carolina at Chapel Hill (1972) and is a
Chartered Financial Analyst.
2. DIRECTORS AND EXECUTIVE OFFICERS OF JI.
Unless otherwise indicated, all information concerning the current
business address, citizenship, principal occupation or employment and five-year
employment history for each person identified below is the same as the
information given in paragraph 1 above.
Director
Richard L. Cravey
Executive Officers
Roy R. Bowman -- President
James A. O'Donnell -- Treasurer and Secretary
I-3
<PAGE> 36
SCHEDULE II
CGW FINANCIAL STATEMENTS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS -- INCOME TAX BASIS
AS OF DECEMBER 31, 1999 AND FOR THE
PERIOD APRIL 22, 1999 (DATE OF FORMATION)
TO DECEMBER 31, 1999:
Statement of Financial Position............................. II-1
Statement of Operations..................................... II-2
Statement of Changes in Partners' Equity.................... II-3
Statement of Cash Flows..................................... II-4
Notes to Financial Statements............................... II-5
</TABLE>
<PAGE> 37
CGW SOUTHEAST PARTNERS IV, L.P.
STATEMENT OF FINANCIAL POSITION -- INCOME TAX BASIS
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Portfolio investments
Common stocks............................................. $26,433,630
Cash........................................................ 2,148,041
Prepaid management fees..................................... 235,104
Organizational costs, net................................... 170,969
Other assets................................................ 20,482
-----------
$29,008,226
===========
LIABILITIES AND PARTNERS' EQUITY
Accrued liabilities......................................... $ 256,756
Borrowings on line of credit................................ 16,000,000
Accrued interest payable.................................... 51,233
Partners' equity:
General partner........................................... 105,569
Limited partners.......................................... 12,594,668
-----------
Total partners' equity............................ 12,700,237
-----------
$29,008,226
===========
</TABLE>
See notes to financial statements.
II-1
<PAGE> 38
CGW SOUTHEAST PARTNERS IV, L.P.
STATEMENT OF OPERATIONS -- INCOME TAX BASIS
PERIOD APRIL 22, 1999 (DATE OF FORMATION) TO DECEMBER 31, 1999
<TABLE>
<S> <C>
Revenue -- Interest income.................................. $ 4,837
-----------
Expenses:
Management fee............................................ 5,629,753
Interest expense.......................................... 399,827
Professional fees......................................... 9,500
Other expenses............................................ 21,846
-----------
Total expenses.................................... 6,060,926
-----------
Net loss.................................................... $(6,056,089)
===========
</TABLE>
See notes to financial statements.
II-2
<PAGE> 39
CGW SOUTHEAST PARTNERS IV, L.P.
STATEMENT OF CHANGES IN PARTNERS' EQUITY -- INCOME TAX BASIS
PERIOD APRIL 22, 1999 (DATE OF FORMATION) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
-------- ----------- -----------
<S> <C> <C> <C>
Partners' Equity -- April 22, 1999
Contributions from partners............................. $169,417 $18,915,525 $19,084,942
Syndication expenses.................................... (3,277) (324,406) (327,683)
Net loss................................................ (60,562) (5,995,527) (6,056,089)
Nondeductible expenses.................................. (9) (924) (933)
-------- ----------- -----------
Partners' Equity -- December 31, 1999..................... $105,569 $12,594,668 $12,700,237
======== =========== ===========
</TABLE>
See notes to financial statements.
II-3
<PAGE> 40
CGW SOUTHEAST PARTNERS IV, L.P.
STATEMENT OF CASH FLOWS -- INCOME TAX BASIS
PERIOD APRIL 22, 1999 (DATE OF FORMATION) TO DECEMBER 31, 1999
<TABLE>
<S> <C>
Operating activities:
Net loss.................................................. $(6,056,089)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization expense................................... 8,998
Increase in prepaid management fees.................... (235,104)
Increase in other assets............................... (20,482)
Increase in accrued liabilities........................ 256,756
Increase in accrued interest payable................... 51,233
Nondeductible expenses................................. (933)
-----------
Net cash used in operating activities............. (5,995,621)
Investing activities:
Purchase of portfolio investments......................... (26,433,630)
-----------
Net cash used in investing activities............. (26,433,630)
Financing activities:
Contributions from partners............................... 19,084,942
Syndication expenses...................................... (327,683)
Organizational costs...................................... (179,967)
Borrowings on line of credit.............................. 16,000,000
-----------
Net cash provided by financing activities......... 34,577,292
-----------
Increase in cash............................................ 2,148,041
Cash:
Beginning of year......................................... 0
-----------
End of year............................................... $ 2,148,041
===========
</TABLE>
See notes to financial statements.
II-4
<PAGE> 41
CGW SOUTHEAST PARTNERS IV, L.P.
NOTES TO FINANCIAL STATEMENTS -- INCOME TAX BASIS
AS OF AND FOR THE PERIOD APRIL 22, 1999 (DATE OF FORMATION) TO DECEMBER 31, 1999
1. PARTNERSHIP AGREEMENT
CGW Southeast Partners IV, L.P. (the "Partnership") is a limited
partnership organized to acquire, along with operating management, equity
positions in profitable or potentially profitable businesses and to develop and
implement strategies designed to enhance the operating efficiency, financial
management, and strategic direction of the businesses.
The Partnership pays the General Partner an annual management fee until
either January 1 or July 1 following the earlier of (i) the end of the
Commitment Period, (ii) the time at which the General Partner or a majority of
the Principals of the General Partner or Messrs. Cravey and Wahlen (whether or
not joined by others), directly or indirectly, hold the closing of a Competing
Fund, or (iii) the time when at least 90% of the aggregate Committed
Contributions of all Partners has been invested, expended, or reserved,
whichever is the first to occur (such period being referred to as the "2%
Period"). The management fee is equal to 2% of the aggregate Committed
Contributions of the Partners.
After the 2% Period, and through the date of liquidation and dissolution
of the Partnership, the Partnership will pay the General Partner an annual
management fee equal to 1% of the Base Amount as of each January 1 and July 1
during such period (referred to as the "1% Period"). The Base Amount means the
sum of (a) the aggregate cost basis of all Portfolio Investments that as of that
date are not Disposed Investments, plus (b) the amount of Bridge Loans
outstanding on that date that have not become Term Loans, plus (c) the amount,
if any, of Distributable Proceeds retained by the Partnership to the extent the
General Partner has reserved such amount for a specific investment in an
acquired business that closes within seventy-five days of the date of
determination.
Payment of the management fee is made quarterly in advance on January 1,
April 1, July 1, and October 1 of each year, in an amount equal to 25% of the
annual management fee.
The General Partner has entered into an agreement with CGW Southeast
Management, LLC ("Management"), whereby the General Partner agrees to pay the
management fees to Management. Under the terms of the Agreement, 80% of any
acquired business consulting fees paid to the General Partner or Management by
the portfolio companies reduces future management fees payable to the General
Partner. In addition, 55% of permitted transaction fees up to aggregate retained
transaction fees of $12.5 million will be offset against any future management
fees; thereafter, 100% of any permitted transaction fees will be offset against
any future management fees. Finally, any break-up fees payable to the General
Partner or the Partnership shall be disbursed as follows: first, to reimburse
the Partnership for partnership expenses incurred in connection with the
transaction; second, to reimburse the General Partner for expenses incurred with
respect to the transaction; and third, to the General Partner, provided,
however, that 80% of such remaining amount paid to the General Partner reduces
future management fees.
Partnership profits or losses resulting from items of income or expense
not relating to an equity investment, exclusive of certain expenses borne by the
General Partner, are generally allocated to the Partners based on their
respective Contribution Accounts. Contribution Accounts are defined as the
amount of committed capital that has been contributed as of the date of
determination.
The net gain of the Partnership is allocated among the Partners to
proportionately reduce the difference between their respective Target Capital
Accounts and Partially Adjusted Capital Accounts as long as the Target Capital
Accounts exceed the Partially Adjusted Capital Accounts. Conversely, the net
loss of the Partnership is allocated to proportionately reduce the difference
between their Partially Adjusted Capital Accounts and Target Capital Accounts as
long as the Target Capital Accounts are less than the Partially Adjusted Capital
Accounts. The Target Capital Accounts are defined as the amount each Partner
would receive if all remaining assets were sold for cash at no gain or loss.
Partially Adjusted
II-5
<PAGE> 42
CGW SOUTHEAST PARTNERS IV, L.P.
NOTES TO FINANCIAL STATEMENTS -- INCOME TAX BASIS -- (CONTINUED)
Capital Accounts represent each Partner's capital account adjusted for all items
except the net gain or net loss allocation.
Cash distributions attributable to interest on investments or bridge loans
shall be made to the partners contributing the funds for such investment in
proportion to such contribution. Any distribution made at any time before a
Portfolio Investment has become a Disposed Investment shall be made to such
Participating Partners in that Portfolio Investment in proportion to their
respective participation percentages. Distributions made relative to Disposed
Investments will be made in the following order, which is determined on an
investment-by-investment basis:
- - Each Participating Partner receives an annually compounded 8% Preferential
Return on capital contributed for such disposed investment.
- - Each Participating Partner receives a return of capital contributions with
respect to such Portfolio Investment, which includes allocated management fees
and expenses attributable to the Disposed Investment.
- - Each Participating Partner receives a return of capital contributions with
respect to all Portfolio Investments that have theretofore become Disposed
Investments, which includes allocated management fees and expenses
attributable to the Disposed Investments.
- - Any remaining amount is distributed 50% to the General Partner and 50% to the
Participating Partners (the "50% Distribution") until the General Partner has
received aggregate Carried Distributions equal to 20% of the aggregate amount
of distributions made to the Participating Partners for the 8% preferential
return and the 50% Distribution. Carried Distributions is defined as the
amount of proceeds that has been distributed to the General Partner in excess
of the amount the General Partner would have received if it had been a Limited
Partner and held no interest in the Partnership as a General Partner.
- - Any remaining amount is distributed 80% to the Participating Partners and 20%
to the General Partner.
No amount shall be distributed to the General Partner unless the net asset
value of the Partnership immediately following the proposed distribution plus
the amount of all prior distributions to the Partners equals or exceeds an
amount equal to 125% of the aggregate Contributions Accounts of all Partners.
If in violation of applicable laws, Pension Fund and Bank Holding Company
investors may withdraw from certain investments provided that they provide to
the General Partner an opinion of counsel stating such investment would be
unlawful or a violation of applicable ERISA or BHC laws. The Partnership
Agreement was amended after year-end to provide that if Limited Partners whose
aggregate committed contributions equal or exceed 35% of the aggregate committed
contributions of all Limited Partners exercise their right to withdraw from
certain investments, then each other Limited Partner whose committed
contribution is equal to or greater than $5,000,000 shall also have the right to
withdraw from such investment.
The Partnership Agreement expires December 31, 2009.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting. The accompanying financial statements have been
prepared on the basis of accounting used for income tax purposes, generally the
accrual basis. Under this income tax method of accounting, investments are
stated at cost. Generally accepted accounting principles would require such
investments to be carried at fair value.
Portfolio Investments. Portfolio investments are stated at cost. In
computing gain or loss on disposal of securities, the Partnership uses the
specific identification method of establishing cost.
II-6
<PAGE> 43
CGW SOUTHEAST PARTNERS IV, L.P.
NOTES TO FINANCIAL STATEMENTS -- INCOME TAX BASIS -- (CONTINUED)
Use of Estimates. Preparing financial statements in conformity with the
basis of accounting used for income tax purposes requires management to make
estimates and assumptions. Those estimates and assumptions affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Taxes on Income. Taxes on income are not provided in the financial
statements of the Partnership because each Partner's share of the taxable income
or loss is included in the tax returns of the respective Partner.
3. INVESTMENTS
On April 23, 1999 the Partnership made its initial investment in J Three
Technology Services of $8.0 million and subsequently made additional investments
in J Three totaling $18.4 million. At December 31, 1999, the Partnership's
investment in J Three is $26,433,630.
4. LINE OF CREDIT
On April 16, 1999, the Partnership entered into a $25,000,000 line of
credit agreement with a bank, which bears interest at the 90-day LIBOR rate plus
150 basis points (6.15% at December 31, 1999). This agreement extends three
years from the origination date and contains three one-year discretionary
extensions at the end of the initial term. As of December 31, 1999, $16,000,000
in advances was outstanding under this line and in addition $51,233 in interest
has been accrued. On January 6, 2000, the Partnership repaid the $16,000,000
balance under its line of credit.
5. PARTNERS' EQUITY
The Partnership's capital accounts for the general and limited partners as
of December 31, 1999 are summarized as follows:
<TABLE>
<CAPTION>
CAPITAL BALANCE
TOTAL COMMITTED AT DECEMBER 31,
CAPITAL 1999
--------------- ---------------
<S> <C> <C>
General partner $ 4,045,000 $ 105,569
Limited partners 400,455,000 12,594,668
------------ -----------
$404,500,000 $12,700,237
============ ===========
</TABLE>
II-7
<PAGE> 44
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for shares and
any other required documents should be sent or delivered by each stockholder of
Johnston or his or her broker, dealer, commercial bank, trust company or other
nominee to the depository, at one of the addresses set forth below:
The Depositary for the offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Tender & Exchange Department
P.O. Box 11248 Only) 101 Barclay Street
Church Street Station (212) 815-6213 Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
</TABLE>
For Confirmation Telephone:
(212) 815-6156
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITORY.
Questions and requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification on Substitute Form
W-9 may be directed to the information agent at the location and telephone
numbers set forth below. Stockholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the offer.
The Information Agent for the offer is:
(MacKenzie Partners, Inc. Logo)
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
JOHNSTON INDUSTRIES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED APRIL 7, 2000
BY
JI ACQUISITION CORP.
a subsidiary of
CGW SOUTHEAST PARTNERS IV, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION
DATE").
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
-------- -------------------------- ------------------------------
(for Eligible Institutions Only)
<S> <C> <C>
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm Receipt of Facsimile by New York, New York 10286
New York, New York 10286-1248 Telephone:
(212) 815-6156
</TABLE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON TENDERED CERTIFICATE(S)
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED BY NUMBER
CERTIFICATE SHARE OF SHARES
NUMBER(S)* CERTIFICATE(S) TENDERED**
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by any certificates delivered to
the Depositary are being tendered. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE ASSISTANCE
IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS LETTER OF
TRANSMITTAL, JOHNSTON INDUSTRIES, INC.'S STOCK TRANSFER AGENT WILL CONTACT
YOU DIRECTLY WITH REPLACEMENT INSTRUCTIONS.
<PAGE> 2
LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF JOHNSTON
INDUSTRIES, INC. PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 7, 2000, BY JI
ACQUISITION CORP. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
THIS LETTER OF TRANSMITTAL IS TO BE USED EITHER IF CERTIFICATES ARE TO BE
FORWARDED HEREWITH OR IF DELIVERY OF SHARES (AS DEFINED BELOW) IS TO BE MADE BY
BOOK-ENTRY TRANSFER TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE DEPOSITORY
TRUST COMPANY (HEREINAFTER REFERRED TO AS THE "BOOK-ENTRY TRANSFER FACILITY")
PURSUANT TO THE PROCEDURES SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE (AS
DEFINED BELOW). STOCKHOLDERS WHO DELIVER SHARES BY BOOK-ENTRY TRANSFER ARE
REFERRED TO HEREIN AS "BOOK-ENTRY STOCKHOLDERS" AND OTHER STOCKHOLDERS ARE
REFERRED TO HEREIN AS "CERTIFICATE STOCKHOLDERS."
STOCKHOLDERS WHOSE CERTIFICATES ARE NOT IMMEDIATELY AVAILABLE OR WHO
CANNOT DELIVER THEIR SHARES AND ALL OTHER DOCUMENTS REQUIRED HEREBY TO THE
DEPOSITARY OR COMPLETE THE PROCEDURES FOR BOOK-ENTRY TRANSFER PRIOR TO THE
EXPIRATION DATE MUST TENDER THEIR SHARES ACCORDING TO THE GUARANTEED DELIVERY
PROCEDURE SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE. SEE INSTRUCTION 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
----------------------------------------------
Account Number:
-------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owners:
-----------------------------------------------
Window Ticket Number (if any):
----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------
Name of Institution which Guaranteed Delivery:
------------------------------
Account Number:
-------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------
(BOXES ABOVE FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
-2-
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to JI Acquisition Corp., a Delaware
corporation (the "Purchaser") and a subsidiary of CGW Southeast Partners IV,
L.P., a limited partnership formed under the Delaware Revised Uniform Limited
Partnership Act ("CGW"), the above-described shares of Common Stock, $.10 par
value per share (the "Shares"), of Johnston Industries, Inc., a Delaware
corporation (the "Company"), pursuant to the Purchaser's offer to purchase all
outstanding Shares at a price of $3.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated April 7, 2000 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, together with the Offer
to Purchase and any amendments or supplements hereto or thereto, constitute the
"Offer"). The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole or in part from time to time, to CGW or one or more
affiliates of CGW the right to purchase Shares tendered pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns, and transfers
all right, title and interest in and to all the Shares that are being tendered
hereby (and any and all other Shares or other securities issued or issuable in
respect thereof (collectively, "Distributions")), and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares and all Distributions, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to (i) deliver certificates for such Shares and
all Distributions, or transfer ownership of such Shares and all Distributions on
the account books maintained by the Book-Entry Transfer Facility, together, in
any such case, with all accompanying evidences of transfer and authenticity, to
or upon the order of the Purchaser, upon receipt by the Depositary, as the
undersigned's agent, of the purchase price (adjusted, if appropriate, as
provided in the Offer to Purchase), (ii) present such Shares and all
Distributions for cancellation and transfer on the Company's books and (iii)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares and all Distributions, all in accordance with the terms of the
Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares and all Distributions and that, when the same are accepted for payment by
the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, claims, charges and
encumbrances, and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute any signature guarantees or additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares and all
Distributions. In addition, the undersigned shall promptly remit and transfer to
the Depositary for the account of the Purchaser any such Distributions issued to
the undersigned, in respect of the tendered Shares, accompanied by documentation
of transfer, and pending such remittance or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of any such
Distributions and, subject to the terms of the Purchase Agreement (as defined in
the Offer to Purchase), may withhold the entire purchase price or deduct from
the purchase price the amount or value thereof, as determined by the Purchaser,
in its sole discretion.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Roy R. Bowman and James A.
O'Donnell, and each of them, and any other designees of the Purchaser, the
attorneys and proxies of the undersigned, each with full power of substitution,
to vote at any annual, special or adjourned meeting of the Company's
stockholders or
-3-
<PAGE> 4
otherwise act (including pursuant to written consent) in such manner as each
such attorney and proxy or his substitute shall in his or her sole discretion
deem proper, to execute any written consent concerning any matter as each such
attorney and proxy or his substitute shall in his or her sole discretion deem
proper with respect to, and to otherwise act with respect to, all the Shares
tendered hereby which have been accepted for payment by the Purchaser prior to
the time any such vote or action is taken (and any and all Distributions issued
or issuable in respect thereof) and with respect to which the undersigned is
entitled to vote. This appointment is effective when, and only to the extent
that, the Purchaser accepts for payment such Shares as provided in the Offer to
Purchase. This power of attorney and proxy is coupled with an interest in the
tendered Shares, is irrevocable and is granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the Offer.
