File No. 33-74076
As filed with the Securities and Exchange Commission on
February 15, 1994.
- ----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------------------
INTERFACE, INC.
(Exact name of issuer as specified in its charter)
Georgia 2273 58-1451243
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
organization) Classification Number)
Code Number)
Orchard Hill Road
P.O. Box 1503
LaGrange, Georgia 30241
(706) 882-1891
(Address, including zip code, and telephone number, including
area code, of issuer's principal executive offices)
David W. Porter, Esquire
Vice President, General Counsel and Secretary
<PAGE>
INTERFACE, INC.
2859 Paces Ferry Road, Suite 2000, Atlanta, Georgia 30339
(404) 319-6471
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
G. Kimbrough Taylor, Esquire
KILPATRICK & CODY
1100 Peachtree Street, Atlanta, Georgia 30309-4530
Telephone: (404) 815-6500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: As soon as possible after this Registration Statement
becomes effective and all other conditions to the merger (the "Merger")
of a subsidiary of the Registrant with and into Prince Street
Technologies, Ltd., a Georgia corporation ("PST"), pursuant to
the Agreement and Plan of Merger described in the enclosed
Prospectus have been satisfied or waived.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box. ____
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
INTERFACE, INC.
Cross Reference Sheet
Pursuant to Item 501(b) of Regulation S-K, showing the location
in the Prospectus
of the information required by Part I of Form S-4.
Item Number and Caption in Form S-4 Location or Caption in
Prospectus
----------------------------------- -----------------------
A. INFORMATION ABOUT THE
TRANSACTION.
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus .......... Cover Page of
Registration
Statement; Cross
Reference Sheet; Outside
Front Cover Page
2.Inside Front and Outside
Back Cover Pages of
Prospectus ........................ Inside Front Cover Page;
Outside Back Cover Page
3. Risk Factors, Ratio
of Earnings to Fixed
Charges and Other
Information. .................... Summary;
4. Terms of the
Transaction ....................... Summary; The Proposed
Merger; Comparison of
Securities of Interface
and PST
5. Pro Forma Financial
Information ...................... Not Applicable
6. Material Contacts with the
Company being Acquired ........... Summary; The Proposed
Merger
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters...................... Not Applicable
8. Interests of Named Experts
and Counsel ...................... Not Applicable
9. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities ...................... Not Applicable
B. INFORMATION ABOUT
THE REGISTRANT.
10. Information With Respect
to S-3 Registrants .............. Summary; Incorporation of
Documents by Reference
11. Incorporation of
Certain Information by
Reference ....................... Incorporation of Documents
by Reference
12. Information With Respect
to S-2 or S-3 Registrants........ Not Applicable
13. Incorporation of Certain
Information by Reference......... Not Applicable
14. Information With Respect
to Registrants Other Than
S-2 or S-3 Registrants........... Not Applicable
C. INFORMATION ABOUT THE
COMPANY BEING ACQUIRED.
15. Information With Respect
to S-3 Companies................. Not Applicable
16. Information With Respect
to S-2 or S-3 Companies ......... Not Applicable
17. Information With Respect
to Companies Other Than
S-2 or S-3 Companies ............ Summary; Certain
Information Regarding PST
and PSHC; Management's
Discussion and Analysis of
Financial Condition and
Results of Operations of
PST; Financial Statements
of PST and PSHC
D. VOTING AND MANAGEMENT INFORMATION.
18. Information if Proxies,
Consents or Other
Authorizations are to be
Solicited ....................... Not Applicable
19. Information if Proxies,
Consents or Other
Authorizations are not
to be Solicited or in an
Exchange Offer................... Outside Front Cover Page;
Summary; The Proposed
Merger; Incorporation of
Documents by Reference;
Certain Information
Regarding PST and PSHC
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1994
INTERFACE, INC.
PROSPECTUS
______________________
This Prospectus relates to the proposed merger (the
"Merger") of PST Acquisition Corp, a Georgia corporation
("Sub") and a wholly-owned subsidiary of Interface, Inc., a
Georgia corporation ("Interface"), with and into Prince Street
Technologies, Ltd., a Georgia corporation ("PST"), immediately
following the merger (the "PST/PSHC Combination") with and into
PST of Prince Street Holding Company, a Georgia corporation
("PSHC") and the parent company of PST, and, at the effective
time of the Merger, the conversion of all of the outstanding
shares of PST ("PST Shares") into the right to receive an
aggregate of [$9,871,242] payable in the discretion of
Interface, subject to certain limitations described herein, in
cash or shares of Interface Class A Common Stock
("Interface Stock"), or a combination thereof, pursuant to
an Acquisition Agreement dated as of December 3, 1993
(the "Acquisition Agreement"), among Interface, Robert S.
Weiner, Randall J. Hatch, Nancy O'Donnell, John O'Donnell,
Jacqueline A. Colando, Traccton Corp., PSHC, Steven C. Andrade
and Robert D. Williams.
This Prospectus is being delivered to current shareholders
of PST and PSHC in connection with the issuance of shares of
Interface Stock ("Merger Shares") to them in the Merger. All
information regarding Interface and Sub in this Prospectus has
been supplied by Interface, and all information regarding PST
and PSHC has been supplied by PST and PSHC. This Prospectus is
first being sent to shareholders of PST and PSHC on or about
_____________, 1994.
THE INTERFACE STOCK HAS LIMITED VOTING RIGHTS. FOR A
DESCRIPTION OF SUCH LIMITED RIGHTS, SEE "COMPARISON OF SECURITIES
OF INTERFACE AND PST".
While this Prospectus contains certain information about
corporate actions that are required by shareholders of PST and
PSHC to permit the consummation of the Merger, this document is
not a proxy statement of either PST or PSHC, neither of
which is soliciting any proxy or consent of shareholders hereby.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
_______________
THE SECURITIES TO WHICH THIS PROSPECTUS RELATES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_______________
The Interface Stock is traded through the NASDAQ
National Market System under the symbol "IFSIA". On __________,
1994, the last reported sale price of the Interface Stock
through the NASDAQ National Market System was $____ per share.
_______________
The date of this Prospectus is ___________, 1994.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY INTERFACE. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES DESCRIBED
HEREIN SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF INTERFACE,
PST OR PSHC SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF OR SINCE THE DATES AS OF WHICH CERTAIN
INFORMATION IS SET FORTH HEREIN.