Such acceptance for payment shall revoke all prior powers of attorney and
proxies given by the undersigned at any time with respect to such Shares and no
subsequent powers of attorney or proxies may be given by the undersigned (and,
if given, will not be deemed effective). The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights with respect to such Shares,
including voting at any stockholders meeting then scheduled.
The undersigned understands that the valid tender of Shares pursuant to
any one of the procedures described in Section 3 of the Offer to Purchase and in
the instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer. The undersigned recognizes that under certain circumstances set forth
in the Offer to Purchase, the Purchaser may not be required to accept for
payment any of the tendered Shares. The Purchaser's acceptance for payment of
Shares pursuant to the Offer will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of any Shares purchased, and/or
return any certificates for Shares not tendered or accepted for payment, in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of any Shares
purchased, and/or any certificates for Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that both the Special Delivery Instructions and the Special Payment
Instructions are completed, please issue the check for the purchase price of any
Shares purchased, and/or return any certificates for Shares not tendered or
accepted for payment in the name(s) of, and mail said check and/or any
certificates to, the person or persons so indicated. In the case of a book-entry
delivery of Shares, please credit the account maintained at the Book-Entry
Transfer Facility indicated above with any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder(s) thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
-4-
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if a certificate for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to be
ISSUED in the name of someone other than the undersigned.
Issue: [ ] check: [ ] certificate(s) to:
Name:
--------------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
(INCLUDE ZIP CODE)
- -------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
[ ] Credit unpurchased Shares tendered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below:
------------------------------------------------------
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if a certificate for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to be
SENT to someone other than the undersigned.
Send: [ ] check: [ ] certificate(s) to:
Name:
----------------------------------------------------------------
(PLEASE PRINT)
Address:
-------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
(INCLUDE ZIP CODE)
- ---------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
-5-
<PAGE> 6
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
Dated:
--------------- , 2000
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or any other person
acting in a fiduciary or representative capacity, please set forth full title
below.)
(See Instruction 5)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title):
- --------------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone Number:
-----------------------------------------
Tax Identification Number or Social Security Number:
---------------------------
- --------------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED, SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
(PLEASE PRINT)
Title:
--------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
Dated
------------ , 2000
-6-
<PAGE> 7
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS FOR THE TENDER OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each an "Eligible Institution,"
and collectively, "Eligible Institutions"). No signature guarantee is required
on this Letter of Transmittal (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" in this Letter
of Transmittal or (ii) if such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by
stockholders either if certificates for Shares are to be forwarded herewith or
if a tender of Shares is to be made pursuant to the procedures for delivery by
book-entry transfer set forth in Section 3 of the Offer to Purchase. For Shares
to be validly tendered pursuant to the Offer, either (i) a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), together with any required signature guarantees, or in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase),
and any other required documents, must be received by the Depositary at one of
the Depositary's addresses set forth herein prior to the Expiration Date and
either certificates for tendered Shares must be received by the Depositary at
one of such addresses or such Shares must be delivered pursuant to the
procedures for book-entry transfer (and a book-entry confirmation received by
the Depositary), in each case, prior to the Expiration Date, or (ii) the
tendering stockholder must comply with the guaranteed delivery procedure set
forth below.
Stockholders whose certificates for Shares are not immediately available,
who cannot complete the procedures for book-entry transfer on a timely basis or
who cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedures, (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser (or a manually signed
facsimile thereof), must be received by the Depositary prior to the Expiration
Date, and (iii) the certificates for (or a book-entry confirmation with respect
to) such Shares, together with this properly completed and duly executed Letter
of Transmittal (or a manually signed facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in Section 3 of the Offer to Purchase. A "trading day"
is any day on which the New York Stock Exchange, Inc. is open for business. The
Notice of Guaranteed Delivery may be delivered by hand to the Depositary or
transmitted by telegram, facsimile transmission or mail to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
The method of delivery of Shares, this Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer Facility,
is at the election and risk of the tendering stockholder. Shares will be deemed
delivered only when actually received by the Depositary (including, in the case
of a book-entry transfer, by book-entry confirmation). If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
In all cases, sufficient time should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a manually signed facsimile thereof), waive any
right to receive any notice of the acceptance of their Shares for payment.
-7-
<PAGE> 8
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If
fewer than all the Shares evidenced by any certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such case, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificate(s) will be
sent to the registered holder(s), unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the expiration
or termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the certificate(s) without any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or accepted for payment are to be issued to a person other than the
registered owner(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the shares tendered hereby, the certificates evidencing
the Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered owner(s)
appear(s) on the certificates for such Shares. Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
the Purchaser will pay, or cause to be paid, any stock transfer taxes with
respect to the transfer and sale of Shares to it or its assignee pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any persons other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such person) payable on
account of the transfer to such person will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be
issued in the name of and/or certificates for Shares not accepted for payment
are to be returned to a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Any stockholder tendering Shares by book-entry
transfer will have any Shares not accepted for payment returned by crediting the
account maintained by such stockholder at the Book-Entry Transfer Facility from
which such transfer was made.
-8-
<PAGE> 9
8. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase, the Purchaser reserves the absolute right, in its sole discretion, to
waive any of the conditions of the Offer or any defect or irregularity in the
tender of any Shares of any particular stockholder, whether or not similar
defects or irregularities are waived in the case of other stockholders.
9. SUBSTITUTE FORM W-9. The tendering stockholder (or other payee) is
required, unless an exemption applies, to provide the Depositary with a correct
Taxpayer Identification Number ("TIN"), generally the stockholder's social
security or federal employer identification number, and with certain other
information, on a Substitute Form W-9, which is provided under "Important Tax
Information" below, and to certify under penalties of perjury, that such number
is correct and that the stockholder (or other payee) is not subject to backup
withholding. If a tendering stockholder is subject to backup withholding, he or
she must cross out item 2 of the Certification Box on Substitute Form W-9 before
signing such Form. Failure to furnish the correct TIN on the Substitute Form W-9
may subject the tendering stockholder (or other payee) to a $50 penalty imposed
by the Internal Revenue Service and payments of cash to the tendering
stockholder (or other payee) pursuant to the Offer may be subject to backup
withholding of 31%. If the tendering stockholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future, he
or she should write "Applied For" in the space provided for the TIN in Part 1,
sign and date the Substitute Form W-9 and sign and date the Certificate of
Awaiting Taxpayer Identification Number. If "Applied For" is written in Part 1
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% of all such payments for surrendered Shares
thereafter until a TIN is provided to the Depositary.
10. LOST OR DESTROYED CERTIFICATES. If any certificate(s)
representing Shares has been lost or destroyed, the stockholder should check the
appropriate box on page 1 of the Letter of Transmittal. The Company's stock
transfer agent will then instruct such stockholder as to the procedure to be
followed in order to replace the certificate(s). The stockholder will have to
post a surety bond of approximately 2% of the current market value of the
Shares. This Letter of Transmittal and related documents cannot be processed
until procedures for replacing lost or destroyed certificates have been
followed.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance or additional copies of the Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at the location and telephone numbers set
forth below.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE COPY
THEREOF), TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND CERTIFICATES, OR A BOOK-ENTRY
CONFIRMATION, FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY (OR A MANUALLY SIGNED
FACSIMILE COPY THEREOF) MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
-9-
<PAGE> 10
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder surrendering Shares must,
unless an exemption applies, provide the Depositary (as payor) with his or her
correct TIN on the Substitute Form W-9 included in this Letter of Transmittal.
If the stockholder is an individual, his or her TIN is his or her social
security number. If the correct TIN is not provided, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service and payments of
cash to the tendering stockholder (or other payee) pursuant to the Offer may be
subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
In order for an exempt foreign stockholder to avoid backup withholding, that
person should complete, sign and submit a Form W-8, Certificate of Foreign
Status, signed under penalties of perjury, attesting to his or her exempt
status. A Form W-8 can be obtained from the Depositary. Exempt stockholders,
other than foreign stockholders, should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9 and sign, date and return the Substitute Form
W-9 to the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payment made to payee. Backup withholding is not an additional tax.
Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his correct TIN (or the TIN of any other
payee) by completing the Substitute Form W-9 included in this Letter of
Transmittal certifying (i) that the TIN provided on the Substitute Form W-9 is
correct (or that such stockholder is awaiting a TIN), and (ii) that the
stockholder is not subject to backup withholding because (a) the stockholder has
not been notified by the Internal Revenue Service that the stockholder is
subject to backup withholding as a result of a failure to report all interest
and dividends or (b) the Internal Revenue Service has notified the stockholder
that the stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN, generally the
social security number or employer identification number, of the record owner(s)
of the Shares. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, he or
she should write "Applied For" in the space provided for the TIN in Part 1, sign
and date the Substitute Form W-9 and sign and date the Certificate of Awaiting
Taxpayer Identification Number, which appears in a separate box below the
Substitute Form W-9. If "Applied For" is written in Part 1 and the Depositary is
not provided with a TIN by the time of payment, the Depositary will withhold 31%
of all payments of the purchase price until a TIN is provided to the Depositary.
-10-
<PAGE> 11
- --------------------------------------------------------------------------------
PAYER'S NAME:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT THE ----------------------------
SUBSTITUTE RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. Social Security Number(s)
FORM W-9
(See Instruction 9) OR
Please fill in your name and
address below. ----------------------------
Employer Identification
Number(s)
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
---------------------------
Name PART 2 -- CERTIFICATION -- Under Penalties of Perjury, I PART 3 --
certify that:
----------------------------- (1) The number shown on this form is my correct Taxpayer Awaiting TIN [ ]
Address (number and street) Identification Number (or I am waiting for a number to ----------------------
be issued to me) and
- ----------------------------- (2) I am not subject to backup withholding because (i) I PART 4 -- For Payee
(City, State and Zip Code) am exempt from backup withholding, or (ii) I have not Exempt from
been notified by the Internal Revenue Service ("IRS") Backup Withholding
DEPARTMENT OF THE TREASURY that I am subject to backup withholding as a result of Exempt [ ]
INTERNAL REVENUE SERVICE failure to report all interest or dividends or (iii)
the IRS has notified me that I am no longer subject to
backup withholding.
--------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
CERTIFICATION INSTRUCTIONS -- You must cross out Item (2) in Part 2 above if you
have been notified by the IRS that you are currently subject to backup withholding
PAYER'S REQUEST FOR because of under reporting interest or dividends on your tax return. However, if
TAXPAYER IDENTIFICATION after being notified by the IRS that you were subject to backup withholding, you
NUMBER (TIN) received another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out Item (2). If you are exempt from backup
withholding, check the box in Part 4 above.
SIGNATURE __________ DATE __________ , 2000
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
THE SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN PART 1 OF THE SUBSTITUTE FORM W-9
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me,
and either (i) I have mailed or delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security Administration Office or (ii) I
intend to mail or deliver an application in the near future. I understand that if I do not provide a
taxpayer identification number by the time of payment, 31% of all reportable payments made to me
thereafter will be withheld, until I provide a number.
</TABLE>
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------- --------------------------- , 2000
Signature Date
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE> 12
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent at the location and telephone numbers set forth below:
The Information Agent for the Offer is:
(MacKenzie Partners, Inc. Logo)
156 Fifth Avenue
New York, New York 10010
Tel: (212) 929-5500 (Call Collect)
OR
CALL TOLL-FREE (800) 322-2885
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
JOHNSTON INDUSTRIES, INC.
As set forth in Section 3 of the Offer to Purchase (as defined below),
this form or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates for shares of Common Stock, $.10 par
value (the "Shares"), of Johnston Industries, Inc., a Delaware corporation (the
"Company"), are not immediately available, or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary at the address set forth below on or
prior to the Expiration Date (as defined in the Offer to Purchase). This form
may be delivered by hand or transmitted by telegram, facsimile transmission or
mail to the Depositary and must include a guarantee by an Eligible Institution
(as defined in the Offer to Purchase). See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand Overnight Courier:
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station New York, New York 10286
New York, New York 10286-1248
</TABLE>
By Facsimile Transmission:
(for Eligible Institutions only)
(212) 815-6213
For Confirmation of Facsimile Transmission:
(212) 815-6156
------------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to JI Acquisition Corp., a Delaware
corporation (the "Purchaser"), and a subsidiary of CGW Southeast Partners IV,
L.P., a limited partnership formed under the Delaware Revised Uniform Limited
Partnership Act, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated April 7, 2000 (the "Offer to Purchase"), and
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of which is
hereby acknowledged, the number of Shares (as such term is defined in the Offer
to Purchase) set forth below, all pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
Number of
Shares:
- ----------------------------------------------- Shares
Certificate No(s). (if available)
---------------------
- ------------------------------------------------------
- ------------------------------------------------------
If Share(s) will be tendered by book-entry
transfer, check the following box
[ ] The Depository Trust Company
Account Number:
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
Name(s) of Record Holder(s):
----------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Address(es):
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number(s):
----------------------------------------------
- --------------------------------------------------------------------------------
Signatures:
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
------------------, 2000
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR A SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation with respect to such
Shares, in any such case together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message, and any other required documents within three
trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver such Letter of Transmittal and such
certificates for Shares, or such Book-Entry Confirmation, to the Depositary
within the time period shown herein. Failure to do so could result in a
financial loss to such Eligible Institution. All capitalized terms used herein
have the meanings set forth in the Offer to Purchase.
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and
Telephone Number:
---------------------------------------------------------------
- --------------------------------------------------------------------------------
(Authorized Signature)
Title:
--------------------------------------------------------------------------
Name:
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please type or print)
Dated:
------------------, 2000
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF
GUARANTEED DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
-2-
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JOHNSTON INDUSTRIES, INC.
BY
JI ACQUISITION CORP.
a subsidiary of
CGW SOUTHEAST PARTNERS IV, L.P.
AT
$3.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED
(THE "EXPIRATION DATE")
April 7, 2000
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
Enclosed is an Offer to Purchase dated April 7, 2000 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer") relating
to the Offer by JI Acquisition Corp., a Delaware corporation (the "Purchaser"),
which is a subsidiary of CGW Southeast Partners IV, L.P., a limited partnership
formed under the Delaware Revised Uniform Limited Partnership Act ("CGW"), to
purchase all of the outstanding shares of Common Stock, $.10 par value per share
(the "Shares"), of Johnston Industries, Inc., a Delaware corporation (the
"Company"), at $3.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer.
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated April 7, 2000;
2. Letter of Transmittal to be used by stockholders of the
Company in accepting the Offer. Facsimile copies of the Letter of
Transmittal (with manual signatures) may be used to tender Shares;
3. A printed form of letter that may be sent to your clients
for whose account you hold Shares in your name or in the name of a
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
4. Notice of Guaranteed Delivery; and
5. Guidelines of the Internal Revenue Service for Certification
of Taxpayer Identification Number on Substitute Form W-9.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the Expiration Date of the Offer, that
number of shares which represents at least nine and seven-tenths percent (9.7%)
of the Shares currently outstanding on a fully diluted basis, which, combined
with the 9,000,000 newly issued shares of Common and Preferred Stock of the
Company to be purchased by Purchaser at the closing of the Offer, will result in
Purchaser being the majority owner of the then issued and
<PAGE> 2
outstanding shares of the Company's voting capital stock, and (ii) the other
conditions set forth in the Offer to Purchase. As used herein, "fully diluted
basis" takes into account issued and outstanding Shares and shares subject to
issuance under stock options, warrants and other securities convertible into
shares which will be outstanding after closing of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay promptly after
the Expiration Date for all Shares validly tendered prior to the Expiration Date
and not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Shares (or a
timely book-entry confirmation with respect thereto), (ii) a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an agent's message, and (iii) any other documents required
by the Letter of Transmittal.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or to
comply with the book-entry transfer procedures on a timely basis, a tender may
be effected by following the guaranteed delivery procedures specified in Section
3 of the Offer to Purchase.
YOUR PROMPT ACTION IS REQUESTED. PLEASE CONTACT YOUR CLIENTS PROMPTLY.
PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MAY 5, 2000, UNLESS EXTENDED.
Neither the Purchaser nor CGW will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent as described
in the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. The Purchaser will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for reasonable
and necessary costs and expenses incurred by them in forwarding materials to
their customers. The Purchaser will pay all stock transfer taxes applicable to
its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
Additional copies of the enclosed materials may be obtained by contacting
the Information Agent at the location and telephone number set forth on the back
cover of the Offer to Purchase.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, CGW, THE DEPOSITARY OR THE
INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THE FOREGOING OR AUTHORIZE YOU OR
ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF
ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR
THE LETTER OF TRANSMITTAL.
-2-
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JOHNSTON INDUSTRIES, INC.
AT
$3.00 NET PER SHARE
BY
JI ACQUISITION CORP.
a subsidiary of
CGW SOUTHEAST PARTNERS IV, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED
(THE "EXPIRATION DATE")
APRIL 7, 2000
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated April 7, 2000
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the Offer by JI Acquisition Corp., a Delaware corporation
(the "Purchaser"), which is a subsidiary of CGW Southeast Partners IV, L.P., a
limited partnership formed under the Delaware Revised Uniform Limited
Partnership Act ("CGW"), to purchase for cash all of the outstanding shares of
Common Stock, $.10 par value per share (the "Shares") of Johnston Industries,
Inc., a Delaware corporation (the "Company"), at a price of $3.00 per Share, net
to the seller in cash, without interest, upon the terms and conditions set forth
in the Offer.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request your instructions as to whether you wish to tender
any of or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The offer price is $3.00 per Share, net to you in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved
the Offer and determined that the terms of the Offer are fair to the
Company's stockholders. The Board of Directors has remained neutral with
regard to its recommendation of the Offer to the stockholders.
4. Tendering stockholders will not be obligated to pay brokerage
fees or commissions or, except as otherwise provided in Instruction 6 of
the Letter of Transmittal, stock transfer taxes on the purchase of Shares
by the Purchaser pursuant to the Offer.
5. The Offer and withdrawal rights will expire at 12:00 midnight,
New York City time, on Friday, May 5, 2000, unless the Offer is extended.
6. The Offer is conditioned upon, among other things, (i) there
being validly tendered and not withdrawn prior to the Expiration Date of
the Offer, that number of shares which represents at least nine and
seven-tenths percent (9.7%) of the Shares currently outstanding on a fully
diluted basis, which, combined with the 9,000,000 newly issued shares of
Common and Preferred Stock of the Company to be purchased by Purchaser at
the closing of the Offer, will result in Purchaser being the majority owner
of the then issued and outstanding shares of the Company's voting capital
stock, and (ii) the other conditions set forth in the Offer to Purchase. As
used herein, "fully diluted basis" takes into account issued and
outstanding Shares and shares subject to issuance under stock options,
warrants and other securities convertible into shares which will be
outstanding after closing of the Offer.