TABLE OF CONTENTS
AVAILABLE INFORMATION
INCORPORATION OF DOCUMENTS BY REFERENCE
SUMMARY
THE PROPOSED MERGER
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF PST
CERTAIN INFORMATION REGARDING PST AND PSHC
COMPARISON OF SECURITIES OF INTERFACE AND PST
LEGAL MATTERS
EXPERTS
INDEX TO FINANCIAL STATEMENTS AND APPENDICES
<PAGE>
AVAILABLE INFORMATION
Interface is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements, and other information
filed by Interface with the Commission pursuant to the
information requirements of the Exchange Act may be inspected
and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New
York Regional Office, 75 Park Place, 14th Floor, New York, New
York 10007; and Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60606. Copies of such material
can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
This Prospectus constitutes a part of a registration
statement on Form S-4 (together with all amendments and
exhibits, the "Registration Statement") filed by Interface
with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus does not
contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For
further information with respect to Interface and the
securities offered hereby, reference is made to the
Registration Statement and the exhibits filed as a part
thereof. Statements contained in this Prospectus regarding the
contents of any contract, agreement or other document
referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract, agreement or
document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such
reference. The Registration Statement, including the exhibits
thereto, may be inspected without charge at the principal office
of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, and copies of all or any part thereof may be obtained
from such office upon payment of the prescribed fees.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated by reference
into this Prospectus and are deemed to be a part hereof from the
date of the filing of such documents:
(1) Interface's Annual Report on Form 10-K for the
fiscal year ended January 3, 1993;
(2) Interface's Quarterly Reports on Form 10-Q for
the quarters ended April 4, 1993, July 4, 1993, and October 3,
1993;
(3) Interface's Current Report on Form 8-K, dated July
6, 1993, as amended September 2, 1993; and
(4) The description of Interface's Class A Common
Stock contained in the registration statement on Form 8-A, filed
with the Commission on April 30, 1984, as amended by Form 8 filed
August 19, 1988;
In addition, all documents filed by Interface pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the closing of
the Merger shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also
is incorporated or deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
(OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE HEREIN)
ARE AVAILABLE, WITHOUT CHARGE, UPON REQUEST FROM ANY
PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, INCLUDING ANY
BENEFICIAL OWNER, TO DANIEL T. HENDRIX, VICE PRESIDENT-FINANCE,
INTERFACE, INC., P.O. BOX 1503, LAGRANGE, GEORGIA 30241,
TELEPHONE NUMBER (706) 882-1891. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
______________, 1994.
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN. CAPITALIZED
TERMS USED AND NOT OTHERWISE DEFINED IN THIS SUMMARY HAVE THE
MEANINGS ASCRIBED TO THEM ELSEWHERE IN THIS PROSPECTUS.
GENERAL
This Prospectus relates to the proposed merger (the
"Merger") of PST Acquisition Corp, a Georgia corporation
("Sub") and a wholly-owned subsidiary of Interface, Inc., a
Georgia corporation ("Interface"), with and into Prince Street
Technologies, Ltd., a Georgia corporation ("PST"), immediately
following the merger (the "PST/PSHC Combination") with and into
PST of Prince Street Holding Company, a Georgia corporation
("PSHC") and the parent company of PST, and, at the effective
time of the Merger (the "Effective Time"), the conversion of
all of the then-outstanding shares of PST ("PST Shares") into
the right to receive an aggregate of [$9,871,242] and
payable in the discretion of Interface, subject to certain
limitations described herein, in cash, Interface Class A Common
Stock ("Interface Stock"), or a combination thereof,
pursuant to an Acquisition Agreement dated as of December 3,
1993 (the "Acquisition Agreement"), among Interface, Robert S.
Weiner, Randall J. Hatch, Nancy O'Donnell, John O'Donnell,
Jacqueline A. Colando, Traccton Corp., and PSHC
(collectively the "PST Shareholders"); and Steven C.
Andrade and Robert D. Williams (collectively, with the PST
Shareholders other than PSHC, the "Shareholders"). See
"THE PROPOSED MERGER - The Acquisition Agreement". (The
shares of Interface Stock to be issued to the Shareholders in
the Merger are referred to herein collectively as the "Merger
Shares".)
The Acquisition Agreement appears as Appendix A to
this Prospectus and is incorporated herein, and any summary
contained herein of the terms of the Acquisition Agreement is
qualified by reference to the Acquisition Agreement.
THE PARTIES
Interface. Interface, through its various
subsidiaries, manufactures and sells in domestic and
international markets carpet tiles under the Interface and Heuga
brands, and interior fabrics under the Guilford of Maine and
Steven Linens brands, for use in offices, healthcare
facilities, airports, educational and other institutions and
retail facilities. Through its Bentley Mills subsidiary,
which it acquired during the second quarter of 1993, the
Company also manufactures and sells high quality, designer-
oriented broadloom carpeting used primarily for commercial
and institutional applications. In addition, Interface
manufactures and sells chemicals used in various rubber and
plastic products, and offers Intersept, a proprietary
antimicrobial chemical, under a licensing program to
manufacturers of other products. Interface's executive
offices are located at Orchard Hill Road, P.O. Box 1503,
LaGrange, Georgia 30241; its telephone number is (706)
882-1891.
PST. PST is engaged in the manufacture and distribution
of innovative and technically advanced tufted broadloom
carpeting specified by interior designers and architects and sold
to flooring contractors for use by end-users in commercial
interiors. PST's offices are located at 36 Enterprise
Boulevard, Atlanta, Georgia; its telephone number is (404)
691-0507.
Sub. Sub was formed in December 1993 as a wholly-
owned subsidiary of Interface to serve as a vehicle to effect the
Merger. Sub's address and telephone number are the same as
those of Interface.
PSHC. PSHC is the parent company of PST by virtue of
its ownership of all the outstanding Class A common stock of
PST. PST is the only operating subsidiary of PSHC, and PSHC is
not otherwise engaged in any business operations and does
not own any other significant assets. As a result of the
PST/PSHC Combination to be effected immediately prior to the
Merger, PSHC will no longer exist as a separate entity at the
time of the Merger and, accordingly, is not a party to the
Merger.