<PAGE> 2
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the expiration of the Offer. If you wish to
have us tender any or all of the Shares held by us for your account, please so
instruct us by completing, executing and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified below. Your instructions should be forwarded to us in ample
time to permit us to submit a tender on your behalf prior to the expiration of
the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in any jurisdiction in which the
making or acceptance of the Offer would not be in compliance with the
securities, blue sky or other laws of such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by one or more registered brokers or dealers
that are licensed under the laws of the jurisdiction.
INSTRUCTION WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JOHNSTON INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated April 7, 2000, and the related Letter of Transmittal, in
connection with the offer by JI Acquisition Corp., a Delaware corporation and a
subsidiary of CGW Southeast Partners IV, L.P., a limited partnership formed
under the Delaware Revised Uniform Limited Partnership Act, to purchase all of
the outstanding shares of Common Stock, $.10 par value per share of Johnston
Industries, Inc., a Delaware corporation.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in such Offer to Purchase and related Letter of
Transmittal.
Dated:
----------, 2000
NUMBER OF SHARES TO BE TENDERED:
SHARES
------------
Unless otherwise indicated, it will be assumed that you instruct us to
tender all Shares held by us for your account.
I (we) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by you
for my (our) account will be tendered.
SIGN HERE
Signature(s)
--------------------------------------------------------------------
Print Name(s)
-------------------------------------------------------------------
Print Address(es)
---------------------------------------------------------------
Area Code and Telephone Number(s)
-----------------------------------------------
Tax ID or Social Security Number(s)
-----------------------------------------------
-2-
<PAGE> 1
EXHIBIT (a)(6)
FOR IMMEDIATE RELEASE:
Contact: Roy Bowman
CGW Southeast Partners IV, L.P.
(404) 816-3255
Contact: Joseph Doherty
MacKenzie Partners, Inc.
(212) 929-5500
(800) 322-2885
CGW SOUTHEAST PARTNERS IV, L.P. AND JI ACQUISITION
CORP. COMMENCE TENDER OFFER FOR SHARES OF JOHNSTON
INDUSTRIES, INC.
Atlanta, Georgia -- April 7, 2000 -- On March 31, 2000, CGW Southeast Partners
IV, L.P., through a wholly owned subsidiary, JI Acquisition Corp., announced
that it had entered into a definitive purchase agreement with Johnston
Industries, Inc. (NYSE:JII).
JI Acquisition Corp. has today commenced a tender offer at $3.00 in cash per
share for all of the shares of common stock of Johnston. The tender offer is
scheduled to expire at 12:00 midnight, New York City time on May 5, 2000,
unless extended.
MacKenzie Partners, Inc. is the Information Agent for the tender offer.
CGW is a Delaware limited partnership organized to make strategic investments
in distribution and manufacturing businesses throughout the United States. CGW
is headquartered in Atlanta, Georgia.
###
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER --
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the individuals
(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account The actual owner(1)
that is not legal or valid
trust under State law
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<S> <C> <C>
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's Social Security number.
(4) Show the name of the owner. Either the Social Security number or the
Employer Identification number may be furnished.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except those identified in item (9). For broker transactions,
payees listed in items (1) through (13) and a person registered under the
Investment Advisers Act of 1940 who regularly acts as a broker are exempt.
Payments subject to reporting under sections 6041 and 6041A of the Internal
Revenue Code (the "Code") are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a) of the Code, or an
IRA, or a custodial account under section 403(b)(7) of the Code.
(3) The United States or any agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a) of the Code.
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Securities,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 of the Code or described in
section 4947 of the Code.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to partnerships not engage in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code.)
- - Payments described in Section 6049(b)(5) of the Code to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN
ENTITY SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividend, and Patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and 6050N
of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE -- Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Willfully falsifying
certifications or affirmation may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR INTERNAL REVENUE
SERVICE.
-2-
<PAGE> 1
EXHIBIT (A)(8)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated April 7, 2000 and the related Letter of
Transmittal (and any amendments thereto) and is being made to all holders of
Shares. The Purchaser (as defined below) is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action pursuant
to state statute. If the Purchaser becomes aware of any state where the making
of the Offer is prohibited, the Purchaser will make a good faith effort to
comply with any such statute. If, after such good faith effort, the Purchaser
cannot comply with any applicable statute, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of Shares in such
state. In those jurisdictions where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
JOHNSTON INDUSTRIES, INC.
AT
$3.00 NET PER SHARE
BY
JI ACQUISITION CORP.
A SUBSIDIARY OF
CGW SOUTHEAST PARTNERS IV, L.P.
JI Acquisition Corp. (the "Purchaser"), a Delaware Corporation, which
is a subsidiary of CGW Southeast Partners IV, L.P., a Delaware limited
partnership ("CGW"), is offering to purchase all of the outstanding shares of
Common Stock, $.10 par value per share (the "Shares"), of Johnston Industries,
Inc., a Delaware corporation (the "Company"), at a purchase price of $3.00 per
Share net to the seller in cash without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated April 7, 2000
(the "Offer to Purchase") and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the Expiration Date of the Offer,
that number of shares which represents at least nine and seven-tenths percent
(9.7%) of the Shares currently outstanding on a fully diluted basis, which,
combined with the 9,000,000 newly issued shares of common stock and preferred
stock to be purchased by Purchaser at the closing of the Offer, will result in
Purchaser being the majority owner of the then issued and outstanding shares of
the Company's voting capital stock, (ii) the other conditions set forth in the
Offer to Purchase and (iii) the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended. The Offer is being made pursuant to a Purchase Agreement, dated as
of March 30, 2000 (the "Purchase Agreement"), among CGW, the Purchaser and the
Company. The Purchase Agreement provides, among other things, for the making of
the Offer by the Purchaser, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Purchase
Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), if the Purchaser acquires more than ninety percent (90%) of the shares
in the Offer, then a subsidiary of the Purchaser will be merged with and into
the Company (the "Merger") and each Share issued and outstanding immediately
prior to the effective time of the Merger (other than Shares owned by CGW, the
Purchaser or their affiliates, or held in the treasury of the Company, which
shall be canceled, and other than Shares, if any, held by stockholders who have
properly exercised and perfected appraisal rights under the DGCL), will, by
virtue of the Merger be
<PAGE> 2
converted into the right to receive $3.00 in cash, payable to the holder
thereof, without interest, upon surrender of the certificate formerly
representing such Shares, less any required withholding taxes. The Purchase
Agreement is more fully described in Section 11 of the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE PURCHASE
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO
THE HOLDERS OF THE SHARES. THE BOARD OF DIRECTORS HAS REMAINED NEUTRAL WITH
REGARD TO ITS RECOMMENDATION OF THE OFFER TO THE STOCKHOLDERS.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment (and thereby purchased) Shares validly tendered and not
properly withdrawn as, if and when the Purchaser gives oral or written notice to
The Bank of New York (the "Depositary") of the Purchaser's acceptance for
payment of such Shares for payment pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payments from the Purchaser and transmitting such payments
to stockholders whose Shares have been accepted for payment. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates representing Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Depository Trust Company (the "Book Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii)
the Letter of Transmittal (or a manually signed facsimile thereof, properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined in Section 3 of the Offer to Purchase) in connection
with a book-entry transfer, and (iii) any other documents required by the Letter
of Transmittal.
As described in Section 1 of the Offer to Purchase, in the Purchase
Agreement, the Purchaser and CGW have agreed with the Company not to extend,
delay acceptance for payment of, or the payment for, Shares, or to terminate,
waive or amend the Offer, except under certain circumstances or if certain
conditions have not been satisfied. Subject to the applicable rules and
regulations of the Securities and Exchange Commission and the terms of the
Purchase Agreement described above, the Purchaser expressly reserves the right,
in its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 14 of the Offer to
Purchase shall have occurred, to (i) extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Shares, by giving oral or written notice of such extension to the Depositary
and (ii) amend the Offer in any respect by giving oral or written notice of such
amendment to the Depositary. Any extension, delay, termination, waiver or
amendment will be followed as promptly as practicable by public announcement
thereof, the announcement in the case of an extension to be made no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date (as defined below). During any such extension, all
Shares previously tendered and not properly withdrawn will remain subject to the
Offer, subject to the rights of a tendering stockholder to withdraw such
stockholder's Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, May 5, 2000, unless and until the Purchaser in its sole discretion (but
subject to the terms and conditions of the Purchase Agreement), shall have
extended the period during which the Offer is open, in which event the
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire. The Purchaser will not make a
subsequent offering period available after the Expiration Date.
Tenders of Shares made pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may be withdrawn at any time after June 6,
2000. For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered such Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase) unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the second sentence of this paragraph. All
questions as to the form and validity (including time of receipt) of any notice
of withdrawal will be determined by the Purchaser in its sole discretion, which
determination will be final and binding.
The information required to be disclosed by Rule 14d-6(d)(1) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's stockholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed by the Purchaser to
record holders of Shares and furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
<PAGE> 3
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the
Information Agent as set forth below. Requests for copies of the Offer to
Purchase and the related Letter of Transmittal and all the tender offer
materials may be directed to the Information Agent and copies will be furnished
promptly at the Purchaser's expense. The Purchaser will not pay any fees or
commissions to any broker or dealer or any other person (other than the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
April 7, 2000
<PAGE> 1
EXHIBIT (a)(10)
FOR: JOHNSTON INDUSTRIES, INC.
FROM: MARTIN SKALA, VP
NICHOLAS PATRUNO, INVESTOR RELATIONS
PORTER, LEVAY & ROSE, INC.
(212) 564-4700
COMPANY JAMES J. MURRAY, CHIEF FINANCIAL OFFICER
CONTACT: (706) 641-3140
FOR IMMEDIATE RELEASE
JOHNSTON INDUSTRIES REPORTS FOURTH QUARTER/YEAR-END RESULTS
COLUMBUS, GA, APRIL 7 Johnston Industries, Inc. (NYSE: JII), a leading
domestic manufacturer of industrial, home furnishing and hospitality textiles,
today announced results for the fourth quarter and fiscal year ended January 1,
2000.
The company reported a net loss for the quarter of $1,670,000, or
sixteen cents per basic and diluted share, on revenues of $67,912,000, compared
with net income of $755,000, or seven cents per basic and diluted share, on
revenues of $65,250,000 for the fourth quarter of 1998.
For the year, the net loss was $8,008,000, or 75 cents per basic and
diluted share, on revenues of $264,036,000, compared with a loss of $608,000,
or six cents per basic and diluted share, on revenues of $283,724,000 for the
prior year.
The lower sales and corresponding reduction in operating performance
in 1999 are attributable to weakness in indirect exports, principally
upholstery substrates, and soft demand in many of the company's domestic
upholstery and home furnishings markets.
-more-
<PAGE> 2
2
Clark Ogle, president and CEO, stated, "The fourth quarter saw a
resurgence in our upholstery substrates business, coupled with disappointing
sales of decorative upholstery fabrics. An unacceptable amount of our Finished
Fabrics sales, particularly our decorative upholstery lines, represented
inventory closeouts and discounting. We believe that the causes of these
closeouts and discounts have been addressed and are unlikely to recur. For
example, our recently announced woven upholstery agreement with Covington Group
has dramatically reduced our exposure to this sort of inventory risk. In
addition, we recognized approximately $2 million of losses during the fourth
quarter related to our guarantees of certain loans that former employees had
under the old Employee Stock Purchase Plan."
Ogle continued, "We reduced our borrowings under our senior credit
facilities by almost $7,000,000 during the fourth quarter, our ninth straight
quarter of debt reduction. From an operating income standpoint, the- fourth
quarter represented the best quarter of a very disappointing year."
Johnston Industries, Inc. manufactures and markets textile fabrics
primarily for industrial and home furnishings end uses. One of Johnston's most
promising product lines is the Caress(R) family of superior table linens.
Johnston Industries Composite Reinforcements Inc. makes Vectorply(R) and other
sophisticated non-crimp multiaxial reinforcing fabrics from fiberglass, carbon
and aramid fibers used in a wide variety of applications.
This press release contains statements of a forward-looking nature regarding
future events. These statements are only predictions and actual events may
differ materially. Please refer to documents that Johnston files from time to
time with the Securities and Exchange Commission for a discussion of certain
factors that could cause actual results to differ materially from those
contained in the forward-looking statements.
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<PAGE> 3
3
JOHNSTON INDUSTRIES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
-------------------------- ------------------
1/1/00 1/2/99 1/1/00 1/2/99
------ ------
<S> <C> <C> <C> <C>
Net sales $ 67,912,000 $ 65,250,000 $ 264,036,000 $ 283,724,000
Costs and expenses:
Cost of sales 58,716,000 54,701,000 235,950.000 245,278,000
Selling, general and administrative 7,427,000 5,970,000 26,872,000 26,718,000
Amortization of goodwill 155,000 161,000 628,000 632,000
Restructuring and impairment charges (3,000) 93,000
Total costs and expenses 66,298,000 60,829,000 263,450,000 272,721,000
Income from operations 1,614,000 4,421,000 586,000 11,003,000
Other expenses (income):
Interest expense 2,877,000 3,279,000 12,0170,00 13,420,000
Interest income (89,000) 83,000 (572,000) (703,000)
Other - net 2,119,000 (249,000) 2,599,000 392,000
Total other expenses - net 4,907,000 3,113,000 14,044.000 13,109,000
Equity in earnings of equity investee 244,000 149,000 799,000 326,000
Realized and unrealized investment loss (50,000) (19,000)
Income (loss) from continuing operations (3,049,000) 1,457,000 (12,709,000) (1,799,000)
(Benefit) for income taxes (1,379,000) 702,000 (4,701,000) (1,191,000)
Net income (loss) (1,670,000) 755,000 (8,008,000) (608,000)
Net income (loss) per common share
- Basic and diluted: $ (.16) $ .07 $ (.75) $ (.06)
Weighted average number of common
shares outstanding 10,722,000 10,722,000 10,722,000 10,722,000
</TABLE>
#####
2000
<PAGE> 1
EXHIBIT (d)
PURCHASE AGREEMENT
BY AND AMONG
CGW SOUTHEAST PARTNERS IV, L.P.,
JI ACQUISITION CORP.,
AND
JOHNSTON INDUSTRIES, INC.
DATED AS OF MARCH 30, 2000
<PAGE> 2
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made and entered into as
of March 30, 2000, by and among CGW Southeast Partners IV, L.P. ("CGW"), a
limited partnership formed under the Delaware Revised Uniform Limited
Partnership Act; JI Acquisition Corp. ("Purchaser"), a Delaware corporation;
and Johnston Industries, Inc. ("Johnston"), a Delaware corporation.
PREAMBLE
The respective Boards of Directors of Johnston and Purchaser and the General
Partner of CGW have approved, and deem it advisable and in the best interests
of their respective stockholders to enter into this Agreement to provide for,
the acquisition of Johnston Common Stock and Johnston Preferred Stock by
Purchaser upon the terms and subject to the conditions set forth herein.
Certain terms used in this Agreement are defined in Section 10.1
of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
THE OFFER
1.1 THE OFFER.
(a) Subject to the provisions of this Agreement, as
promptly as reasonably practicable, Purchaser shall, and CGW shall cause
Purchaser to, commence (within the meaning of Rule 14d-2 under the 1934 Act) a
tender offer (as it may be amended from time to time as permitted by this
Agreement, the "Offer") for all of the then outstanding shares (the "Shares")
of Johnston Common Stock at a price of $3.00 per Share, net to the seller in
cash (such price, or any such higher price per Share as may be paid in the
Offer, being referred to herein as the "Offer Price"). The obligation of
Purchaser to, and of CGW to cause Purchaser to, commence the Offer and accept
for payment, and pay for, any Shares tendered pursuant to the Offer shall be
subject to the conditions set forth in Article 8 hereof and Exhibit 1 hereto
(any of which may be waived by Purchaser in its sole discretion) and to the
terms and conditions of this Agreement. Purchaser expressly reserves the right
to modify the terms of the Offer, except that, without the consent of Johnston,
Purchaser shall not (i) reduce the price per Share to be paid pursuant to the
Offer, (ii) modify or add to the conditions set forth in Exhibit 1, (iii)
except as provided in the next sentence, extend the Offer, or (iv) change the
form of consideration payable in the Offer. Notwithstanding the foregoing,
Purchaser may, without the consent of Johnston, (i) extend the Offer, if at the
scheduled expiration date of the Offer any of the conditions to Purchaser's
<PAGE> 3
obligations to purchase Shares shall not be satisfied, (ii) extend the Offer
for a period of not more than ten business days beyond the initial expiration
date of the Offer (which initial expiration date shall be 20 business days
following the commencement of the Offer), if on the date of such extension less
than 90% of the outstanding Shares have been validly tendered and not properly
withdrawn pursuant to the Offer, notwithstanding that all conditions to the
Offer are satisfied as of the date of such extension, (iii) extend the Offer
for any period required by any rule, regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer, and (iv) extend the Offer
for any reason for a period of not more than ten business days beyond the
latest expiration date that would otherwise be permitted under clause (i), (ii)
or (iii) of this sentence. Notwithstanding the foregoing, the Offer may not be
extended beyond the date of termination of this Agreement pursuant to Article
9. Subject to the terms and conditions of the Offer and this Agreement,
Purchaser shall, and CGW shall cause Purchaser to, pay for all Shares validly
tendered and not withdrawn pursuant to the Offer that Purchaser becomes
obligated to purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(b) On the date of commencement of the Offer, Purchaser
shall file, and CGW shall cause Purchaser to file, with the SEC a Tender Offer
Statement on Schedule TO with respect to the Offer, which shall contain an
offer to purchase (the "Offer to Purchase") and a related letter of transmittal
and summary advertisement, all in accordance with the terms of the Offer as set
forth herein (such Schedule TO and the documents included therein pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents"). The Offer Documents shall comply in all
material respects with the requirements of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, sent or
given to Johnston's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Purchaser with respect to information furnished in
writing by or on behalf of Johnston expressly for inclusion in the Offer
Documents. Purchaser and Johnston each agree promptly to correct any
information provided by or on its behalf for use in the Offer Documents if and
to the extent that such information shall have become false or misleading in
any material respect, and Purchaser further agrees to promptly take all steps
necessary to amend or supplement the Offer Documents and to cause the Offer
Documents as so amended or supplemented to be filed with the SEC and to be
disseminated to Johnston's stockholders, in each case as to and to the extent
required by applicable federal securities laws. Johnston and its counsel shall
be given the opportunity to review the Schedule TO before it is filed with the
SEC. In addition, Purchaser will provide Johnston and its counsel, in writing,
with any comments, whether written or oral, Purchaser or its counsel may
receive from time to time from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
1.2 JOHNSTON ACTIONS.
(a) Johnston hereby approves the making of, and consents to
the Offer and represents and warrants that its Board of Directors, at a meeting
duly called and held, has duly adopted resolutions (i) approving this
Agreement, consenting to the Offer being made and
-2-
<PAGE> 4
approving the sale of Johnston Common Stock and Johnston Preferred Stock
contemplated by Article 3 hereof (collectively, the "Transactions"), and such
approval constitutes approval of the Transactions for purposes of Section 203
of the DGCL and the Stockholder Protection Agreement, dated as of May 17, 1999,
between Johnston and The Bank of New York (the "Stockholder Protection
Agreement"), such that the provisions of said Section 203 and the Stockholder
Protection Agreement will not apply to the Transactions and (ii) determining,
in reliance on the opinion described in Section 4.22 hereof, that the terms of
the Transactions are fair to, and in the best interests of, the stockholders of
Johnston.