<PAGE>
SUMMARY HISTORICAL INFORMATION
The following summary historical information, which does
not give effect to the Merger, should be read in conjunction
with the consolidated financial statements and notes thereto
of Interface, Inc. and subsidiaries, which are incorporated
herein by reference, and the combined financial statements of PST
and PSHC (the combined group being referred to herein as
"PST/PSHC") appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Interface, Inc. and Subsidiaries
(In thousands, except per share amounts)
----------------------------------------
Statements of Operations
Data: Fiscal Year<F1> Nine Months ended Nine Months ended
1992 1991 1990 1989 1988<F2> October 3, 1993 October 4, 1992
---- ---- ---- ---- ------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $594,078 $581,786 $623,467 $581,756 $396,651 $452,672 $447,505
Costs of sales 404,130 393,733 410,652 382,455 263,508 309,437 302,422
Selling, general and
administrative
expenses 149,509 150,100 153,317 135,468 87,445 110,927 113,204
Other expense (income) 21,878 23,623 21,818 23,202 11,587 18,656 17,523
Income before taxes on
income 18,561 14,330 37,680 40,631 34,111 13,652 14,356
Taxes on income 6,311 5,409 14,078 16,084 13,926 4,781 5,265
Net income 12,250 8,921 23,602 24,547 20,185 8,871 9,091
Earnings per share:
Primary .71 .52 1.37 1.43 1.18 .49 .53
Fully diluted<F4> .71 .52 1.24 1.27 1.15 .49 .53
Cash dividends paid 4,142 4,136 4,133 3,600 2,649 3,586 3,106
Cash dividends per
share .24 .24 .24 .21 .16 .18 .18
Property additions<F3> 14,476 15,375 23,705 25,333 49,261 11,225 11,513
Depreciation and
amortization 22,257 19,723 21,570 17,243 11,621 20,520 16,977
Weighted average shares
outstanding
Primary 17,253 17,230 17,214 17,146 17,109 17,280 17,249
Fully diluted 23,398 23,375 23,359 23,291 18,726 24,068 23,393
Balance Sheet Data: At Fiscal Year End <F1>
<CAPTION>
1992 1991 1990 1989 1988 At October 3, 1993
---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C> <C>
Working capital $138,834 $150,541 $156,638 $131,953 $127,328 $158,543
Current ratio 2.5 2.3 2.4 2.2 2.3 2.4
Net property and
equipment $137,605 $139,406 $141,125 $126,917 $119,006 $143,059
Total assets 534,120 569,438 582,371 525,814 493,371 643,480
Total long-term debt 235,488 240,137 254,578 244,158 249,136 297,988
Shareholders' equity 186,349 198,977 198,409 157,001 135,985 211,032
Book value per share 10.79 11.55 11.52 9.14 7.94 12.21
____________________________________________
<FN>
<F1> Interface's fiscal year ends on the Sunday nearest December 31.
<F2> During 1988, Interface completed an acquisition
accounted for as a purchase.
<F3> Includes property and equipment obtained in acquisitions of
businesses.
<F4> For fiscal years 1992 and 1991 and the nine months ended
October, 3, 1993 and October 4, 1992, earnings per share on
a fully diluted basis are antidilutive.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Prince Street Holding Company and Prince Street Technologies, Ltd.
(In thousands, except per share amounts and number of shares outstanding)
-------------------------------------------------------------------------
Statements of Operations Data:
Fiscal Year <F1>
-----------------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- --- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $30,671 $27,814 $28,066 $21,348 $18,624
Costs of goods sold 21,014 19,414 18,560 15,107 12,531
Selling, general and
administrative
expenses 7,800 7,821 6,908 6,382 5,460
Other
expense (income) 889 885 982 673 519
Income (loss) before income
taxes and extraordinary item 968 (306) 1,616 (814) 114
Income tax (provision) benefit (398) 81 (676) 41 (46)
Income (loss) before
extraordinary item 570 (225) 940 (773) 68
Extraordinary item - utilization
of operating loss carry-
forward 88 -- 226 -- --
Net income (loss) 658 (225) 1,166 (773) 68
Pro forma earnings per share 952.63 (326.24) 1,687.23 (1,119.14) 98.75
Cash dividends paid -- -- -- -- --
Property additions 1,205 1,330 1,022 879 615
Depreciation and
amortization 722 642 495 312 180
Pro forma weighted average
shares outstanding 691 691 691 691 691
Balance Sheet Data:
<CAPTION>
At Fiscal Year End <F1>
---------------------------------------------------------------------------
1993 1992 1991 1990 1989
---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Working capital $2,434 $2,291 $3,035 $2,846 $768
Current ratio 1.4 1.4 1.6 1.8 1.2
Net property and
equipment $4,223 $ 3,799 $3,017 $2,528 $1,132
Total assets 12,321 11,499 11,863 9,161 5,470
Total long-term debt 4,315 4,630 4,392 4,793 843
Shareholders' equity 2,746 2,088 2,313 1,147 1,347
Book value per share 3,974 3,021 3,348 1,660 1,949
____________________________
<FN>
<F1> PST/PSHC's fiscal year ends on the Sunday nearest September 30.
</TABLE>
<PAGE>
THE MERGER
Background and General. Immediately prior to the
Effective Time, PSHC and PST will effect the PST/PSHC Combination
pursuant to which PSHC, the owner of all the outstanding shares
of PST Class A common stock, will be merged into PST, with PST
as the surviving corporation in the PST/PSHC Combination. Each
share of PSHC common stock issued and outstanding immediately
prior to the PST/PSHC Combination will be converted into the
right to receive .000295377 shares of Class B common stock of
PST. The shares of PST Class A common stock held by PSHC
will be cancelled, and all the outstanding shares of PST
Class B common stock issued and outstanding immediately
prior to the PST/PSHC Combination will continue unchanged
after the PST/PSHC Combination and will continue to evidence the
same number of shares of Class B common stock of PST.
At the Effective Time, following the PST/PSHC Combination,
Sub will be merged with and into PST, and Interface will thereby
become the holder of all of the issued and outstanding shares of
PST. Sub will cease to exist as a separate corporation, and PST
will be the surviving corporation in the Merger (the "Surviving
Corporation"). The articles of incorporation of PST and the
bylaws of Sub, as in effect at the Effective Time, will be the
articles of incorporation and the bylaws of the Surviving
Corporation.
Conversion of PST Shares. At the Effective Time, all of
the then-outstanding shares of PST, which will consist solely of
shares of PST Class B common stock as a result of the PST/PSHC
Combination (collectively, the "PST Shares"), will be converted
into the right to receive an aggregate of [$9,871,242]
(the "Merger Consideration"), as adjusted from the
initial $10,500,000 base amount as described in "THE PROPOSED
MERGER - The Acquisition Agreement". In exchange for the PST
Shares, each Shareholder will be entitled to receive a pro
rata amount of the Merger Consideration as set forth on
Exhibit C to the Acquisition Agreement.
The Merger Consideration is expected to be paid in shares
of Interface Stock, valued for such purpose at the average
of the closing sale prices for Interface Stock as reported by
the NASDAQ National Market System ("NASDAQ") for the 60
trading days immediately preceding the Closing Date (the
"Closing Date Price"). Interface will have the option, however,
to pay up to 20% of the aggregate Merger Consideration in cash,
with the balance payable in Interface Stock, or, if the Closing
Date Price is less than $12.00 per share, to pay the entire
Merger Consideration in cash.
Following the consummation of the PST/PSHC Combination,
there will be 691 PST Shares outstanding, each of which will be
entitled to a pro rata amount of the Merger Consideration
(that is, approximately $14,285.44 per share). The Closing Date
Price cannot be predicted at this time; however, using for
illustration purposes only the following sales price information
for the Interface Stock, the PST Shares would be converted in
the Merger into the following numbers of shares of Interface
Stock if the Closing Date Price were as follows and if the
Merger Consideration were paid entirely in Interface Stock:
<TABLE>
<CAPTION>
Maximum Aggregate Shares Shares of Interface
of Interface Stock Stock Per PST Share
------------------ -------------------
<S> <C> <C>
Last Reported Closing Sales
Price of Interface Stock
on ________, 1994 <F1>
Average of Closing Sales
Prices of Interface Stock
for the 60 Consecutive Trading
Days Ending ____________, 1994 <F1>
Average of Closing Sales
Prices of the Interface Stock
for the 40 Consecutive Trading
Days Ending ____________, 1994 <F1>
____________________________________________________________
<FN>
<F1> N.B.: Last Trading Date immediately preceding date of Prospectus
</TABLE>
<PAGE>
POSITION OF THE PST AND PSHC BOARDS OF DIRECTORS AND REASONS
FOR THE MERGER
The Board of Directors of each of PST and PSHC have
approved the Merger and have informed Interface that they
desire that the Merger be consummated. Moreover, each of the
Shareholders has executed the Acquisition Agreement,
which obligates the Shareholders to cause PST and PSHC to
consummate the PST/PSHC Combination and to cause PST
immediately thereafter to consummate the Merger, subject only
to the satisfaction or waiver of certain limited conditions.
Such executions by the Shareholders may be tantamount to
their respective consents to the Merger and the PST/PSHC
Combination as shareholders of PST or PSHC, as the case may
be, although a Shareholder might breach his or her agreement
under the Acquisition Agreement and refuse to vote for or
consent to the PST/PSHC Combination or the Merger to the extent
a separate vote or consent of shareholders may be required
under applicable provisions of the Georgia Business Corporation
Code in order to consummate the PST/PSHC Combination or the
Merger. With respect to any such required vote or consent, the
Board of Directors of PST and PSHC each recommend that the
Shareholders approve the PST/PSHC Combination or the Merger, as
the case may be.
For a description of the relationships among Interface,
PST and PSHC prior to the Acquisition Agreement, and the
reasons for entering into the Acquisition Agreement, see
"Certain Pre-Existing Relationships Between the Parties" and
"Background and Reasons for the Merger" under "THE PROPOSED
MERGER", below.
APPROVALS OF THE MERGER
Interface. The Acquisition Agreement and the
transactions contemplated thereby have been approved and adopted
by the Board of Directors of Interface and are not required under
Georgia law to be approved by the shareholders of Interface.
The Acquisition Agreement and the transactions contemplated
thereby have been approved and adopted by the Board of
Directors and sole shareholder of Sub.
PST and PSHC. The Acquisition Agreement and the
transactions contemplated thereby have been approved and adopted
by the Boards of Directors of PST and PSHC. Under Georgia
law, the PST/PSHC Combination is required to be approved
by the holders of a majority of the outstanding shares of
PSHC common stock and the holders of the outstanding shares of
the PST Class A and Class B common stock voting as a single
class, and the Merger is required to be approved by the
holders of a majority of the PST Shares. Each shareholder of
PST and PSHC has executed the Acquisition Agreement and has
granted an irrevocable proxy in favor of Robert S. Weiner, the
Chairman and Chief Executive Officer of PST and PSHC, to vote
such holder's PST and PSHC common stock with respect to matters
relating to the PST/PSHC Combination and the Merger. Dr. Weiner
has informed Interface that he intends to vote all such
shares in favor of approval of the Acquisition Agreement,
the PST/PSHC Combination and the Agreement and Plan of Merger
between Sub and PST (which is attached to the Acquisition
Agreement as Exhibit B), to the extent any such separate approval
by PST or PSHC shareholders is required by Georgia law.
Executive officers and directors of PST (after the PST/PSHC
Combination) will beneficially own 87.5% of the outstanding PST
Shares.
DISSENTERS' RIGHTS
Under Georgia law, holders of shares of Interface common
stock will not be entitled to dissenters' rights in connection
with the Merger because Interface is not a party to the
Merger. Although each holder of PST Shares has entered
into the Acquisition Agreement and has granted an irrevocable
proxy to Dr. Weiner to vote his, her, or its PST Shares,
a Shareholder may have dissenters' rights under Georgia law
if Dr. Weiner votes such Shareholder's PST Shares against the
Merger. See "THE PROPOSED MERGER - Rights of Dissenting
Shareholders". Dr. Weiner and such Shareholder, however, would
be liable to Interface for damages for breach of the Acquisition
Agreement in any such event.
CONDITIONS TO AND TERMINATION OF THE MERGER
The consummation of the Merger is subject to a number
of conditions, including the consummation of the PST/PSHC
Combination. See "THE PROPOSED MERGER - The Acquisition
Agreement".
EFFECTIVE TIME
The Effective Time of the Merger will occur on the date and
at the time that the articles or certificate of merger of Sub
and PST are filed with the Secretary of State of Georgia as
contemplated by the Acquisition Agreement, unless a later date or
time is specified therein. Interface anticipates that the
closing pursuant to the Acquisition Agreement will occur on, or
as promptly thereafter as reasonably practicable, the first
business day (the "Closing Date") that is 20 business days after
the date of this Prospectus (or a lesser number of days
if permitted by applicable legal requirements) and as of
which all conditions to consummation of the Merger have been
satisfied or waived by the party or parties legally entitled
to do so.
INDEMNIFICATION
The Acquisition Agreement provides for the
Shareholders, jointly and severally, to indemnify Interface and
its affiliates and PST and PSHC, subject to a threshold of one-
half of one percent (1/2%) of the Merger Consideration and a
limitation of their total liability to not more than 50% of the
Merger Consideration, with respect to losses arising out
of or relating to certain representations, warranties
and agreements made by the Shareholders, PST and PSHC in
the Acquisition Agreement. (Without regard to such threshold
and liability limitation, however, the Shareholders could be
liable to Interface (up to $350,000) if PST or PSHC pays any
termination fee to a company with which the Shareholders
previously had entered into a letter of intent to sell PST and
PSHC. See "THE PROPOSED MERGER - Background and Reasons for
the Merger". Interface contends that neither PST nor PSHC has
any binding obligation to pay such a fee.) The
Acquisition Agreement provides that neither PST nor PSHC will be
liable to any Shareholder as a result of any breach of any
representation, warranty or agreement of PST or PSHC in the
Acquisition Agreement, and that no Shareholder will have a right
of contribution against either PST or PSHC on account of any
event arising prior to or as of the Closing Date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Neither Interface nor PST nor PSHC has made any
representation regarding the federal income tax consequences
resulting from the Merger or the other transactions
contemplated by the Acquisition Agreement, and no opinion of
counsel has been furnished with respect to such matters.