(b) On the date the Offer Documents are filed with the SEC,
Johnston shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-9")
which shall contain the position of the Board of Directors of Johnston and
shall mail the Schedule 14D-9 to the stockholders of Johnston. The Schedule
14D-9 shall comply in all material respects with the requirements of applicable
federal securities laws and, on the date filed with the SEC and on the date
first published, sent or given to Johnston's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Johnston with respect to
information furnished in writing by or on behalf of Purchaser expressly for
inclusion in the Schedule 14D-9. Purchaser and Johnston agree promptly to
correct any information provided by or on its behalf for use in the Schedule
14D-9 if and to the extent that such information shall have become false or
misleading in any material respect, and Johnston further agrees to promptly
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
to be disseminated to Johnston's stockholders, in each case as to and to the
extent required by applicable Federal securities laws. Purchaser and its
counsel shall be given the opportunity to review the Schedule 14D-9 before it
is filed with the SEC. In addition, Johnston agrees to provide Purchaser and
its counsel, in writing, with any comments, whether written or oral, that
Johnston 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
or other communications.
(c) In connection with the Offer, Johnston will promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all record holders of the Shares as of a recent date, and shall
furnish Purchaser with such additional information (including, but not limited
to, updated lists of holders of the Shares and their addresses, mailing labels
and lists of security positions) and assistance as the Purchaser or its agents
may reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. Subject to the requirements of applicable Law, and
except for such steps as are necessary to disseminate the Offer Documents, CGW
and Purchaser shall hold in confidence the information contained in any of such
labels and lists and the additional information referred to in the preceding
sentence, will use such information only in connection with the Offer, and, if
this Agreement is terminated, will promptly deliver or cause to be delivered to
Johnston all copies of such information then in their possession.
-3-
<PAGE> 5
ARTICLE 2
EFFECTIVE TIME AND CLOSING
2.1 EFFECTIVE TIME. The Transactions shall become effective on
the date and at the time that payment for the Shares validly tendered and not
withdrawn pursuant to the Offer has been made by Purchaser (the "Effective
Time").
2.2 TIME AND PLACE OF CLOSING. The closing of the Transactions
(the "Closing") will take place at 9:00 A.M. on the date that the Effective
Time occurs (or the immediately preceding day if the Effective Time is earlier
than 9:00 A.M.), or at such other time as the Parties, acting through their
authorized officers, may mutually agree. The Closing shall be held at such
location as may be mutually agreed upon by the Parties.
ARTICLE 3
STOCK PURCHASE
Pursuant to the following provisions of this Article 3, Purchaser shall
purchase shares of Johnston Common Stock and Johnston Preferred Stock having an
aggregate value of $27 million.
3.1 PURCHASE OF COMMON STOCK. At the Closing, Purchaser shall
purchase and acquire, and CGW shall cause Purchaser to purchase and acquire,
and Johnston shall issue and sell to Purchaser, 8,750,000 shares of authorized
but unissued Johnston Common Stock (the "Additional Common Stock") at a per
share purchase price of $3.00 per share for an aggregate value of $26.25
million. The issuance of the Additional Common Stock shall have been duly
approved by the Board of Directors of Johnston as required by applicable law,
such that, when issued, the shares of Additional Common Stock will be duly and
validly issued and outstanding and fully paid and nonassessable under the DGCL.
3.2 DESIGNATION OF SERIES A PREFERRED STOCK. Prior to the
Effective Time, Johnston shall cause its Board of Directors to designate a
class of Johnston Preferred Stock as Series A Preferred Stock having the
designations and powers, preferences and rights, and the qualifications,
limitations and restrictions set forth in the Certificate of Designation
attached hereto as Exhibit 2.
3.3 PURCHASE OF PREFERRED STOCK. At the Closing, Purchaser shall
purchase and acquire, and CGW shall cause Purchaser to purchase and acquire and
Johnston shall issue and sell to Purchaser, 250,000 shares of Series A
Preferred Stock of Johnston at a per share purchase price of $3.00 per share
for an aggregate value of $750,000. The issuance of such Series A Preferred
Stock shall have been duly approved by the Board of Directors of Johnston as
required by applicable Law, such that, when issued, the shares of Series A
Preferred Stock will be duly and validly issued and outstanding and fully paid
and nonassessable under the DGCL.
-4-
<PAGE> 6
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF JOHNSTON
Except as specifically set forth in the Johnston Disclosure
Memorandum, Johnston hereby represents and warrants to CGW and Purchaser as
follows:
4.1 ORGANIZATION, STANDING, AND POWER. Johnston is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets.
Johnston is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect. The minute books and other organizational documents
for Johnston have been made available to CGW for its review and are true and
complete in all material respects 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 stockholders thereof.
4.2 AUTHORITY OF JOHNSTON; NO BREACH BY AGREEMENT.
(a) Johnston has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the Transactions. The execution, delivery, and performance of
this Agreement and the consummation of the Transactions have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Johnston. This Agreement represents a legal, valid, and binding
obligation of Johnston, enforceable against Johnston in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium, or similar 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 proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Johnston, nor the consummation by Johnston of the Transactions, nor compliance
by Johnston with any of the provisions hereof, will (i) conflict with or result
in a breach of any provision of Johnston's Certificate of Incorporation or
Bylaws or the certificate or articles of incorporation or bylaws of any
Johnston Subsidiary or any resolution adopted by the board of directors or the
stockholders of any Johnston Entity, or (ii) except as set forth in Section 4.2
of the Johnston Disclosure Memorandum, constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any Lien on
any material Asset of any Johnston Entity under, any Contract of any Johnston
Entity, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect, or, (iii) subject to receipt of the requisite Consents
referred to in Section 8.1(a), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to any Johnston
-5-
<PAGE> 7
Entity or any of their respective material Assets (including any CGW Entity or
any Johnston Entity becoming subject to or liable for the payment of any Tax or
any of the Assets owned by any CGW Entity or any Johnston Entity being
reassessed or revalued by any Taxing authority).
(c) No notice to, filing with, or Consent of, any
Governmental Entity is necessary for the consummation by Johnston of the
Transactions, except for (i) the filing of a premerger notification and report
form by CGW and Johnston under the HSR Act, (ii) the filing with the SEC of (y)
the Schedule TO, and (z) such reports under Section 13(a) of the 1934 Act as
may be required in connection with the Transactions, (iii) the filing of
appropriate documents with the relevant authorities of jurisdictions in which
Johnston is qualified to do business, and (iv) such other notices, filings and
Consents as are disclosed in Section 4.2 of the Johnston Disclosure Memorandum.
4.3 CAPITAL STOCK.
(a) The entire authorized capital stock of Johnston
consists of 23,000,000 shares, of which 20,000,000 are shares of Johnston
Common Stock and 3,000,000 are shares of Johnston Preferred Stock. Of the
Johnston Common Stock, 10,721,872 shares are issued and outstanding and
1,745,819 are held in treasury, and of the Johnston Preferred Stock, no shares
have been issued and are outstanding, except for (i) 325,000 shares which have
been designated as Johnston preferred stock, series 1996, of which no shares of
such Johnston preferred stock, series 1996, are outstanding and no shares are
held in treasury, and (ii) 200,000 shares which have been designated as Series
X Junior Participating Preferred Stock, par value $.01 per share (the "Series X
Preferred Stock"), of which no shares of Series X Preferred Stock are
outstanding and no shares are held in treasury. All of the issued and
outstanding shares of capital stock of Johnston are duly and validly issued and
outstanding and are fully paid and nonassessable under the DGCL. None of the
outstanding shares of capital stock of Johnston have been issued in violation
of any preemptive rights of the current or past stockholders of Johnston.
(b) Except for the shares set forth above, or as disclosed
in Section 4.3(b) of the Johnston Disclosure Memorandum, there are no shares of
capital stock or other equity securities of Johnston outstanding and no
outstanding Johnston Equity Rights. All shares of Johnston Common Stock which
may be issued pursuant to Johnston Equity Rights as described in Section 4.3(b)
of the Johnston Disclosure Memorandum, when issued, will have been duly
authorized, validly issued, fully paid and nonassessable. Set forth on Section
4.3(b) of the Johnston Disclosure Memorandum is a list of the holders of
Johnston Equity Rights, including the number of shares of Johnston Common Stock
issuable upon the exercise of each such Johnston Equity Rights and the exercise
price thereof. Except as set forth in Section 4.3(b) of the Johnston Disclosure
Memorandum, Johnston does not have any outstanding option, warrant,
subscription or other right, agreement or commitment that either (i) obligates
Johnston to issue, sell or transfer, repurchase, redeem or otherwise acquire or
vote any shares of the capital stock of Johnston or (ii) restricts the transfer
of Johnston Common Stock.
4.4 JOHNSTON SUBSIDIARIES. Johnston has disclosed in Section 4.4
of the Johnston Disclosure Memorandum all of the Johnston Subsidiaries that are
corporations (identifying its
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<PAGE> 8
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
the Johnston 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 disclosed in Section 4.4 of the Johnston
Disclosure Memorandum, Johnston or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock (or other equity interests) of
each Johnston Subsidiary. No capital stock (or other equity interest) of any
Johnston Subsidiary is or may become required to be issued by reason of any
Johnston Equity Rights, and there are no Contracts by which any Johnston
Subsidiary is bound to issue additional shares of its capital stock (or other
equity interests) or Johnston Equity Rights or by which any Johnston Entity is
or may be bound to transfer any shares of the capital stock (or other equity
interests) of any Johnston Subsidiary. There are no Contracts relating to the
rights of any Johnston Entity to vote or to dispose of any shares of the
capital stock (or other equity interests) of any Johnston Subsidiary. All of
the shares of capital stock (or other equity interests) of each Johnston
Subsidiary held by a Johnston a Johnston Entity are fully paid and
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the Johnston
Entity free and clear of any Lien. Except as disclosed in Section 4.4 of the
Johnston Disclosure Memorandum, each Johnston Subsidiary is a corporation, and
each such Subsidiary is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its material Assets and to carry on
its business as now conducted. Each Johnston Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Johnston Material Adverse Effect. The minute books and other
organizational documents for each Johnston Subsidiary have been made available
to CGW for its review, and, except as disclosed in Section 4.4 of the Johnston
Disclosure Memorandum, are true and complete in all material respects as in
effect as of the date of this Agreement and accurately reflect all amendments
thereto and all proceedings of the Board of Directors and stockholders thereof.
4.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Johnston has timely filed and made available to CGW all
SEC Documents required to be filed by Johnston since January 1, 1996 (the
"Johnston SEC Reports"). The Johnston SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at the time they
were filed (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Johnston SEC Reports or necessary in order to make the statements in such
Johnston SEC Reports, in light of the circumstances under which they were made,
not materially misleading. No Johnston Subsidiary is required to file any SEC
Documents.
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(b) Each of the Johnston Financial Statements (including,
in each case, any related notes) contained in the Johnston SEC Reports,
including any Johnston SEC Reports filed after the date of this Agreement until
the Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by
Form 10-Q of the SEC), and fairly presented in all material respects the
consolidated financial position of Johnston and its Subsidiaries as at the
respective dates and the consolidated results of operations and cash flows for
the periods indicated, except that the 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.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Section 4.6 of the Johnston Disclosure Memorandum, no Johnston Entity has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Johnston Material Adverse Effect. No Johnston Entity has incurred
or paid any Liability since January 1, 1999, 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 Johnston Material Adverse Effect or (ii) in connection with
the transactions contemplated by this Agreement. Except as disclosed in Section
4.6 of the Johnston Disclosure Memorandum, no Johnston Entity 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
for any Person for any amount in excess of $50,000.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1, 1999,
except as disclosed in Section 4.7 of the Johnston Disclosure Memorandum, (i)
there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect, (ii) there has not been any split, combination or
reclassification of any of Johnston's outstanding capital stock or any issuance
or authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its outstanding capital stock, (iii) there
has not been any material change in the accounting methods, principles or
practices by Johnston or any Johnston Subsidiaries, except insofar as may have
been required by GAAP, and (iv) the Johnston Entities have not taken any
action, or failed to take any action, prior to the date of this Agreement,
which action or failure, if taken after the date of this Agreement, would
represent or result in a material breach or violation of any of the covenants
and agreements of Johnston provided in Section 6.2.
4.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of
any of the Johnston Entities have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1997, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, all Tax Returns filed are
complete and accurate in all material respects. All Taxes shown on filed Tax
Returns have been
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paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that is reasonably likely to result in a determination
that would have, individually or in the aggregate, a Johnston Material Adverse
Effect, except as reserved against in the Johnston Financial Statements
delivered prior to the date of this Agreement or as disclosed in Section 4.8 of
the Johnston Disclosure Memorandum. Johnston's federal income Tax Returns have
been audited by the IRS and accepted through June 30, 1995. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid. There are no Liens with respect to Taxes upon any of
the material Assets of the Johnston Entities.
(b) Except as set forth in Section 4.8 of the Johnston
Disclosure Memorandum, none of the Johnston Entities has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due for
any of the Johnston Entities for the period or periods through and including
the date of the respective Johnston Financial Statements that has been made and
is reflected on such Johnston Financial Statements is sufficient to cover all
such Taxes.
(d) Deferred Taxes of the Johnston Entities have been
provided for in accordance with GAAP.
(e) None of the Johnston Entities is a party to any Tax
allocation or sharing agreement and none of the Johnston Entities has been a
member of an Affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Johnston) or has any
Liability for Taxes of any Person (other than Johnston and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law) as a transferee or successor or by Contract or otherwise.
(f) Each of the Johnston Entities is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all material applicable
information reporting and Tax withholding requirements under federal, state,
and local Tax Laws, and such records identify with specificity all accounts
subject to backup withholding under Section 3406 of the Internal Revenue Code,
except for such instances of noncompliance and such omissions as are not
reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect.
(g) Except as disclosed in Section 4.8 of the Johnston
Disclosure Memorandum, none of the Johnston Entities has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Johnston Entities that occurred
during or after any Taxable Period in
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which the Johnston Entities incurred a net operating loss that carries over to
any Taxable Period ending after November 2, 1997.
(i) No Johnston Entity has or has had in any foreign
country a permanent establishment, as defined in any applicable tax treaty or
convention between the United States and such foreign country.
4.9 ASSETS.
(a) Except as disclosed in Section 4.9 of the Johnston
Disclosure Memorandum or as disclosed or reserved against in the Johnston
Financial Statements delivered prior to the date of this Agreement, the
Johnston Entities have good and marketable title, free and clear of all Liens,
to all of their respective material Assets, except for any such Liens or other
defects of title which are not reasonably likely to have a Johnston Material
Adverse Effect. All material tangible properties used in the businesses of the
Johnston Entities are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with Johnston's past
practices.
(b) All items of inventory of the Johnston Entities
reflected on the most recent balance sheet included in the Johnston Financial
Statements delivered prior to the date of this Agreement and prior to the
Effective Time consisted and will consist, as applicable, of items of a quality
and quantity usable and salable in the ordinary course of business and conform
to generally accepted standards in the industry in which the Johnston Entities
are a part.
(c) The accounts receivable of the Johnston Entities as set
forth on the most recent balance sheet included in the Johnston Financial
Statements delivered prior to the date of this Agreement or arising since the
date thereof are valid and genuine; have arisen solely out of bona fide sales
of goods, performance of services and other business transactions in the
ordinary course of business consistent with past practice; are not subject to
valid defenses, set-offs or counterclaims; and are collectible within 90 days
after billing at the full recorded amount thereof less, in the case of accounts
receivable appearing on the most recent balance sheet included in the Johnston
Financial Statements delivered prior to the date of this Agreement, the
recorded allowance for collection losses on such balance sheet. The allowance
for collection losses on such balance sheet has been determined in accordance
with GAAP.
(d) All Assets which are material to Johnston's business on
a consolidated basis, held under leases or subleases by any of the Johnston
Entities, 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.
(e) The Johnston Entities currently maintain insurance
substantially similar in amounts, scope, and coverage to that maintained by
other peer organizations. None of the
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Johnston Entities has received notice from any insurance carrier that (i) any
policy of insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. Except as set forth in Section 4.9
of the Johnston Disclosure Memorandum, there are presently no claims for
amounts exceeding in any individual case $50,000 pending under such policies of
insurance and no notices of claims in excess of such amounts have been given by
any Johnston Entity under such policies.
(f) The Assets of the Johnston Entities include all Assets
required to operate the business of the Johnston Entities as presently
conducted.
4.10 INTELLECTUAL PROPERTY. Each Johnston Entity owns or has a
license to use all of the material Intellectual Property used by such Johnston
Entity in the course of its business. Each Johnston Entity is the owner of or
has a license to any material Intellectual Property sold or licensed to a third
party by such Johnston Entity in connection with such Johnston Entity's
business operations, and such Johnston Entity has the right to convey by sale
or license any material Intellectual Property so conveyed. No Johnston Entity
is in Default under any of its material Intellectual Property licenses. No
proceedings have been instituted, or are pending or, to Johnston's Knowledge,
threatened, which challenge the rights of any Johnston Entity with respect to
material Intellectual Property used, sold or licensed by such Johnston Entity
in the course of its business, nor to Johnston's Knowledge has any person
claimed or alleged any rights to such Intellectual Property. To Johnston's
Knowledge, the conduct of the business of the Johnston Entities does not
infringe any Intellectual Property of any other person. No Johnston Entity is
obligated to pay any recurring royalties to any Person with respect to any such
Intellectual Property. Except as disclosed in Section 4.10 of the Johnston
Disclosure Memorandum, every officer, director, or employee of any Johnston
Entity is a party to a Contract which requires such officer, director or
employee to assign any interest in any Intellectual Property to a Johnston
Entity and to keep confidential any trade secrets, proprietary data, customer
information, or other business information of a Johnston Entity, and, to
Johnston's Knowledge, no such officer, director or employee is party to any
Contract with any Person other than a Johnston Entity which requires such
officer, director or employee to assign any interest in any Intellectual
Property to any Person other than a Johnston Entity or to keep confidential any
trade secrets, proprietary data, customer information, or other business
information of any Person other than a Johnston Entity. Except as disclosed in
Section 4.10 of the Johnston Disclosure Memorandum, to Johnston's Knowledge, no
officer, director or employee of any Johnston Entity is party to any Contract
which restricts or prohibits such officer, director or employee from engaging
in activities competitive with any Person, including any Johnston Entity.