Accordingly, while a discussion is included herein as to
Interface's belief with respect to certain possible federal
income tax consequences, the Shareholders are urged to
consult their own respective tax advisors regarding the tax
consequences to them resulting from such transactions. See
"THE PROPOSED MERGER - Certain Federal Income Tax Consequences".
EXCHANGE OF STOCK CERTIFICATES
At the Effective Time, each Shareholder will be required
to surrender certificates representing all of such
Shareholder's PST Shares in order to receive certificates
representing the portion of the Merger Consideration payable in
Interface Stock issuable to such Shareholder.
REGULATORY APPROVALS
No governmental approvals are required with respect to
the Merger except for the acceptance by the Georgia Secretary of
State of the articles or certificate of merger that will be
filed by Interface and PST with the Georgia Secretary of
State. Filings have been made with the Federal Trade
Commission ("FTC") under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act"), and early
termination of the waiting period has been received.
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for under the purchase method
of accounting. See "THE PROPOSED MERGER - Accounting Treatment
of the Merger".
MARKET PRICES OF INTERFACE STOCK
The Interface Stock is traded through NASDAQ under the
symbol "IFSIA". On December 3, 1993 (the last trading day
prior to the public announcement of the Acquisition Agreement),
the closing sale price of the Interface Stock as reported by
NASDAQ was $14.375 per share. On ____________, 1994 (the last
trading day before the date of this Prospectus), such closing
sale price as reported by NASDAQ was $______________. There is
no public market for the PST Shares. See "CERTAIN INFORMATION
REGARDING PST AND PSHC - Stock Ownership and Other Stock
Information".
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth certain data concerning
the historical net earnings, dividends and book value per
share for each of Interface and PST\PSHC, which do not give
effect to the Merger, and for Interface and PST/PSHC on a
pro forma and equivalent pro forma basis, respectively, after
giving effect to the payment of the Merger Consideration. The
pro forma information presented is for informational purposes
only and is not necessarily indicative of future combined
earnings or financial position that would have been reported
had the Merger been completed at the beginning of the
respective periods or as of the date for which such unaudited
pro forma information is presented. The information presented
below should be read in conjunction with the historical
financial statements of Interface incorporated by reference
herein and of PST and PSHC included elsewhere herein.
<TABLE>
<CAPTION>
Interface Interface
(historical) (pro forma consolidated)<F1>
---------------------------- --------------------------
Nine months Nine months
Year ended ended Year ended ended
January 3, October 3, January 3, October 3,
1993 1993 1993 1993
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Net earnings per common share $.71 $.49 $.68 $.50
Cash dividends declared per
share .................. $.24 $.18 $.24 $.18
Book value per common share
at period end........... $10.79 $10.77 $10.95 $11.03
<CAPTION>
PST/PSHC
PST/PSHC equivalent
(historical) (pro forma consolidated)<F2>
------------------------- -------------------------
Year ended Nine months Nine months
Year ended ended Year ended ended
September 27, October 3, January 3, October 3,
1992 1993 1993 1993
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings per common share $(326.24) $551.37 $626.73 $460.82
Cash dividends declared per
share.................. --- --- --- ---
Book value per common share at
period end $3,021.32 $3,973.95 $10,092.00 $10,166.00
_________________________________
<FN>
<F1> Based on the purchase method of accounting, assuming a
Closing Date Price of $15.50 per share and the issuance of
636,854 shares of Interface Stock in payment of the Merger
Consideration. Final determination of required purchase
accounting adjustments and the fair value of the assets and
liabilities of PST has not yet been made. Interface will
undertake a study to determine the fair value of PST's assets
and liabilities and will make appropriate purchase accounting
adjustments based upon completion of that study.
<F2> Equivalent pro forma consolidated per share information
for PST/PSHC reflects the Interface pro forma
consolidated per share information, as adjusted to a pre-
Merger PST/PSHC share basis, assuming a conversion
ratio of 921.64 shares of Interface Stock for each share
of PST common stock.
</TABLE>
THE PROPOSED MERGER
The following is a brief summary of certain aspects of
the Merger. This summary does not purport to be complete
and is qualified in its entirety by reference to the
Acquisition Agreement, which appears as Appendix A to this
Prospectus and is incorporated herein by reference.
BACKGROUND AND REASONS FOR THE MERGER
Background
During 1990, PST began to seek additional capital in order
to finance expansion of its perations, equipment purchases and
other working capital requirements. PST had discussions with
several potential sources of capital about a variety of
financing options. On July 20, 1990, Interface and PST
entered into a financing arrangement pursuant to which
Interface and PST executed a loan agreement for a $3,700,000
credit facility (the "Loan Agreement"), Interface was granted a
stock subscription warrant to acquire up to a specified
percentage of the equity of PST (the "Stock Warrant"), and all
of the shareholders of PST executed a stock option
agreement pursuant to which Interface was granted an option
to acquire all of the outstanding shares of PST for a price
determined pursuant to certain formulae (the "Stock Option
Agreement"). In addition, Interface was also granted, under
the Stock Option Agreement, a right of first refusal in
the event that the shareholders of PST desired to sell
their PST shares or substantially all of the assets of PST to
a third party.
On August 20, 1993, PST, PSHC and the Shareholders executed
a letter of intent with Mohawk Industries, Inc. ("Mohawk"),
pursuant to which the Shareholders expressed their intent to sell
the assets and business of PST and PSHC to Mohawk for a
purchase price estimated to be in the $10,000,000 to $13,000,000
range, subject to various purchase price adjustments and
the execution of a definitive acquisition agreement (the
"First Mohawk Letter of Intent"). On or about August 23,
1993, PST informed Interface of the existence of the First
Mohawk Letter of Intent. On September 10, 1993, Interface
informed PST that it intended to exercise its right of first
refusal under the Stock Option Agreement within the exercise
period provided therein. On September 17, 1993, Mohawk
withdrew its offer under the First Mohawk Letter of Intent,
thereby terminating, at that time, any discussions of PST's
acquisition by Mohawk, or Interface's acquisition of PST
pursuant to its right of first refusal.