4.11 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 4.11 of the Johnston
Disclosure Memorandum, each Johnston Entity, its Participation Facilities, and
its Operating Properties are, and have been during any Johnston Entity's tenure
as an owner or operator thereof, and to Johnston's Knowledge were prior to such
tenure, in compliance with all Environmental Laws, except for violations which
are not reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect.
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(b) Except as set forth in Section 4.11 of the Johnston
Disclosure Memorandum, there is no Litigation pending or, to the Knowledge of
Johnston, threatened before any court, governmental agency, or authority or
other forum in which any Johnston Entity or any of its Operating Properties or
Participation Facilities (or Johnston in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance with any Environmental
Law or (ii) relating to the release, discharge, spillage, or disposal into the
environment of any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or reasonably expected to affect) a site owned,
leased, or operated by any Johnston Entity or any of its Operating Properties
or Participation Facilities, except for such Litigation pending or threatened
that is not reasonably likely to have, individually or in the aggregate, a
Johnston Material Adverse Effect, nor, to Johnston's Knowledge, is there any
reasonable basis for any Litigation of a type described in this sentence,
except such as is not reasonably likely to have, individually or in the
aggregate, a Johnston Material Adverse Effect.
(c) Except as set forth in Section 4.11 of the Johnston
Disclosure Memorandum during the period of (i) any Johnston Entity's ownership
or operation of any of their respective current properties, (ii) any Johnston
Entity's participation in the management of any Participation Facility, or
(iii) to Johnston's Knowledge, any Johnston Entity's holding of a security
interest in an Operating Property, there have been no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, adjacent to, or
affecting (or potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect. Prior to the period of (i) any Johnston Entity's
ownership or operation of any of their respective current properties, (ii) any
Johnston Entity's participation in the management of any Participation
Facility, or (iii) to Johnston's Knowledge, any Johnston Entity's holding of a
security interest in a Operating Property, to the Knowledge of Johnston, there
were no releases, discharges, spillages, or disposals of Hazardous Material in,
on, under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Johnston Material Adverse Effect.
4.12 COMPLIANCE WITH LAWS. Each Johnston Entity has in effect all
material Permits necessary for it to own, lease, or operate its material Assets
and to carry on its business as now conducted, and there has occurred no
Default under any such Permit, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Johnston Material Adverse
Effect. Except as disclosed in Section 4.12 of the Johnston Disclosure
Memorandum, none of the Johnston Entities:
(a) is in Default under any of the provisions of its
Certificate of Incorporation or Bylaws (or other governing
instruments);
(b) Except for the environmental issues described in Section
4.11 of the Johnston Disclosure Memorandum, is in Default under any
Laws, Orders, or Permits applicable to its business or employees
conducting its business, except for Defaults which
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are not reasonably likely to have, individually or in the aggregate, a
Johnston Material Adverse Effect; or
(c) Except for the environmental issues described in Section
4.11 of the Johnston Disclosure Memorandum, since January 1, 1995, has
received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any Johnston Entity
is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Johnston Material Adverse Effect, (ii) threatening to
revoke any material Permits, the revocation of which is reasonably
likely to have, individually or in the aggregate, a Johnston Material
Adverse Effect, or (iii) requiring any Johnston Entity to enter into
or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or
to adopt any Board resolution or similar undertaking.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority, which are in Johnston's
possession, have been made available to CGW.
4.13 LABOR RELATIONS. No Johnston Entity is the subject of any
Litigation asserting that it or any other Johnston Entity has committed an
unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state law) or seeking to compel it or any other Johnston Entity
to bargain with any labor organization as to wages or conditions of employment,
nor is any Johnston Entity party to any collective bargaining agreement, nor is
there any strike or other labor dispute involving any Johnston Entity, pending
or, to Johnston's Knowledge, threatened, or to the Knowledge of Johnston, is
there any activity involving any Johnston Entity's employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
4.14 EMPLOYEE BENEFIT PLANS.
(a) Johnston has disclosed in Section 4.14 of the Johnston
Disclosure Memorandum, and has delivered or made available to CGW prior to the
execution of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any Johnston Entity or
ERISA Affiliate thereof 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 (collectively,
the "Johnston Benefit Plans"). Any of the Johnston Benefit Plans which is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
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ERISA, is referred to herein as a "Johnston ERISA Plan." Each Johnston ERISA
Plan which is also a "defined benefit plan" (as defined in Section 414(j) of
the Internal Revenue Code) is referred to herein as an "Johnston Pension Plan."
No Johnston Pension Plan is or has been a multiemployer plan within the meaning
of Section 3(37) of ERISA.
(b) All Johnston Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Johnston Material Adverse Effect. Each
Johnston ERISA Plan which is intended to be qualified under Section 401(a) of
the Internal Revenue Code has received a favorable determination letter from
the Internal Revenue Service, and Johnston is not aware of any circumstances
likely to result in revocation of any such favorable determination letter. No
Johnston Entity has engaged in a transaction with respect to any Johnston
Benefit Plan that, assuming the taxable period of such transaction expired as
of the date hereof, would subject any Johnston Entity to a Tax imposed by
either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA.
(c) Except as set forth in Section 4.14(c) of the Johnston
Disclosure Memorandum, no Johnston Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no material change in the
financial position of any Johnston Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Johnston Pension Plan, and (iii) no
increase in benefits under any Johnston Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Johnston Material Adverse Effect or
materially adversely affect the funding status of any such plan. Neither any
Johnston Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any Johnston
Entity, or the single-employer plan of any entity which is considered one
employer with Johnston under Section 4001 of ERISA or Section 414 of the
Internal Revenue Code or Section 302 of ERISA (whether or not waived) (an
"ERISA Affiliate") has an "accumulated funding deficiency" within the meaning
of Section 412 of the Internal Revenue Code or Section 302 of ERISA. No
Johnston Entity has provided, or is required to provide, security to a Johnston
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code.
(d) No Liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by any Johnston Entity with respect to
any ongoing, frozen, or terminated single-employer plan or the single-employer
plan of any ERISA Affiliate. No Johnston Entity has incurred any withdrawal
Liability with respect to a multiemployer plan under Subtitle B of Title IV of
ERISA (regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required
to be filed for any Johnston Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
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(e) Except as disclosed in Section 4.14 of the Johnston
Disclosure Memorandum, no Johnston Entity has any Liability for retiree health
and life benefits under any of the Johnston Benefit Plans and there are no
restrictions on the rights of such Johnston Entity to amend or terminate any
such retiree health or benefit Plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 4.14 of the Johnston
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the Transactions will (i) result in any payment (including
severance, unemployment compensation, golden parachute, or otherwise) becoming
due to any director or any employee of any Johnston Entity from any Johnston
Entity under any Johnston Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Johnston Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(g) 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 any Johnston Entity and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the Johnston Financial Statements to the
extent required by and in accordance with GAAP.
4.15 MATERIAL CONTRACTS. Except as disclosed in Section 4.15 of
the Johnston Disclosure Memorandum or otherwise reflected in the Johnston
Financial Statements, none of the Johnston Entities, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate
payments to any Person in any calendar year in excess of $50,000, (ii) any
Contract relating to the borrowing of money by any Johnston Entity or the
guarantee by any Johnston Entity of any such obligation (other than Contracts
evidencing trade payables and Contracts relating to borrowings or guarantees
made in the ordinary course of business), (iii) any Contract which prohibits or
restricts any Johnston Entity from engaging in any business activities in any
geographic area, line of business or otherwise in competition with any other
Person, (iv) any Contract between or among Johnston Entities, (v) any Contract
involving Intellectual Property (other than Contracts entered into in the
ordinary course with customers and "shrink-wrap" software licenses), (vi) any
Contract relating to the provision of data processing, network communication,
or other technical services to or by any Johnston Entity, (vii) any Contract
relating to the purchase or sale of any goods or services (other than Contracts
entered into in the ordinary course of business and involving payments under
any individual Contract not in excess of $100,000), (viii) any agreement with
any holder (or Affiliate thereof) of 5% or more of any class of securities of
Johnston or any Johnston Entity and (ix) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a Form 10-K filed
by Johnston with the SEC as of the date of this Agreement (together with all
Contracts referred to in Sections 4.9 and 4.14(a), the "Johnston Contracts").
With respect to each Johnston Contract and except as disclosed in Section 4.15
of the Johnston Disclosure Memorandum:
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(a) the Contract is in full force and effect; (b) no Johnston Entity is in
Default thereunder, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Johnston Material Adverse Effect, (c)
no Johnston Entity has repudiated or waived any material provision of any such
Contract; and (d) no other party to any such Contract is, to the Knowledge of
Johnston, in Default in any respect, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect, or has repudiated or waived any material provision
thereunder. Except as set forth in Section 4.15 of the Johnston Disclosure
Memorandum, all of the indebtedness of any Johnston Entity for money borrowed
is prepayable at any time by such Johnston Entity without penalty or premium.
4.16 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Johnston, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Johnston Entity,
or against any director, employee or employee benefit plan of any Johnston
Entity, or against any material Asset, interest, or right of any of them, that
is reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Johnston Entity, that are reasonably likely to have, individually or in the
aggregate, a Johnston Material Adverse Effect. Section 4.16 of the Johnston
Disclosure Memorandum contains a summary of all Litigation as of the date of
this Agreement to which any Johnston Entity is a party and which names a
Johnston Entity as a defendant or cross-defendant or for which, to Johnston's
Knowledge, any Johnston Entity has any potential Liability.
4.17 REPORTS. Since January 1, 1996, or the date of organization
if later, each Johnston Entity has timely filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with Regulatory Authorities (except failures to file which
are not reasonably likely to have, individually or in the aggregate, a Johnston
Material Adverse Effect). As of their respective dates, each of such reports
and documents, including the financial statements, exhibits, and schedules
thereto, complied in all material respects with all applicable Laws. As of its
respective date, each such report and document did not, in all material
respects, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
materially misleading.
4.18 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by any Johnston
Entity or any Affiliate thereof to CGW pursuant to this Agreement or in
connection with the Transactions contains or will contain, when considered in
light of all information provided to CGW pursuant hereto, any untrue statement
of material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by Johnston,
or any of its officers, directors, employees, representatives or agents, for
inclusion or incorporation by reference in the Offer Documents or the Schedule
14D-9 including any amendments or supplements thereto, will at the respective
times the Offer Documents or the Schedule 14D-9 are filed with the SEC or first
published, sent or given to Johnston's stockholders, contain any statement
which, at such time and in light of the circumstances under which it is made,
is false or misleading with respect to any material fact, or, in light of the
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circumstances under which they were made, omit to state any material fact
necessary in order to make the statements therein not false or misleading;
provided, that Johnston makes no representation or warranty with respect to
information that has been or will be supplied in writing by or on behalf of
CGW, Purchaser or any CGW Subsidiaries, or their officers, directors,
employees, representatives or agents, for inclusion or incorporation by
reference in any of the foregoing documents. The Schedule 14D-9 and any
amendments or supplements thereto will comply in all material respects with the
applicable provisions of the 1934 Act and the rules and regulations thereunder
and all other documents that any Johnston Entity or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
Transactions will comply as to form in all material respects with the
provisions of applicable Law.
4.19 REGULATORY MATTERS. No Johnston Entity or any Affiliate
thereof has taken or agreed to take any action or has any Knowledge of any fact
or circumstance that is reasonably likely to materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section 8.1(a) or
result in the imposition of a condition or restriction of the type referred to
in the last sentence of such Section.
4.20 STATE TAKEOVER LAWS. Each Johnston Entity has taken all
necessary action to exempt the transactions contemplated by this Agreement
from, or if necessary to challenge the validity or applicability of, any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover Laws (collectively, "Takeover Laws").
4.21 CHARTER PROVISIONS. Each Johnston Entity has taken all
action so that the entering into of this Agreement and the consummation of the
Transactions do not and will not result in the grant of any rights to any
Person under the Certificate of Incorporation, Bylaws or other governing
instruments of any Johnston Entity or restrict or impair the ability of CGW or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of any Johnston Entity that may be directly
or indirectly acquired or controlled by them.
4.22 OPINION OF FINANCIAL ADVISOR. Johnston has received the
opinion of The Robinson-Humphrey Company, LLC, dated the date of this
Agreement, to the effect that the consideration to be received by the holders
of Johnston Common Stock is fair, from a financial point of view, to such
holders, a signed copy of which has been delivered to CGW.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Johnston as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Purchaser is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on its
business as now conducted and to own,
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lease and operate its material Assets. Purchaser is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Purchaser Material Adverse Effect.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Purchaser has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the Transactions. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of Purchaser. This Agreement represents a legal,
valid, and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar 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 proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Purchaser, nor the consummation by Purchaser of the Transactions, nor
compliance by Purchaser with any of the provisions hereof, will, subject to
receipt of the requisite Consents referred to in Section 8.1(a), constitute or
result in a Default under, or require any Consent pursuant to, any Law or Order
applicable to Purchaser.
(c) No notice to, filing with, or Consent of, any
Governmental Entity is necessary for the consummation by Purchaser of the
Transactions, except for (i) the filing of a premerger notification and report
form by Purchaser under the HSR Act, (ii) the filing with the SEC of the Offer
Documents and such reports under Sections 13 and 16(a) of the 1934 Act as may
be required in connection with the Transactions, and (iii) such other notices,
filings and Consents as may be required under the Takeover Laws or "blue-sky"
Laws of various states.
5.3 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Purchaser, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Purchaser, that is
reasonably likely to prevent, materially delay or materially impair the ability
of Purchaser to consummate the transactions contemplated hereby.
5.4 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by Purchaser or any
Affiliate thereof to Johnston pursuant to this Agreement contains or will
contain, when considered in light of all information provided to Johnston
pursuant hereto, any untrue statement of material fact or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were
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made, not misleading. None of the information supplied or to be supplied by
Purchaser, or any of its officers, directors, employees, representatives or
agents for inclusion or incorporation by reference in the Offer Documents or
the Schedule 14D-9 including any amendments or supplements thereto, will at the
respective times they are filed with the SEC or first published or sent or
given to Johnston's stockholders, contain any statement which, at such time and
in light of the circumstances under which it is made, is false or misleading
with respect to any material fact, or, in light of the circumstances under
which they were made, omit to state any material fact necessary in order to
make the statements therein not false or misleading. Notwithstanding the
foregoing, Purchaser does not make any representation or warranty with respect
to the information that has been supplied in writing by or on behalf of any
Johnston Entity or their respective officers, directors, employees,
representatives or agents for inclusion or incorporation by reference in any of
the foregoing documents. The Offer Documents and any amendments or supplements
thereto will comply in all material respects with the applicable provisions of
the 1934 Act and the rules and regulations thereunder and all other documents
that Purchaser or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the Transactions will comply as to form
in all material respects with the provisions of applicable Law.
5.5 REGULATORY MATTERS. Neither Purchaser nor any Affiliate
thereof has taken or agreed to take any action or has any Knowledge of any fact
or circumstance that is reasonably likely to materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section 8.1(a) or
result in the imposition of a condition or restriction of the type referred to
in the last sentence of such Section.
5.6 COMMITMENT LETTER. Purchaser has received a commitment
letter, dated the date hereof, from a lender to restructure the Bank Credit
Agreement, dated as of March 28, 1996, as amended, between Johnston, the
Johnston Subsidiaries and the banks named therein, The Chase Manhattan Bank,
N.A. as Administrative Agent, Chase Securities, Inc. as Arranger, and
NationsBank, N.A. as Syndication Agent, on terms and conditions satisfactory to
Purchaser.
5.7 INVESTMENT INTENT. Purchaser is acquiring the Additional
Common Stock and Series A Preferred Stock to be issued pursuant to Article 3 of
this Agreement for investment only, for Purchaser's own account and not as a
nominee or agent, and not with the view to, or for resale in connection with,
any distribution thereof or participation therein. Purchaser is an "accredited
investor" as such term is defined in Rule 501(a) under the Securities Act.
Purchaser understands that the shares of Johnston Common Stock and Series A
Preferred Stock to be issued pursuant to Article 3 of this Agreement have not
been, and will not be, registered under the 1933 Act in reliance upon the
representations set forth herein.
ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 AFFIRMATIVE COVENANTS OF JOHNSTON. From the date of this
Agreement until the earlier of the termination of this Agreement or the time
designees of Purchaser have been elected to and constitute a majority of the
Board of Directors of Johnston (the "Appointment Date"),
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unless the prior written consent of Purchaser shall have been obtained, and
except as otherwise expressly contemplated herein, Johnston shall and shall
cause each of its Subsidiaries to (a) operate its business only in the usual,
regular, and ordinary course, (b) preserve intact its business organization and
material Assets and maintain its material rights, and (c) take no action which
would (i) materially adversely affect the ability of any Party to obtain any
Consents required for the Transactions without imposition of a condition or
restriction of the type referred to in the last sentences of Section 8.1(a) or
8.1(b), (ii) except as otherwise permitted by Section 7.9, cause any of the
conditions to the Offers set forth in Exhibit 1, not to be satisfied, or (iii)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement.
6.2 NEGATIVE COVENANTS OF JOHNSTON. From the date of this
Agreement until the earlier of the termination of this Agreement or the
Appointment Date, unless the prior written consent of Purchaser shall have been
obtained, and except as otherwise expressly contemplated herein, Johnston
covenants and agrees that it will not do or agree or commit to do, or permit
any of its Subsidiaries to do or agree or commit to do, any of the following:
(a) amend the Certificate of Incorporation, Bylaws or other
governing instruments of any Johnston Entity, or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a Johnston Entity to
another Johnston Entity) in excess of an aggregate of $100,000 (for
all the Johnston Entities on a consolidated basis) except in the
ordinary course of the business of the Johnston Entities consistent
with past practices, or impose, or suffer the imposition, on any
material Asset of any Johnston Entity of any Lien or permit any such
Lien to exist (other than in connection with Liens in effect as of the
date hereof that are disclosed in the Johnston Disclosure Memorandum);
or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any Johnston
Entity, or declare or pay any dividend or make any other distribution
in respect of Johnston's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof and pursuant to the
terms thereof in existence on the date hereof, issue, sell, pledge,
encumber, authorize the issuance of, enter into any Contract to issue,
sell, pledge, encumber, or authorize the issuance of, or otherwise
permit to become outstanding, any additional shares of Johnston Common
Stock or any other capital stock of any Johnston Entity, or any stock
appreciation rights, or any option, warrant, or other Johnston Equity
Right; or
(e) adjust, split, combine or reclassify any capital stock of
any Johnston Entity or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Johnston
Common Stock, or sell, lease, mortgage or otherwise dispose of or
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otherwise encumber (x) any shares of capital stock of any Johnston
Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another Johnston Entity) or (y) any Asset having a book
value in excess of $25,000 other than in the ordinary course of
business for reasonable and adequate consideration; or
(f) purchase any securities or make any material investment,
either by purchase of stock of securities, contributions to capital,
Asset transfers, or purchase of any Assets, in any Person other than a
wholly owned Johnston Subsidiary, or otherwise acquire direct or
indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, or (ii) the creation
of new wholly owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Johnston Entity, except in accordance
with past practice disclosed in Section 6.2(g) of the Johnston
Disclosure Memorandum or as required by Law; pay any severance or
termination pay or any bonus other than pursuant to written policies
or written Contracts in effect on the date of this Agreement and
disclosed in Section 6.2(g) of the Johnston Disclosure Memorandum; and
enter into or amend any severance agreements with officers of any
Johnston Entity; grant any material increase in fees or other
increases in compensation or other benefits to directors of any
Johnston Entity except in accordance with past practice disclosed in
Section 6.2(g) of the Johnston Disclosure Memorandum; or
(h) enter into or amend any employment Contract between any
Johnston Entity and any Person (unless such amendment is required by
Law) that the Johnston Entity 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; or
(i) adopt any new employee benefit plan of any Johnston
Entity or terminate or withdraw from, or make any material change in
or to, any existing employee benefit plans of any Johnston Entity
other than any such change that is required by Law or that, in the
opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan, or make any distributions from such
employee benefit plans, except as required by Law, the terms of such
plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(k) commence any Litigation other than in accordance with
past practice, or settle any Litigation involving any Liability of any
Johnston Entity for material money damages or restrictions upon the
operations of any Johnston Entity; or
(l) enter into, modify, amend or terminate any material
Contract or waive, release, compromise or assign any material rights
or claims; or
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(m) authorize any of, or commit or agree to take any of,
the foregoing actions.
6.3 ADVERSE CHANGES IN CONDITION. Johnston agrees to give written
notice promptly to CGW and Purchaser upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Johnston Material Adverse Effect or (ii) would cause or constitute
a material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 MERGER WITHOUT MEETING OF STOCKHOLDERS. In the event that
Purchaser and any Affiliates shall acquire in the aggregate at least 90% of the
outstanding shares of the voting capital stock of Johnston, pursuant to the
Offer or otherwise (including the purchase of Additional Common Stock and
Series A Preferred Stock pursuant to Article 3 of this Agreement), the parties
hereto shall, at the request of Purchaser and subject to the provisions of this
Article 7, take all necessary and appropriate action to cause a wholly owned
subsidiary of Purchaser to be merged with and into Johnston, with Johnston as
the surviving corporation (the "Merger"), without a meeting of stockholders of
Johnston, in accordance with the DGCL; such that each share of capital stock of
the wholly owned subsidiary of Purchaser owned by Purchaser or its Affiliates
shall be cancelled and cease to be outstanding and each share of Johnston
Common Stock, other than those held by CGW, Purchaser or their Affiliates,
shall be exchanged for cash consideration equal to the Offer Price.
7.2 ALTERNATIVE MERGER. In the event that Purchaser and any
Affiliates shall acquire in the aggregate at least 50.1% of the outstanding
shares of the voting capital stock of Johnston, pursuant to the Offer or
otherwise (including the purchase of the Additional Common Stock and Series A
Preferred Stock pursuant to Article 3 of this Agreement), then as soon as
practicable after the Closing the parties hereto shall, subject to the
provisions of this Article 7, take all necessary and appropriate action to
cause a wholly owned subsidiary of Purchaser to be merged with and into
Johnston, with Johnston as the surviving corporation (the "Alternative Merger")
without a meeting of stockholders of Johnston, in accordance with the DGCL;
such that each share of capital stock of the wholly owned subsidiary of
Purchaser owned by Purchaser or its Affiliates shall be cancelled and cease to
be outstanding.
7.3 APPLICATIONS; ANTITRUST NOTIFICATION. Purchaser shall
promptly prepare and file, and Johnston shall cooperate in the preparation and,
where appropriate, filing of, applications with all Regulatory Authorities
having jurisdiction over the transactions contemplated by this Agreement
seeking the requisite Consents necessary to consummate the transactions
contemplated by this Agreement. To the extent required by the HSR Act, each of
the Parties will promptly file with the United States Federal Trade Commission
and the United States Department of Justice the notification and report form
required for the Transactions and any supplemental or
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additional information which may reasonably be requested in connection
therewith pursuant to the HSR Act and will comply in all material respects with
the requirements of the HSR Act. The Parties shall deliver to each other copies
of all filings, correspondence and orders to and from all Regulatory
Authorities in connection with the Transactions.
7.4 FILINGS WITH STATE OFFICES. If required pursuant to Sections
7.1 or 7.2, Johnston shall execute and file the necessary Certificate of Merger
with the Secretary of State of the State of Delaware.
7.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its 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 under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Exhibit 1 and in Article 8; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.
7.6 BOARD OF DIRECTORS OF JOHNSTON.
(a) Promptly upon the purchase of and payment for shares of
Johnston Common Stock and Series A Preferred Stock by Purchaser pursuant to
Article 1 and Article 3 hereof, which represent at least a majority of the
outstanding shares of Johnston's capital stock, Purchaser shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of Johnston as is equal to the product of the total number
of directors on such Board (giving effect to the directors designated by
Purchaser pursuant to this sentence) multiplied by the percentage that the
number of shares of Johnston capital stock so purchased bears to the total
number of shares of Johnston capital stock then outstanding. In furtherance
thereof, Johnston shall, upon the request of Purchaser, use its commercially
reasonable efforts promptly either to increase the size of its Board of
Directors, including amending the By-laws of Johnston if necessary to so
increase the size of Johnston's Board of Directors, or secure the resignations
of such number of its incumbent directors, or both, as is necessary to enable
Purchaser's designees to be so elected to Johnston's Board of Directors, and
shall take all actions available to Johnston to cause Purchaser's designees to
be so elected. At such time, Johnston shall, if requested by Purchaser, also
cause persons designated by Purchaser to constitute at least the same
percentage (rounded up to the next whole number) as is on Johnston's Board of
Directors of (i) each committee of Johnston's Board of Directors, (ii) of each
Johnston Subsidiary and (iii) each committee (or similar body) of each such
board.
(b) Johnston shall promptly take all actions required
pursuant to Section 14(f) of the 1934 Act and Rule 14f-1 promulgated thereunder
in order to fulfill its obligations under Section 7.6(a), including mailing to
stockholders the information required by Section 14(f) of the
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1934 Act and Rule 14f-1 as is necessary to enable CGW's designees to be elected
to Johnston's Board of Directors. Purchaser shall supply Johnston and be solely
responsible for any information with respect to it and its nominees, officers,
directors and Affiliates required by this Section 7.6(b). The rights and
obligations provided for in this Section 7.6(b) are in addition to and shall
not limit any rights which Purchaser or any of its Affiliates may have as a
holder or beneficial owner of shares of Johnston Common Stock as a matter of
law with respect to the election of directors or otherwise.
7.7 PAYMENT IN RESPECT OF JOHNSTON EQUITY RIGHTS. As soon as
practicable after the date of this Agreement and following the effectiveness of
the Merger or the Alternative Merger, the Board of Directors of Johnston (or if
appropriate, any committee administering the Johnston Stock Plans) shall adopt
such resolutions or take such other actions as are required to adjust the terms
of all outstanding Johnston Equity Rights to purchase shares of Johnston Common
Stock (except for those Johnston Equity Rights set forth on Schedule 7.7, the
"Retained Johnston Equity Rights") to provide that each Johnston Equity Right
(excluding the Retained Johnston Equity Rights) outstanding immediately prior
to the acceptance for payment of Shares pursuant to the Offer shall be
cancelled and the holder thereof shall be entitled to receive a cash payment
from Purchaser at the Effective Time of an amount equal to (i) the excess, if
any, of (x) the price per Share to be paid pursuant to the Offer over (y) the
exercise or conversion price per Share of such Johnston Equity Right,
multiplied by (ii) the number of Shares for which such Johnston Equity Right
shall not theretofore been exercised (the "Option Consideration"). Until
surrendered for payment in accordance with the provisions of this Section 7.7,
all Johnston Equity Rights (excluding the Retained Johnston Equity Rights)
shall, from and after the Effective Time, represent for all purposes only the
right to receive the consideration provided in this Section 7.7, without any
interest thereon.
Johnston shall use its best efforts to obtain all necessary Consents or
releases from holders of Johnston Equity Rights, to the extent required by the
terms of the plans or agreements governing such Johnston Equity Rights, as the
case may be, or pursuant to the terms of any Johnston Equity Right granted
thereunder, and take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 7.7 (except for such
action that may require the approval of Johnston's stockholders).
7.8 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, Johnston shall keep CGW
advised of all material developments relevant to its business and shall permit
CGW to make or cause to be made such investigation of the business and
properties of Johnston and its Subsidiaries and of their respective financial
and legal conditions as CGW reasonably requests, provided that such
investigation shall be reasonably related to the Transactions and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the representations and warranties of the other Party.
(b) In addition to CGW's obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein, CGW shall, and
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shall cause Purchaser and their respective advisers and agents to, maintain the
confidentiality of all confidential information furnished to it or any of them
by Johnston concerning Johnston and its Subsidiaries' businesses, operations,
and financial positions and shall not use such information for any purpose
except in furtherance of the transactions contemplated by this Agreement. If
this Agreement is terminated prior to the Effective Time, CGW shall promptly
return or cause to be returned, or certify or cause to be certified the
destruction of, all documents and copies thereof, and all work papers
containing confidential information received from Johnston.
(c) Johnston shall use its best efforts to exercise and
enforce its rights, and shall not, without the prior written consent of
Purchaser, waive any of its rights, under confidentiality agreements entered
into with Persons which were considering an acquisition proposal with respect
to Johnston.
(d) Each Party 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 Johnston
Material Adverse Effect or a CGW Material Adverse Effect, as applicable.
7.9 PRESS RELEASES. Prior to the Effective Time, the Parties
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 7.9
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
7.10 CERTAIN ACTIONS. Except with respect to this Agreement and
the Transactions, and as provided below, no Johnston Entity nor any Affiliate
thereof nor any Representatives thereof retained by any Johnston Entity shall
directly or indirectly initiate, solicit, encourage or knowingly facilitate
(including by way of furnishing information) any inquiries or the making of any
acquisition proposal. Notwithstanding anything herein to the contrary, Johnston
and its Board of Directors shall be permitted (i) to the extent applicable, to
comply with Rule 14d-9 and Rule 14e-2 promulgated under the 1934 Act with
regard to an acquisition proposal, and (ii) to engage in any discussions or
negotiations with, or provide any information to, any Person in response to an
unsolicited bona fide written acquisition proposal by any such Person, if and
only to the extent that (a) Johnston's Board of Directors concludes in good
faith and consistent with its fiduciary duties to Johnston's stockholders under
applicable Law that such acquisition proposal could reasonably be expected to
result in a Superior Proposal, (b) prior to providing any information or data
to any Person in connection with an acquisition proposal by any such Person,
Johnston's Board of Directors receives from such Person an executed
confidentiality agreement containing confidentiality terms at least as
stringent as those contained in the confidentiality agreement between Johnston
and CGW, and (c) prior to providing any information or data to any Person or
entering into discussions or negotiations with any Person, Johnston's Board of
Directors notifies CGW and Purchaser promptly of such inquiries, proposals or
offers received by, any such
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information requested from, or any such discussions or negotiations sought to
be initiated or continued with, any of its Representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any inquiries, proposals or offers. Johnston agrees that it will
promptly keep CGW informed of the status and terms of any such proposals or
offers and the status and terms of any such discussions or negotiations.
Johnston agrees that it will, and will cause its officers, directors and
Representatives to, immediately cease and cause to be terminated any
activities, discussions or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any acquisition
proposal. Johnston agrees that it will use reasonable best efforts to promptly
inform its directors, officers, key employees, agents and Representatives of
the obligations undertaken in this Section 7.10. Nothing in this Section shall
(x) permit Johnston to terminate this Agreement (except as specifically
provided in Article 9 thereof) or (y) affect any other obligation of CGW,
Purchaser or Johnston under this Agreement.
7.11 STATE TAKEOVER LAWS. Each Johnston Entity shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the validity or applicability of, any applicable
state takeover law, including Section 203 of the DGCL.
7.12 CHARTER PROVISIONS. Each Johnston Entity shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Transactions do not and will not result in the grant of any
rights to any Person under the Certificate of Incorporation, Bylaws or other
governing instruments of any Johnston Entity or restrict or impair the ability
of CGW or any of its Subsidiaries to vote, or otherwise to exercise the rights
of a stockholder with respect to, shares of any Johnston Entity that may be
directly or indirectly acquired or controlled by them.
7.13 INDEMNIFICATION.
(a) For a period of three years after the Effective Time,
Purchaser shall, and shall cause Johnston to, indemnify, defend and hold
harmless the present and former directors, officers, employees and agents of
the Johnston Entities (each, an "Indemnified Party") against all Liabilities
arising out of actions or omissions relating to the Indemnified Party's service
or services as directors, officers, employees or agents of Johnston or, at
Johnston's request, of another corporation, partnership, joint venture, trust
or other enterprise occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the fullest extent permitted
under Delaware Law and by Johnston's Certificate of Incorporation and Bylaws as
in effect on the date hereof, including provisions relating to advances of
expenses incurred in the defense of any Litigation and whether or not Purchaser
is insured against any such matter. Without limiting the foregoing, in any case
in which approval by Johnston is required to effectuate any indemnification,
Johnston shall direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel
mutually agreed upon between Purchaser and the Indemnified Party.
(b) Purchaser shall, or shall cause Johnston to, use its
reasonable efforts (and Johnston shall cooperate prior to the Effective Time in
these efforts) to maintain in effect for a
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period of three years after the Effective Time Johnston's existing directors'
and officers' liability insurance policy (provided that Purchaser may
substitute therefor (i) policies of at least the same coverage and amounts
containing terms and conditions which are substantially no less advantageous or
(ii) with the consent of Johnston given prior to the Effective Time, any other
policy) with respect to claims arising from facts or events which occurred
prior to the Effective Time and covering persons who are currently covered by
such insurance; provided, that neither Purchaser, the surviving corporation of
the Merger, if applicable, nor Johnston shall be obligated to make aggregate
premium payments for such three-year period in respect of such policy (or
coverage replacing such policy) which exceed, for the portion related to
Johnston's directors and officers, 150% of the annual premium payments on
Johnston's current policy in effect as of the date of this Agreement (the
"Maximum Amount"). If the amount of the premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Purchaser shall use
its reasonable efforts to maintain the most advantageous policies of directors'
and officers' liability insurance obtainable for a premium equal to the Maximum
Amount.
(c) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 7.13, upon learning of any such Liability
or Litigation, shall promptly notify Purchaser thereof. In the event of any
such Litigation (whether arising before or after the Effective Time), (i) CGW
or Johnston shall have the right to assume the defense thereof and neither
Purchaser nor Johnston shall be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
Purchaser or Johnston elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between Purchaser or Johnston and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Purchaser or Johnston shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; provided, that Purchaser and Johnston shall be obligated pursuant to
this paragraph (c) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the
defense of any such Litigation, and (iii) neither Purchaser nor Johnston shall
be liable for any settlement effected without its prior written consent; and
provided further that neither Purchaser nor Johnston shall have any obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
(d) If Purchaser or Johnston or any successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and in each
case, proper provision shall be made so that the successors and assigns of
Purchaser or Johnston shall assume the obligations set forth in this Section
7.13.
(e) The provisions of this Section 7.13 are intended to be
for the benefit of and shall be enforceable by, each Indemnified Party and
their respective heirs and representatives.
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7.14 MAINTENANCE OF PUBLIC TRADING MARKET. In the event that the
Minimum Tender Condition is met but the Purchaser and any Affiliates shall not
have acquired in the aggregate at least 90% of the outstanding Shares of
Johnston pursuant to the Transactions, CGW and Purchaser shall, for a period of
three years after the Effective Date use their commercially reasonable best
efforts to maintain a public trading market for the Johnston Common Stock
either on a national securities exchange, any of the Nasdaq Stock Markets, or
in over-the-counter trading, and as long as such public trading market exists
CGW and Purchaser shall comply with the 1934 Act, and the rules and regulations
promulgated thereunder.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and the other Transactions
are subject to the satisfaction of the following conditions, unless waived by
both Parties pursuant to Section 10.6:
(A) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Transactions shall have been obtained
or made and shall be in full force and effect and all waiting periods
required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the Transactions
shall be conditioned or restricted in a manner (including requirements
relating to the raising of additional capital or the disposition of
Assets) which in the reasonable judgment of the Board of Directors of
Purchaser and the General Partner of CGW would so materially adversely
impact the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or requirement
been known, CGW and Purchaser would not have entered into this
Agreement.
(B) CONSENTS AND APPROVALS. Each Party shall have obtained
any and all Consents required 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 Johnston
Material Adverse Effect or a Purchaser Material Adverse Effect, as
applicable. No Consent so obtained which is necessary to consummate the
Transactions shall be conditioned or restricted in a manner which in the
reasonable judgment of the Board of Directors of Purchaser and the
General Partner of CGW would so materially adversely impact the economic
or business benefits of the transactions contemplated by this Agreement
that, had such condition or requirement been known, CGW and Purchaser
would not have entered into this Agreement.
(C) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the Transactions contemplated
by this Agreement.
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(D) PURCHASE OF SHARES IN OFFER. Purchaser shall have
purchased Shares pursuant to the Offer, except that this condition shall
not apply if Purchaser shall have failed to purchase Shares pursuant to
the Offer in breach of their obligations under this Agreement.
(E) EMPLOYEE LOANS. Each of the financial institutions that
have made loans to employees of Johnston to purchase shares of Johnston
Common Stock ("Employee Loans"), and which loans are guaranteed by
Johnston (such employees, the lending institutions and the outstanding
amounts under their loans are set forth on Schedule A hereto), shall
have agreed to restructure the Employee Loans on terms reasonably
acceptable to the Parties, including the pledge by each borrower under
the Employee Loans of all shares of Johnston Common Stock held by such
borrower and purchased with the proceeds of the Employee Loan to the
lender to secure the Employee Loans; provided, however, that should any
such employee borrower choose to tender such shares of Johnston Common
Stock acquired with the Employee Loans, the Employee Loan relating to
that employee borrower shall not be restructured and shall remain due
and payable in accordance with its original terms.
(F) REFINANCING OF JOHNSTON DEBT. Purchaser shall have
restructured the Bank Credit Agreement, dated as of March 28, 1996, as
amended, between Johnston, the Johnston Subsidiaries and the banks named
therein, The Chase Manhattan Bank, N.A as Administrative Agent, Chase
Securities, Inc. as Arranger, and NationsBank, N.A. as Syndication
Agent, on terms and conditions satisfactory to Purchaser.
(G) FINANCING. Purchaser will have prior to the Effective
Time, sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to make the aggregate cash
payment required to be paid pursuant to Article 2 of this Agreement and
to purchase and pay for the Additional Common Stock and the Series A
Preferred Stock pursuant to Article 3 of this Agreement (the financing
described in this paragraph (g), together with the financing described
in paragraph (f) above, hereinafter referred to as the "Financing").