On October 13, 1993, PST, PSHC and the Shareholders executed
a second letter of intent (the "Second Mohawk Letter of Intent")
with Mohawk pursuant to which the Shareholders once again
expressed their intent to sell the assets and business of PST
and PSHC to Mohawk for a purchase price estimated by the
Shareholders to be $12,000,000, or $15,000,000 if Interface
exercised its Stock Warrant, subject to various purchase
price adjustments and the execution of a definitive acquisition
agreement. The Second Mohawk Letter of Intent provided for up
to 100% of the purchase price to be paid in Mohawk common stock.
On or about October 13, 1993, PST informed Interface of the
existence of the Second Mohawk Letter of Intent. Between October
13, 1993 and November 15, 1993, a series of negotiations took
place between Interface and representatives of the Shareholders
regarding the terms and conditions on which Interface might
exercise its right of first refusal, including the valuation of
the Mohawk proposal. On November 15, 1993, Interface notified
the Shareholders that it had elected to exercise its right of
first refusal under the Stock Option Agreement, and the parties
proceeded to prepare definitive acquisition documents to
consummate the transaction. After a series of further
negotiations, the parties executed the definitive
acquisition documentation on December 3, 1993.
Reasons for the Merger
The shareholders of PST and PSHC desired more liquidity
for their investments in PST and PSHC, neither of whose
shares are publicly traded, and were thus seeking a purchaser
for PST and PSHC. When the shareholders executed the Second
Mohak Letter of Intent, Interface's right of first refusal
under the Stock Option Agreement was triggered, and the PST
Shareholders were obligated thereby to sell their shares of
PST to Interface if Interface exercised its right of first
refusal.
In connection with negotiating the 1990 financing
transaction, Interface obtained certain future rights, as part
of the Stock Option Agreement, to purchase all of the
capital stock of PST. Interface did so because it believed that
it might want to acquire PST in the future depending upon
developments in PST's and Interface's respective businesses
and in the carpet industry generally. In addition to the
right of first refusal, the Stock Option Agreement conferred
upon Interface an outright option for such a purchase at any
time during the period from October 31, 1994 to March 31,
1995. However, upon receiving notice that the Shareholders
had entered into the Second Mohawk Letter of Intent and had
initiated the right of first refusal procedure, Interface was
forced to decide whether to acquire PST immediately or to allow
Mohawk, which, like Interface, is a leading carpet manufacturer,
to pursue its acquisition of PST. After a review of PST's
business and financial prospects, Interface concluded that
PST's product lines, proprietary processes and favorable
relationships with the design community would complement and
expand Interface's existing product lines and production
capabilities, including its newly-acquired broadloom carpet
operation, and would be beneficial to Interface's operations
generally. Consequently, Interface elected to exercise its
right to acquire PST.
CERTAIN PRE-EXISTING RELATIONSHIPS BETWEEN THE PARTIES
Loan Agreement
Under the Loan Agreement, Interface agreed to lend
$3,000,000 to PST pursuant to a fixed rate promissory note (the
"Fixed Rate Note") and committed to lend an additional $700,000
to PST pursuant to a floating rate promissory note (the "Floating
Rate Note"). As collateral for the loans, PST granted Interface
a security interest in all of its inventory and equipment and
certain of its real property located in Cartersville, Georgia,
on which PST operates a skein dye facility. Certain of the
equipment in which Interface was granted a security interest
is subject to a prior security interest of another lender.
The Fixed Rate Note provides for interest to accrue at
eight percent (8%) per annum, payable quarterly. The Floating
Rate Note provides for interest to accrue at the prime rate
of interest charged by Bankers Trust Company, adjusted quarterly,
plus one-half (1/2) percentage point per annum, payable
quarterly; as of the date of this Prospectus, the effective
rate is ___________ per cent (___%). The principal
outstanding on each of the Fixed Rate Note and the Floating Rate
Note is payable, by their respective terms, in a single balloon
payment on the earlier of (a) thirty (30) days after (but not
earlier than October 31, 1994) (i) Interface delivers
notice of its intention to surrender its option, or
terminate a previous election to exercise its option under
the Stock Option Agreement or (ii) expiration of the option
period provided for in the Stock Option Agreement without
Interface having elected to exercise its option, or (b) seven
days after the closing of the purchase of all of the stock of
PST pursuant to an exercise by Interface of its option under the
Stock Option Agreement. The Fixed Rate Note further provides
for a $2,000,000 mandatory prepayment upon the death of Robert
S. Weiner prior to its maturity date.
As of the date hereof, $3,000,000 in principal is
outstanding under the Fixed Rate Note, and $563,498 in principal
is outstanding under the Floating Rate Note.
The Loan Agreement contains certain financial covenants
that require PST to maintain, among other things, certain levels
of net worth and certain financial ratios, and restricts
dividends, officer compensation and property acquisitions. As
of its 1993 fiscal year end, PST was in default on one of
these financial covenants, but has received a waiver of
such default from Interface. See note 4 to the combined
financial statements of PST and PSHC.
Stock Warrant
The Stock Warrant provided Interface with the right, for
a period of 10 years from July 20, 1990, to subscribe for
and purchase 125 shares of PST's Class A common stock and 68.5
shares of PST's Class B common stock, representing twenty percent
(20%) of the equity of PST on a fully diluted basis (subject to
adjustment based upon PST's financial performance during its
fiscal years 1991 through 1994, and certain anti-dilution
provisions contained therein) at a price of $3,000,000. As a
result of PST's financial performance for its 1991 through 1993
fiscal years, at the time the Acquisition Agreement was
executed, adjustments required by the Stock Warrant resulted
in Interface's being entitled to subscribe for and purchase
thirty percent (30%) of PST's outstanding equity, on a fully
diluted basis, at the $3,000,000 purchase price. Pursuant to
the terms of the Stock Warrant, upon sixty (60) days' written
notice (during which Interface could exercise the Warrant), PST
would have the right to redeem the Stock Warrant on March 31,
1995 for $3,000,000 plus certain additional payments to
Interface. The Acquisition Agreement provides that Interface
shall cancel the Stock Warrant at or prior to the closing.