8.2 CONDITIONS TO OBLIGATIONS OF CGW AND PURCHASER. The
obligations of CGW and Purchaser to perform their respective obligations under
this Agreement are subject to the satisfaction of the following conditions,
unless waived by CGW and Purchaser pursuant to Section 10.6(a):
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 8.2(a), the accuracy of the representations and warranties of
Johnston set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). The representations and warranties set forth in Section 4.3 shall
be true and correct (except for inaccuracies which are de minimus in
amount). The representations and warranties set forth in Sections 4.20,
and 4.21 shall be
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true and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of Johnston set forth
in this Agreement (including the representations and warranties set
forth in Sections 4.3, 4.20, and 4.21) such that the aggregate effect of
such inaccuracies has, or is reasonably likely to have, a Johnston
Material Adverse Effect; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or to the
"Knowledge" of any Person shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Johnston to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(C) CERTIFICATES. Johnston shall have delivered to CGW and
Purchaser (i) a certificate, dated as of the Effective Time and signed
on its behalf by its chief executive officer and its chief financial
officer, to the effect that the conditions set forth in Section 8.1 as
relates to Johnston and in Section 8.2(a) and 8.2(b) have been
satisfied, and (ii) certified copies of resolutions duly adopted by
Johnston's Board of Directors evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance of
this Agreement, and the consummation of the Transactions, all in such
reasonable detail as CGW, Purchaser and their counsel shall request.
8.3 CONDITIONS TO OBLIGATIONS OF JOHNSTON. The obligations of
Johnston to perform its obligations under this Agreement are subject to the
satisfaction of the following conditions, unless waived by Johnston pursuant to
Section 10.6(b):
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 8.3(a), the accuracy of the representations and warranties of
Purchaser set forth in this Agreement shall be assessed as of the date
of this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). The representations and warranties of Purchaser set forth in
Sections 5.5 and 5.7 shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties
of Purchaser set forth in this Agreement (including the representations
and warranties set forth in Sections 5.5 and 5.7) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to
have, a Purchaser Material Adverse Effect; provided that, for purposes
of this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" or to
the "Knowledge" of any Person shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of CGW and Purchaser to be performed and
complied with pursuant to this Agreement, including, but not limited to
the provisions set forth in Article 3
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herein and Section 8.1(f) hereof, and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(C) CERTIFICATES. Purchaser shall have delivered to Johnston
(i) a certificate, dated as of the Effective Time and signed on its
behalf by its president, to the effect that the conditions set forth in
Section 8.1 as relates to CGW and Purchaser and in Section 8.3(a) and
8.3(b) have been satisfied, and (ii) certified copies of resolutions
duly adopted by Purchaser's Board of Directors evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the Transactions,
all in such reasonable detail as Johnston and its counsel shall request.
(D) PAYING AGENT CERTIFICATION. The bank or trust company
selected by CGW to act as paying agent (the "Paying Agent") shall have
delivered to Johnston a certificate, dated as of the Effective Time, to
the effect that Purchaser has deposited with the Paying Agent sufficient
funds to pay the aggregate cash payments required to be paid pursuant to
Article 1.
ARTICLE 9
TERMINATION
9.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of Johnston and CGW or both, this Agreement may be terminated at
any time prior to the Effective Time:
(a) By mutual consent of CGW and Johnston; or
(b) By either of Johnston or CGW:
(i) if (A) the Offer shall have expired without any
Shares being purchased therein or (B) Purchaser shall not have accepted
for payment all Shares tendered pursuant to the Offer by June 30, 2000;
provided, however, that the right to terminate this Agreement under this
Section 9.1(b)(i) 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 Purchaser, to purchase the Shares pursuant
to the Offer on or prior to such date; or
(ii) if any court, arbitration tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity") shall have issued an
order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares pursuant
to the Offer and such order, decree, ruling or other action shall have
become and final and non-appealable; or
(c) By Johnston:
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(i) if Purchaser shall have failed to commence the
Offer as soon as reasonably practical following the date of the initial
public announcement of the Offer; provided, that Johnston may not
terminate this Agreement pursuant to this Section 9.1(c)(i) if Johnston
is at such time in willful and material breach of this Agreement; or
(ii) if CGW or Purchaser shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach
cannot be or has not been cured, in all material respects, within 30
days after the giving of written notice to CGW or Purchaser, as
applicable; or
(iii) if the Board of Directors of Johnston shall
have determined to endorse, enter into and recommend to Johnstons'
shareholders a Superior Proposal and shall have concurrently therewith
entered into a definitive Contract with a Person in accordance with
Section 7.10 with respect to such Superior Proposal, provided it has
complied with all of the provisions thereof, including the notice
provisions thereof; or
(d) By CGW:
(i) if, due to an occurrence not involving a breach
by CGW or Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Exhibit 1,
Purchaser shall have failed to commence the Offer as soon as reasonably
practical following the date of the initial public announcement of the
Offer; or
(ii) if prior to the purchase of Shares pursuant to
the Offer, Johnston shall have breached in any material respect any
representation, warranty, covenant or other agreement contained in this
Agreement or in the agreements governing the Financing, which (A) would
give rise to the failure of a condition set forth in paragraph (f), (g)
and (j) of Exhibit 1, and (B) as of the Closing, cannot be or has not
been cured, in all material respects.
9.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
9.2 and Article 10 shall survive any such termination and abandonment, and (ii)
a termination other than pursuant to Section 9.1(a) shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
9.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 9.3 and
Articles 2, 10 and Section 7.13.
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ARTICLE 10
MISCELLANEOUS
10.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person; or
(iii) any other Person for which a Person described in clause (ii) acts
in any such capacity.
"AGREEMENT" shall mean this Purchase Agreement, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"ASSETS" of a Person shall mean all of the assets,
properties, businesses and rights of such Person of every kind, nature,
character and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such
Person and wherever located.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement dated March 2, 1999, between Johnston and CGW.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument,
lease, obligation, plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital stock,
Assets or business.
"DGCL" shall mean the Delaware General Corporation Law.
"DEFAULT" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or
Permit, (ii) any occurrence of any event that with the passage of time
or the giving of notice or both would constitute a breach or
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violation of, default under, contravention of, or conflict with, any
Contract, Law, Order, or Permit, or (iii) any occurrence of any event
that with or without the passage of time or the giving of notice would
give rise to a right of any Person to exercise any remedy or obtain any
relief under, terminate or revoke, suspend, cancel, or modify or change
the current terms of, or renegotiate, or to accelerate the maturity or
performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"JOHNSTON COMMON STOCK" shall mean the $.10 par value per
share, common stock of Johnston.
"JOHNSTON DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Johnston Disclosure Memorandum" delivered prior to
the date of this Agreement to CGW describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect
to one Section shall be deemed to be disclosed for purposes of any other
Section for which such disclosure is applicable, if such applicability
is clear in the specific context and cross-referenced in the appropriate
sections.
"JOHNSTON ENTITIES" shall mean, collectively, Johnston and all
Johnston Subsidiaries.
"JOHNSTON EQUITY RIGHTS" shall mean all arrangements, calls,
commitments, Contracts, options (including employee stock options),
rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to
issue additional shares of its capital stock or other Equity Rights.
"JOHNSTON FINANCIAL STATEMENTS" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if
any) of Johnston as of January 2, 1999, January 3, 1998 and December 28,
1996, and the related statements of operations, changes in stockholders'
equity, and cash flows (including related notes and schedules, if any)
for the three months ended October 2, 1999, and for each of the three
fiscal years ended January 2, 1999, January 3, 1998 and December 28,
1996, as filed by Johnston in SEC Documents, and (ii) the consolidated
balance sheets of Johnston (including related notes and schedules, if
any) and related statements of operations, changes in stockholders'
equity, and cash flows (including related notes and schedules, if any)
included in SEC Documents filed with respect to periods ended subsequent
to January 2, 1999.
"JOHNSTON MATERIAL ADVERSE EFFECT" shall mean an event,
change or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of Johnston and
its Subsidiaries, taken as a whole, or (ii) the ability of Johnston to
perform its obligations under this Agreement or the other transactions
contemplated by this Agreement.
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"JOHNSTON PREFERRED STOCK" shall mean the $.01 par value per
share, preferred stock of Johnston.
"JOHNSTON STOCK PLANS" shall mean the existing stock option
and other stock-based compensation plans of Johnston set forth in
Schedule 4.14 of the Johnston Disclosure Memorandum.
"JOHNSTON SUBSIDIARIES" shall mean the Subsidiaries of
Johnston, which shall include the Johnston Subsidiaries described in
Section 4.4 and any corporation or other organization acquired as a
Subsidiary of Johnston in the future and held as a Subsidiary by
Johnston at the Effective Time.
"ENVIRONMENTAL LAWS" shall mean all currently existing Laws
relating to pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land surface, or
subsurface strata) and which are administered, interpreted, or enforced
by the United States Environmental Protection Agency and state and local
agencies with jurisdiction over, and including common law in respect of,
pollution or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other currently
existing Laws relating to emissions, discharges, releases, or threatened
releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"EXHIBIT 1" shall mean the Exhibit so marked, a copy of which
is attached to this Agreement. Such Exhibit is hereby incorporated by
reference herein and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document without being
attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HSR ACT" shall mean Section 7A of the Clayton Act, as
added by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
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"INTELLECTUAL PROPERTY" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications
therefor, technology rights and licenses, computer software (including
any source or object codes therefor or documentation relating thereto),
trade secrets, franchises, know-how, inventions, and other intellectual
property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean
those facts that are known or should reasonably have been known after
due inquiry by the president, chief financial officer, chief accounting
officer, chief operating officer, or any senior or executive vice
president of such Person.
"LAW" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, or
statute applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any Regulatory
Authority.
"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 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.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest,
title retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, and (iii) Liens which do
not materially impair the use of or title to the Assets subject to such
Lien.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other
proceeding relating to or affecting a Party, its business, its Assets
(including Contracts related to it), or the transactions contemplated by
this Agreement.
"MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
"OPERATING PROPERTY" shall mean any property owned, leased,
or operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds
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a security interest or other interest (including an interest in a
fiduciary capacity), and, where required by the context, includes the
owner or operator of such property, but only with respect to such
property.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates
to a material degree in the management and, where required by the
context, said term means the owner or operator of such facility or
property, but only with respect to such facility or property.
"PARTY" shall mean either Johnston or CGW, and "PARTIES"
shall mean both Johnston and CGW.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in concert,
or any person acting in a representative capacity.
"PURCHASER MATERIAL ADVERSE EFFECT" shall mean an event,
change or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on the
ability of CGW or Purchaser to perform their respective obligations
under this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC,
the NYSE, the Nasdaq National Market, the Federal Trade Commission, the
United States Department of Justice, and all other federal, state,
county, local or other governmental or regulatory agencies, authorities
(including self-regulatory authorities), instrumentalities, commissions,
boards or bodies having jurisdiction over the Parties and their
respective Subsidiaries.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative
engaged by a Person.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the
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Trust Indenture Act of 1939, as amended, and the rules and regulations
of any Regulatory Authority promulgated thereunder.
"SUBSIDIARIES" shall mean all those corporations,
associations, or other business entities of which the entity in question
either (i) owns or controls 50% or more of the outstanding equity
securities either directly or through an unbroken chain of entities as
to each of which 50% or more of the outstanding equity securities is
owned directly or indirectly by its parent (provided, there shall not be
included any such entity the equity securities of which are owned or
controlled in a fiduciary capacity), (ii) in the case of partnerships,
serves as a general partner, (iii) in the case of a limited liability
company, serves as a managing member, or (iv) otherwise has the ability
to elect a majority of the directors, trustees or managing members
thereof.
"SUPERIOR PROPOSAL" shall mean any proposal (i) made by a
third party to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of Johnston
Common Stock then outstanding or all or substantially all the assets of
Johnston, (ii) which the Board of Directors of Johnston determines in
its good faith judgment that such proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial and
regulatory aspects of the proposal and the Person making the proposal
and (iii) which would, if consummated, result in a more favorable
transaction to the shareholders of Johnston than the transaction
contemplated by this Agreement, taking into account, to the extent
relevant, the long-term prospects and interests of Johnston and its
stockholders.
"TAX" or "TAXES" shall mean any federal, state, county,
local, or foreign taxes, charges, fees, levies, imposts, duties, or
other assessments, including income, gross receipts, excise, employment,
sales, use, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital,
profits, withholding, Social Security, single business and unemployment,
disability, real property, personal property, registration, ad valorem,
value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposes or required to be
withheld by the United States or any state, county, local or foreign
government or subdivision or agency thereof, including any interest,
penalties, and additions imposed thereon or with respect thereto.
"TAX RETURN" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an
Affiliated or combined or unitary group that includes a Party or its
Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
<TABLE>
<S> <C>
Additional Common Stock Section 3.1
</TABLE>
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<PAGE> 40
<TABLE>
<S> <C>
Appointment Date Section 6.1
Alternative Merger Section 7.2
Closing Section 2.2
Johnston Benefit Plans Section 4.14
Johnston Contracts Section 4.15
Johnston ERISA Plan Section 4.14
Johnston Pension Plan Section 4.14
Johnston SEC Reports Section 4.5
Effective Time Section 2.1
ERISA Affiliate Section 4.14
Fully Diluted Shares Exhibit 1
Governmental Entity Section 9.1
Indemnified Party Section 7.13
Maximum Amount Section 7.13
Merger Section 7.1
Offer Section 1.1
Offer Documents Section 1.1
Offer Price Section 1.1
Offer to Purchase Section 1.1
Option Consideration Section 7.7
Paying Agent Section 8.3
Schedule TO Section 1.1
Schedule 14D-9 Section 1.2
Shares Section 1.1
Stockholder Protection Agreement Section 1.2
Takeover Laws Section 4.20
Transactions Section 1.2
</TABLE>
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
10.2 EXPENSES.
(a) Except as otherwise provided in this Section 10.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel.
(b) If (i) Johnston terminates this Agreement pursuant to
Section 9.1(c)(iii), or (ii) either Johnston or CGW terminates this Agreement
pursuant to Section 9.1(b)(i) and prior thereto there shall have been publicly
announced another acquisition proposal, Johnston shall pay to CGW, an amount
equal to $3,000,000, plus an amount equal to CGW's actual, reasonable and
reasonably documented out-of-pocket fees and expenses incurred by CGW and
Purchaser in
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<PAGE> 41
connection with the Offer, this Agreement and the consummation of the
Transactions, which shall be payable in same day funds, provided that in no
event shall Johnston be obligated to pay any such fees and expenses in excess
of $4,000,000.
(c) If Johnston terminates this Agreement pursuant to
Section 9.1(c)(i) or (ii), then CGW shall pay to Johnston an amount equal to
Johnston's reasonable and reasonably documented legal fees and expenses
incurred, as of the date of such termination, with respect to this Agreement
and the Transactions.
(d) If CGW terminates this Agreement pursuant to Section
9.1(d)(ii), then Johnston shall pay to CGW an amount equal to CGW's reasonable
and reasonably documented legal fees and expenses incurred, as of the date of
such termination, with respect to this Agreement and the Transactions.
(e) If, upon expiration of the Offer, the Minimum Tender
Condition (as defined in Exhibit 1 hereto) is not satisfied, Johnston shall pay
to CGW an amount equal to CGW's reasonable and reasonably documented legal fees
and expenses incurred, with respect to this Agreement and the Transactions.
(f) Nothing contained in this Section 10.2 shall constitute
or shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
10.3 BROKERS AND FINDERS. Each of the Parties represents and
warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage fees, commissions,
or finders' fees in connection with this Agreement or the Transactions. In the
event of a claim by any broker or finder based upon his or its representing or
being retained by or allegedly representing or being retained by Johnston or by
CGW, each of Johnston and CGW, as the case may be, agrees to indemnify and hold
the other Party harmless of and from any Liability in respect of any such
claim.
10.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral (except, as to Section
7.10(b), for the Confidentiality Agreement). Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
10.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of each of the Parties.
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<PAGE> 42
10.6 WAIVERS.
(a) Prior to or at the Effective Time, CGW, acting through
its General Partner, shall have the right to waive, for itself and for
Purchaser, any Default in the performance of any term of this Agreement by
Johnston, to waive or extend the time for the compliance or fulfillment by
Johnston of any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of CGW under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by the General Partner of CGW.
(b) Prior to or at the Effective Time, Johnston, acting at
the direction of its Board of Directors, shall have the right to waive any
Default in the performance of any term of this Agreement by CGW or Purchaser,
to waive or extend the time for the compliance or fulfillment by CGW or
Purchaser of any and all of these respective obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
Johnston under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of Johnston.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or of the breach of any other term of this
Agreement.
10.7 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. 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.
10.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
Johnston: Johnston Industries, Inc.,
105 Thirteenth Street
Columbus, Georgia 31901
Telecopy Number: (706) 641-3159
Attention: D. Clark Ogle
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<PAGE> 43
Copy to Counsel: Paul, Hastings, Janofsky & Walker LLP
600 Peachtree Street
Atlanta, GA 30308
Telecopy Number: (404) 815-2400
Attention: Elizabeth H. Noe
CGW or Purchaser: CGW Southeast Partners IV, L.P.
Twelve Piedmont Center, Suite 210
Atlanta, Georgia 30305
Telecopy Number: (404) 816-3258
Attention: Roy R. Bowman
Copy to Counsel: Alston & Bird LLP
1201 West Peachtree Street
Atlanta, GA 30309-7260
Telecopy Number: (404) 881-4777
Attention: Sidney J. Nurkin
10.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Georgia, without regard
to any applicable conflicts of Laws.
10.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in
this Agreement are for reference purposes only and are not part of this
Agreement. Unless otherwise indicated, all references to particular Articles or
Sections shall mean and refer to the referenced Articles and Sections of this
Agreement.
10.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall
be considered the draftsman. The parties acknowledge and agree that this
Agreement has been reviewed, negotiated, and accepted by all parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
10.13 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such
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<PAGE> 44
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf by its duly authorized officers as of the day and
year first above written.
CGW Southeast Partners IV, L.P.
By: CGW Southeast IV, L.L.C., its General Partner
By: CGW, Inc., its Manager
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
JI Acquisition Corp.
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
---------------------------------------------
Johnston Industries, Inc.
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
---------------------------------------------
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<PAGE> 45
EXHIBIT 1
CONDITIONS OF THE OFFER
The capitalized terms used in this Exhibit 1 have the meanings assigned to them
in the Purchase Agreement to which this Exhibit 1 is attached.
Notwithstanding any other provision of the Offer or the Purchase
Agreement, Purchaser 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 1934 Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for any
Shares tendered pursuant to the Offer, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any
Shares tendered pursuant to the Offer, and may amend or terminate the Offer as
to any Shares not then paid for unless (i) there shall have been validly
tendered and not withdrawn, prior to the expiration of the Offer, that number
of Shares which, when aggregated with the shares of Johnston Common Stock and
Series A Preferred Stock to be acquired by the Purchaser pursuant to Article 3
hereof, would represent at least a majority of the Fully Diluted Shares (as
defined below) (the "Minimum Tender Condition") and (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated. The term "Fully Diluted Shares" means
all outstanding securities entitled generally to vote in the election of
directors of Johnston on a fully diluted basis, after giving effect to the
exercise or conversion of all Retained Johnston Equity Rights exercisable or
convertible into such voting securities and the purchase of the Additional
Common Stock and Series A Preferred Stock pursuant to Article 3 of the
Agreement. Furthermore, notwithstanding any other term of the Offer or the
Purchase Agreement, Purchaser shall not be required to accept for payment or,
subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may terminate or amend the Offer, with the consent of
Johnston or if, at any time on or after the date of the Purchase Agreement and
prior to the acceptance for payment of Shares or the payment therefor, any of
the following conditions exists:
(a) there shall have been instituted, threatened or pending any
Litigation brought by any Governmental Entity or other person, or before
any court or governmental authority, agency or tribunal, domestic or
foreign, in each case that has a reasonable likelihood of success, (i)
challenging the acquisition by CGW or Purchaser of any Shares, directly
or indirectly seeking to restrain or prohibit or otherwise make more
costly the making or consummation of the Offer, or seeking to obtain
from Johnston, CGW or Purchaser any damages that are material in
relation to Johnston and its Subsidiaries, taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by Johnston, CGW
or any of their respective Subsidiaries of any material portion of the
business or assets of Johnston, CGW or any of their respective
Subsidiaries, or to compel Johnston, CGW or any of their respective
Subsidiaries to dispose of or hold separate any material portion of the
business or assets of Johnston, CGW or any of their respective
Subsidiaries, as a result of the Offer,
<PAGE> 46
(iii) seeking to impose or to confirm limitations on the ability of CGW
or any of its Subsidiaries effectively to acquire or hold or to exercise
full rights of ownership of Shares, including without limitation the
right to vote any Shares acquired or owned by CGW or any of its
Subsidiaries on all matters properly presented to the stockholders of
Johnston, or the right to vote any shares of capital stock of any
Subsidiary directly or indirectly owned by Johnston, (iv) seeking to
prohibit CGW or any of its Subsidiaries from effectively controlling in
any material respect the business or operations of Johnston or any of its
Subsidiaries, or (v) which otherwise is reasonably likely to have a
Johnston Material Adverse Effect
(b) there shall be any Law or Order threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued with respect
to, or deemed applicable to, or any Consent withheld with respect to,
(i) CGW, Johnston or any of their respective Subsidiaries or (ii) the
Offer, by any Governmental Entity or before any court or governmental
authority, agency or tribunal, domestic or foreign, that is reasonably
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred any Johnston Material Adverse Effect or
any development that, insofar as reasonably can be foreseen, is
reasonably likely to result in a Johnston Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock
Exchange or in the Nasdaq National Market for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from
physical damage or interference not relating to monetary conditions),
(ii) a decline of at least 25% in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 index from the date
hereof, or a material disruption of or material adverse change in
financial, banking or capital market conditions that could materially
adversely affect syndication of loan facilities, (iii) any material
adverse change in United States currency exchange rates or a suspension
of, or limitation on, the markets therefor, (iv) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (v) any limitation (whether or not mandatory) by any
domestic government or governmental, administrative or regulatory
authority or agency on, or any other event that could reasonably be
expected to materially adversely affect the extension of credit by banks
or other lending institutions, (vi) a commencement of a war or armed
hostilities or other national or international calamity having a
Johnston Material Adverse Effect or CGW Material Adverse Effect or
materially adversely affecting (or materially delaying) the consummation
of the Offer or (vii) in the case of any of the foregoing existing on
the date of the Purchase Agreement, a material acceleration or worsening
thereof;
(e) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes
of this paragraph as set forth in Rule 13d-3 promulgated under the 1934
Act) of more than 20% of the outstanding Shares has been acquired by any
corporation (including Johnston or any of its Subsidiaries or
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<PAGE> 47
Affiliates), partnership, person or other entity or "group" (within the
meaning of Section 13(d)(3) of the 1934 Act), other than Purchaser or
any of its Affiliates, or (ii) (A) the Board of Directors of Johnston or
any committee thereof shall have approved or recommended any acquisition
proposal or any other acquisition of Shares other than the Offer or (B)
Johnston shall have entered into an agreement with respect to an
acquisition proposal or (C) the Board of Directors of Johnston or any
committee thereof shall have resolved to do any of the foregoing;
(f) any of the representations and warranties of Johnston set forth in
the Purchase Agreement that are qualified as to materiality shall not be
true and correct, or any such representations and warranties that are
not so qualified shall not be true and correct in any material respect,
in each case as if such representations and warranties were made at the
time of such determination;
(g) Johnston shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of Johnston to be performed or complied with by it under the
Purchase Agreement;
(h) the Purchase Agreement shall have been terminated in accordance
with its terms or the Offer shall have been terminated with the consent
of Johnston;
(i) all Consents of and notices to or filings with governmental
authorities and third parties required in connection with the
Transactions shall not have been obtained or made other than those the
absence of which, individually or in the aggregate, would not have a
Johnston Material Adverse Effect or prevent or materially delay
consummation of any of the Transactions;
(j) Notwithstanding Section 5.6 of the Purchase Agreement, Purchaser
shall not have received financing in an amount necessary to consummate
the Transactions, including the payment of fees and expenses relating to
the Transactions, on terms and conditions reasonably satisfactory to
Purchaser and CGW; or
(k) CGW and Purchaser shall not have received confirmation from
Johnston that each of the financial institutions that have made loans to
employees of Johnston to purchase shares of Johnston Common Stock
("Employee Loans"), and which loans are guaranteed by Johnston (such
employees, the lending institutions and the outstanding amounts under
their loans are set forth on Schedule A hereto), shall have agreed to
restructure the Employee Loans on terms reasonably acceptable to CGW and
Purchaser, including the pledge by each borrower under the Employee
Loans of all shares of Johnston Common Stock held by such borrower and
purchased with the proceeds of the Employee Loan to the lender to secure
the Employee Loans; provided, however, that should any such employee
borrower choose to tender such shares of Johnston Common Stock acquired
with the Employee Loans, the Employee Loan relating to that employee
borrower shall not be restructured and shall remain due and payable in
accordance with its original terms;
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<PAGE> 48
which, in the sole and reasonable judgment of CGW or Purchaser, in any such
case, and regardless of the circumstances giving rise to any such condition
(including any action or inaction by CGW or any of its Affiliates), makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of CGW and Purchaser
and may be asserted by CGW or Purchaser regardless of the circumstances giving
rise to any such condition or may be waived by CGW or Purchaser in whole or in
part at any time and from time to time in their sole discretion (subject in
each case to the terms of the Purchase Agreement). The failure by CGW or
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
Any determination by CGW or Purchaser concerning the events described in this
Exhibit 1 will be final and binding upon all parties.
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<PAGE> 49
EXHIBIT 2
SERIES B PREFERRED STOCK DESIGNATION
<PAGE> 50
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF JOHNSTON INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, we, D. Clark Ogle, President and Chief Executive Officer, and F.
Ferrell Walton, Secretary of JOHNSTON INDUSTRIES, INC. (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with provisions of Section 103 thereof,
DO HEREBY CERTIFY: That pursuant to the authority conferred upon the
Board of Directors by the Certificate of Incorporation, as amended, of the said
Corporation, the said Board of Directors on ___________ ___, 2000, adopted the
following resolution creating a series of 250,000 shares of Preferred Stock
designated as Series A Convertible Preferred Stock:
RESOLVED, that a series of the Corporation's Preferred Stock consisting
of 250,000 shares of Preferred Stock, par value $.01 per share, be and hereby
is, designated as "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock"), and that the Series A Preferred Stock shall have the
designations, powers, preferences, rights and qualifications, limitations and
restrictions substantially as set forth in the Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock (the
"Certificate") described below.
This Certificate states that the Board of Directors does hereby fix and
herein state and express such designations, powers, preferences and relative and
other special rights and qualifications, limitations and restrictions thereof as
follows (all terms used herein which are defined in the Certificate of
Incorporation shall be deemed to have the meanings provided therein):
SECTION 1.
DESIGNATION AND AMOUNT
The shares of such series shall be designated as "Series A Convertible
Preferred Stock" (the "Series A Preferred Stock") and the number of shares
constituting such series shall be 250,000. Such number of shares of Series A
Preferred Stock may be increased or decreased by resolution of the Board of
Directors; provided however, that no decrease shall reduce the number of shares
of Series A Preferred Stock to a number less than the number of shares of Series
A Preferred Stock then outstanding plus the number of shares of Series A
Preferred Stock reserved for issuance upon the exercise of outstanding options,
rights or warrants exercisable for, or upon the conversion of any outstanding
securities issued by the Corporation convertible into, Series A Preferred Stock.
SECTION 2.
DIVIDENDS AND DISTRIBUTIONS
(A) Subject to the prior and superior rights of the holders of any
shares of any series of preferred stock ranking prior and superior to the shares
of Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available therefor, dividends
payable in cash, property, or in shares of the Common Stock, par value $.01 per
share of the Corporation (the "Common Stock") in an amount per share equal to
that amount of cash,
<PAGE> 51
property or Common Stock per share declared and paid out of funds legally
available therefor, on the Common Stock.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the date of declaration of
dividends on the Common Stock. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an amount
less than the total amount of such accrued dividends shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
SECTION 3.
VOTING RIGHTS
The holders of shares of Series A Preferred Stock shall have the same
voting rights with respect to matters which the holders of Common Stock are
entitled to vote, and, except as expressly set forth in the General Corporation
Law of the State of Delaware, the holders of shares of Series A Preferred Stock
shall vote together with the holders of Common Stock as a single class.
SECTION 4.
CERTAIN RESTRICTIONS
(A) Whenever dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions on shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not: (i) declare or pay dividends on, make any other distribution on, or redeem
or purchase or otherwise acquire for consideration any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock; (ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid or distributions made ratably on the
Series A Preferred Stock and all such stock ranking on a parity with respect to
the particular dividend or distribution in proportion to the total amounts to
which the holders of all such shares are then entitled; (iii) redeem or purchase
or otherwise acquire for consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (both as to dividends and
upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of Series A
Preferred Stock, or any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series
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<PAGE> 52
and classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5.
CONVERSION RIGHTS
(A) General Rights. The shares of Series A Preferred Stock shall
be convertible into Common Stock on the following terms and conditions:
(a) Term. Pursuant to the provisions of paragraph
5(A)(g), the outstanding shares of Series A Preferred Stock shall be
convertible into such number of fully paid and nonassessable shares of
Common Stock as are issuable pursuant to the conversion formula set
forth in paragraph 5(A)(c), as the same may be adjusted from time to
time pursuant to Section 5(B). The Corporation shall make no payment or
adjustment on account of distributions accrued or in arrears on the
Series A Preferred Stock surrendered for conversion and no adjustment
on account of distributions on the shares of Common Stock issuable upon
conversion.
(b) Surrender of Shares. Upon the occurrence of the
provisions set forth in paragraph 5(A)(g), the holders of Series A
Preferred Stock may surrender the certificate or certificates for such
shares of Series A Preferred Stock at the offices of the Corporation,
or at such other place or places, if any, as the Board of Directors of
the Corporation may determine, duly endorsed to the Corporation or in
blank or accompanied by proper instruments of transfer to the
Corporation or in blank, and shall state in writing therein the name or
names in which the holder wishes the certificate or certificates for
shares of Common Stock issuable on such conversion to be issued. The
surrender of shares of Series A Preferred Stock shall constitute a
contract between the holder and the Corporation whereby (i) such holder
shall be deemed to subscribe for the amount of Common Stock which he
will be entitled to receive upon such conversion and, in payment and
satisfaction of such subscription, to surrender the shares of Series A
Preferred Stock and to release the Corporation from all obligation
thereon, and (ii) the Corporation shall be deemed to agree that the
surrender of the certificate or certificates for such shares of Series
A Preferred Stock and the extinguishment of obligation thereon shall
constitute full payment of such subscription for the Common Stock so
subscribed for and to be issued upon such conversion.
The Corporation will as soon as practicable after such deposit
of certificates for shares of Series A Preferred Stock, issue and
deliver to the person for whose account such shares of Series A
Preferred Stock were so surrendered, or to his nominee or nominees, a
certificate or certificates for the number of full shares of Common
Stock to which the holder shall be entitled as aforesaid, together with
a check or cash in respect of any fraction of a share as hereinafter
provided in paragraph 5(A)(f). Subject to the following provisions of
this Section 5, such conversion shall be deemed to have been made on
the Business Day on which a holder of Series A Preferred Stock has
surrendered its shares of Series A Preferred Stock in accordance with
the conditions described in paragraph 5(A), and the person or persons
entitled to receive the Common Stock issuable
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<PAGE> 53
upon conversion of the Series A Preferred Stock shall be deemed for all
purposes to have become the record holder or holders of such Common
Stock and to have ceased to be the holder of Series A Preferred Stock
on such Business Day.
(c) Stock Unit. Each share of Series A Preferred Stock
shall be convertible, at the times and places and in the manner
referred to in this Section 5, into one "Stock Unit". The contents of a
Stock Unit as of the date of filing of this Certificate of Designation
with the Secretary of State of the State of Delaware, shall be one (1)
share of Common Stock (as constituted upon such date) of the
Corporation. The contents of a Stock Unit shall thereafter be subject
to adjustment in accordance with the provisions of Section 5(B).
(d) Taxes. The issue of share certificates on conversion
of the Series A Preferred Stock shall be made free of any tax in
respect of such issue. The Corporation shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares in a name other than that of the
holder of Series A Preferred Stock converted, and the Corporation shall
not be required to issue or deliver any such share certificate unless
and until the person or persons requesting the issuance thereof shall
have paid to the Corporation the amount of any such tax or shall have
established to the satisfaction of the Corporation that such tax has
been paid.
(e) Reservation of Shares. The Corporation shall at all
times reserve and keep available, out of its authorized and unissued
shares, solely for the purpose of effecting the conversion of Series A
Preferred Stock, such number of shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all shares of
Series A Preferred Stock from time to time outstanding. The Corporation
shall from time to time, in accordance with the General Corporation Law
of the State of Delaware, use its best efforts to cause the number of
authorized shares of its Common Stock to be increased if at any time
the number of authorized shares of Common Stock remaining unissued
shall not be sufficient to permit the conversion of all of the then
outstanding shares of Series A Preferred Stock.
(f) Fractional Shares. The Corporation shall not be
required to issue fractional shares of Common Stock or scrip upon
conversion of Series A Preferred Stock. As to any final fraction of a
share of Common Stock which a holder of one or more shares of Series A
Preferred Stock would otherwise be entitled to receive upon conversion
of Series A Preferred Stock, the Corporation shall pay a cash
adjustment in respect of such final fraction in an amount equal to
$3.00 per share of Series A Preferred Stock.
(g) Terms of Conversion. The shares of Series A Preferred
Stock shall be convertible to Common Stock, at the times and places and
in the manner referred to in this Section 5(A), at the election of the
holders of the Series A Preferred Stock, provided the number of shares
of Common Stock authorized but unissued under the Corporation's
Certificate of Incorporation is sufficient to satisfy the number of
shares of Series A Preferred Stock being converted at such time.
(B) Antidilution. The number of shares of Common Stock comprising
a Stock Unit shall be subject to adjustment from time to time, as follows:
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(a) Recapitalization. In case the Corporation after the
date of filing of this Certificate of Designation with the Secretary of
State of the State of Delaware (the "Base Date") shall (i) issue a
share dividend to the holders of its Common Stock, (ii) combine its
outstanding shares of Common Stock into a smaller number of shares, or
(iii) issue by reclassification of its shares of Common Stock any
shares of the Corporation, then the number of shares of Common Stock
comprising a Stock Unit immediately after the happening of any of the
events described above shall be adjusted by multiplying the Stock Unit
in effect immediately prior to such event by a fraction, the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to
such event. Similar adjustments to the content of a Stock Unit shall be
made if any of the events described above in this subparagraph (a)
shall thereafter occur. An adjustment made pursuant to this
subparagraph (a) shall become effective retroactively immediately after
the record date in the case of a share dividend, and shall become
effective immediately after the effective date in the case of a
combination or reclassification.
(b) Other Actions by Corporation. In case the Corporation
after the Base Date shall take any action affecting the Common Stock,
other than action described in subparagraph (a) of this Section 5(B),
which in the opinion of the Board of Directors of the Corporation would
materially affect the rights of the holders of the Series A Preferred
Stock, the Common Stock included in a Stock Unit shall be adjusted in
such manner, if any, and at such time, as the Board of Directors of the
Corporation, in its sole discretion, may determine to be equitable in
the circumstances. Failure of the Board of Directors of the Corporation
to provide for an adjustment prior to the effective date of any such
action by the Corporation affecting the Common Stock shall be
conclusive evidence that the Board of Directors of the Corporation has
determined that it is equitable to make no adjustment in the
circumstances.
(c) Notices of Adjustment. Whenever the content of a
Stock Unit is adjusted pursuant to this Section 5(B), the Corporation
shall promptly mail to each holder of record of the shares of Series A
Preferred Stock, a certificate signed by the President or Vice
President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation setting forth in
reasonable detail the events requiring the adjustment and the method by
which such adjustment was calculated and specifying the number, or
kind, or class of shares or other securities or property comprising a
Stock Unit after giving effect to such adjustment.
Failure to file any certificate or notice or to
publish or mail any notice, or any defect in any certificate or notice,
pursuant to this Section 5(B) shall not affect the legality or validity
of the adjustment in the content of a Stock Unit or of any transaction
giving rise thereto.
SECTION 6.
REACQUIRED SHARES
Any shares of Series A Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be
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created by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
SECTION 7.
LIQUIDATION, DISSOLUTION OR WINDING UP
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
[$3.00] per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, if declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of the Series
A Liquidation Preference, holders of Series A Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
remaining assets to be distributed.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of the Series A Preferred
Stock and the holders of such parity shares in proportion to their respective
liquidation preferences.
SECTION 8.
NO REDEMPTION
The shares of Series A Preferred Stock shall not be redeemable.
SECTION 9.
RANKING
The Series A Preferred Stock shall rank junior to all other series of
the Corporation's preferred stock, if any, as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise. Nothing in this Certificate shall limit the power of the Board of
Directors to create a new series of preferred stock ranking senior to the Series
A Preferred Stock in any respect.
SECTION 10.
AMENDMENT
The Certificate of Incorporation of the Corporation shall not be
further amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of two-thirds or more
of the outstanding shares of Series A Preferred Stock, voting separately as a
class.
SECTION 11.
FRACTIONAL SHARES
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Series A Preferred Stock may be issued in fractions of a share, which
shall entitle the holder, in proportion to such holder's fractional shares, to
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this _____ day of
____, 2000.
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D. Clark Ogle, President
Attest:
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F. Ferrell Walton, Secretary