Stock Option
The Stock Option Agreement granted Interface the right
and option to purchase all, but not less than all, of the capital
stock of PST owned by the Shareholders at a purchase price equal
to the greater of $8,750,000 or an amount calculated pursuant
to certain formulae based upon the average net income of PST
over the three-year period ending September 30, 1994. The
option was exercisable at any time from October 1, 1994 to
March 31, 1995 (the "Option Period"). The Stock Option
Agreement also granted Interface a right of first refusal if
the Shareholders received prior to the commencement of the
Option Period an offer from a third party to purchase the PST
shares or substantially all of the assets of PST. The purchase
price for PST under the right of first refusal was stated as
the lesser of (i) the aggregate consideration proposed to be paid
to the Shareholders in the offer by the third party, and (i)
the greater of (a) such amounts determined by the application of
certain formulae calculated on PST's (1) net sales and (2)
average net income, or (b) $7,500,000. Interface exercised
its right of first refusal under the Stock Option Agreement in
response to the Second Mohawk Letter of Intent and the parties
proceeded to enter into the Acquisition Agreement.
Business Relations Agreement
On July 20, 1990, Interface and PST entered into a
business relations agreement (the "Business Relations
Agreement"), whereby each party agreed, through March 31, 1995,
to promote the products of the other with their respective
customers in certain situations where such customers had a need
for products sold by the other party. The Business
Relations Agreement was terminated by Interface on January 14,
1993 in accordance with its rights thereunder.
THE ACQUISITION AGREEMENT
General
The Acquisition Agreement provides that, upon the
satisfaction or waiver of certain conditions to the closing, the
parties shall cause two mergers to occur. First, PSHC and PST
will be combined into a single entity by PSHC's merger into PST,
with PST continuing as the surviving corporation. Immediately
thereafter, Sub will be merged into PST, and PST will continue as
the surviving corporation and become a wholly-owned subsidiary of
Interface.
Pursuant to the PST/PSHC Combination, the PST articles
of incorporation will be the articles of incorporation of PST,
as the surviving corporation, and the PST bylaws will be the
bylaws of PST as the surviving corporation. The PST/PSHC
Combination will become effective upon the filing with the
Secretary of State of Georgia of duly executed articles or a
certificate of Merger. Pursuant to the PST/PSHC Combination (i)
all the outstanding shares of Class A common stock of PST
will be cancelled and retired, and no consideration will
be delivered in respect thereof; (ii) each issued and
outstanding share of the Class B common stock of PST will
continue unchanged as one share of Class B common stock of PST
(and the Class B common stock will then constitute the only
class of PST common stock issued and outstanding); and (iii)
each share of the common stock of PSHC issued and outstanding
at the time of the PST/PSHC Combination will be converted into,
and certificates therefor shall thereafter evidence only the
right to receive upon surrender by the holder thereof,
.000295377 shares of Class B common stock of PST.
Pursuant to the Merger, the PST articles of incorporation
will be the articles of incorporation of PST, as the
surviving corporation, and the Sub bylaws will be the bylaws of
PST, as the surviving corporation. At the Effective Time,
(i) each of the issued and outstanding shares of common
stock of Sub will be converted into one share of PST Class B
common stock; and (ii) all of the shares of the Class B
common stock of PST issued and outstanding immediately prior
to the Effective Time will be converted into, and
certificates therefor shall thereafter evidence only the right
to receive upon surrender by the holder thereof, a pro rata
amount of the Merger Consideration as set forth on Exhibit C to
the Acquisition Agreement, which appears as Appendix A to this
Prospectus. As a result of the PST/PSHC Combination, no shares
of Class A common stock of PST or shares of PSHC will be
outstanding at the Effective Time.
The Merger Consideration will be payable entirely in shares
of Interface Stock, based upon the Closing Date Price, unless
(i) Interface has exercised its option under the Acquisition
Agreement to pay up to 20% of the Merger Consideration in cash
by providing written notice thereof to the Shareholders no later
than five (5) days before Closing, or (ii) Interface exercises
its further option under the Acquisition Agreement to pay
100% of the Merger Consideration in cash if the Closing Date
Price is less than $12.00 per share.
Following the consummation of the PST/PSHC Combination,
there will be 691 PST Shares outstanding, each of which will be
entitled to a pro rata amount of the Merger Consideration
(that is, approximately $14,285.44 per share). The Closing Date
Price cannot be predicted at this time; however, using for
illustration purposes only the following sales price information
for the Interface Stock, the PST Shares would be converted in the
Merger into the following numbers of shares of Interface Stock if
the Closing Date Price were as follows and if the Merger
Consideration were paid entirely in Interface Stock:
<TABLE>
<CAPTION>
Maximum Aggregate Shares Shares of Interface
of Interface Stock Stock Per PST Share
------------------------ -------------------
<S> <C> <C>
Last Reported Closing Sales Price
of Interface Stock on ________,
1994
Average of Closing Sales Prices
of Interface Stock for the 60
Consecutive Trading Days
Ending ____________, 1994
Average of Closing Sales Prices
of the Interface Stock for the 40
Consecutive Trading Days Ending
____________, 1994
</TABLE>
In lieu of issuing a fractional share to a
Shareholder, Interface may pay such holder an amount of cash
equal to the amount of such fraction multiplied by the Closing
Date Price.
None of the outstanding shares of Interface Stock will
be modified in the Merger, and all of such shares will continue
to be outstanding capital stock of Interface after the
Effective Time. All outstanding options or other rights to
acquire Interface Stock will be unaffected by the Merger,
and will continue to be outstanding in accordance with their
terms.
REPRESENTATIONS AND WARRANTIES
The Acquisition Agreement contains various representations
and warranties of the Shareholders relating to, among other
things: (a) organization and similar corporate matters; (b)
capital structure and ownership of shares; (c) compliance with
agreements and governmental regulations; (d) corporate books and
records; (e) necessary consents; (f) possession of franchises
and licenses; (g) certain accounting and financial reporting
matters; (h) the absence of undisclosed liabilities; (i)
title to property; (j) bank accounts; (k) receivables;
(l) inventory; (m) returns and consignments; (n) personal
property; (o) real property; (p) authority to conduct
business and intellectual property rights (q) material
contracts; (r) insurance; (s) customers and suppliers; (t)
contingencies; (u) taxes; (v) parachute payments; (w)
employment and labor matters; (x) employee benefit matters; (y)
environmental matters; (z) the absence of certain business
practices; (aa) governmental reports; (bb) agreements and
transactions with related parties; and (cc) the absence of
changes since the date of PST's most recent fiscal year end. Any
misrepresentation or breach of warranty with respect to these
matters by the Shareholders, PST or PSHC could entitle Interface
to refuse to consummate the Merger or to seek indemnification as
discussed below.
The Acquisition Agreement contains representations
and warranties of Interface with respect to organization,
authorization and full disclosure. Any misrepresentation or
breach of warranty with respect to these matters by
Interface could entitle the Shareholders to refuse to
consummate the Merger.
INDEMNIFICATION
The Acquisition Agreement provides that the
Shareholders will indemnify and hold harmless Interface, its
affiliates, their respective officers and directors, PST and
PSHC for any losses, damages, liabilities, costs and expenses
("Losses") arising out of or relating to any misrepresentation,
breach of warranty, or nonfulfillment of an agreement contained
in the Acquisition Agreement or in any certificate, schedule,
instrument or document delivered pursuant thereto, and all Losses
of any nature whatsoever, whether known or unknown, to the extent such
Losses relate to a liability of PST that was not reflected or
reserved against in full in PST's audited balance sheet as at
September 27, 1992, or that were not disclosed to Interface as
required by the Acquisition Agreement.
The Shareholders will not be obligated to make
such indemnification with respect to any Losses until the
aggregate Losses exceed one-half of one percent (1/2%) of
the Merger Consideration; thereafter such indemnification will
be limited to an aggregate maximum of fifty percent (50%)
of the Merger Consideration. (Without regard to such
threshold and liability limitation, however, the Shareholders
could be liable to Interface (up to $350,000) if PST or PSHC pays
any termination fee to Mohawk. Interface contends that neither
PST nor PSHC has any binding obligation to pay such fee.)
The Acquisition Agreement provides that neither PST nor PSHC
will be liable to any Shareholder as a result of any
misrepresentation, breach of warranty or nonfulfillment
of an agreement of PST or PSHC in the Acquisition Agreement,
and no Shareholder will have a right of contribution against
either PST or PSHC on account of any event arising prior to or as
of the Closing Date.
CERTAIN OTHER AGREEMENTS
Adjustment to Merger Consideration. Pursuant to
the Acquisition Agreement, the initial $10,500,000 base
amount of Merger Consideration was subject to downward
adjustment if PST's adjusted earnings before interest and
taxes for its fiscal year ended October 3, 1993, calculated
in accordance with generally accepted accounting principles
("GAAP") consistently applied, with certain agreed upon non-
GAAP adjustments ("Adjusted EBIT"), was less than $2,060,371.
The Adjusted EBIT was only $[1,928,279], and accordingly the
Merger Consideration was reduced from $10,500,000 to
$[9,871,242], based on a formula in the Acquisition Agreement
that required a reduction equal to 70% of the product of (i)
6.8 multiplied by (ii) the amount that the Adjusted EBIT was
less than $2,060,371.
Non-Competition Agreement. As an inducement to Interface
to enter into the Acquisition Agreement and to consummate the
Merger, Robert S. Weiner, the Chairman and Chief Executive
Officer of PST and PSHC, agreed to a non-competition covenant
in the Acquisition Agreement (the "Non-Compete") that will
commence on the Closing Date and end on the fourth
anniversary thereof. Except as described in the next
sentence, the Non-Compete prohibits Dr. Weiner from engaging
in, consulting with, or owning, controlling, managing or
otherwise participating in the ownership, control or management
of a business engaged in the manufacture, purchase for resale,
sale, or distribution, within any part of the continental
United States or Canada, of broadloom carpet (including,
without limitation, tufted carpet in any roll width) or carpet
tile, except as an employee on behalf of PST or its affiliates.
Dr. Weiner will not be prohibited from engaging in, consulting
with, or owning, controlling, managing or otherwise
participating in the ownership, control, or management of an
entity that manufactures, sells or distributes broadloom carpet
solely and exclusively for use in the residential end user
market, and that neither manufactures, sells or distributes any
broadloom carpet or carpet tiles for use in any market other
than the residential end user market, nor is affiliated
with any entity that manufactures, sells or distributes
broadloom carpet or carpet tile for use in any market other
than the residential end user market. Dr. Weiner is also
restricted by the Non-Compete from (i) soliciting the patronage
of any person or entity to whom PST sold any products during
the 12-month period immediately preceding the Closing Date,
or (ii) soliciting or inducing any person employed by PST
or PSHC to leave such employment, whether or not such
employment is pursuant to a written contract.
Expenses. The Acquisition Agreement provides that
Interface will be responsible for all of its expenses incurred
in connection with the negotiation and performance of the
Acquisition Agreement, except as discussed below. The
Acquisition Agreement further provides that PST is permitted to
pay up to $500,000 of valid and verifiable bona fide expenses
(including brokerage commissions based upon an aggregate
Merger Consideration of no more than $12,000,000) associated
with the negotiation and performance of the Acquisition
Agreement, whether incurred by the Shareholders, PST or PSHC.
The Shareholders (collectively) and Interface have each
agreed to pay fifty percent (50%) of all costs and out-of-
pocket expenses (including, but not limited to, fees and
expenses of Interface's attorneys, accountants and other
professionals, and filing fees paid to the Commission or
otherwise), incurred by Interface with respect to the
preparation and filing of this Prospectus and the
Registration Statement of which it is a part, and any other
costs and expenses related to the registration of the Interface
Stock for issuance in the Merger.
Restriction on Sale of Shares. Notwithstanding that
the Merger Shares have been registered for issuance to the
Shareholders in the Merger, each Shareholder has agreed that, on
any particular day during the period commencing on the Closing
Date and continuing through the third anniversary thereof (each
a "Sale Date"), the Shareholder will not sell or otherwise
dispose of any Interface Stock in excess of the number of shares
equal to (i) 100,000 shares or, until the 30th day after the
Closing Date,250,000 shares (as applicable,the "Base Monthly
Number") minus (ii) the aggregate number of shares of
Interface Stock sold or disposed of by all of the Shareholders
during the 30 calendar-day period ending on the date
immediately before the Sale Date. The foregoing restriction is
in addition to (and shall continue to apply in the absence of)
any restriction on the resale by Shareholders of their
Merger Shares as a result of Rule 145 under the Securities
Act or any other restriction on transfer ofInterface Stock by a
Shareholder, such as Rule 144 under the Securities Act if
such Shareholder becomes an "affiliate" of Interface within the
meaning of Rule 144. All certificates representing Merger
Shares shall bear an appropriate legend referencing the
restrictions set forth in the Acquisition Agreement.
This Prospectus does not cover any resale of Merger Shares
by the Shareholders; accordingly, any Shareholder who is
an "affiliate" of PST within the meaning of Rule 144 as of
the time the Shareholders vote or consent (or are deemed to
have voted or consented) to approve the Merger, shall in
addition to the contractual restriction described above be
subject to the restrictions provided in Rule 145(d) with
respect to public offers or sales of Merger Shares.
Because the issuance to the Shareholders of the Merger
Shares has been registered, however, Rule 145(d) would
nonetheless permit a Shareholder who is such an affiliate to
sell, within any three-month period, a number of shares of
Interface Stock up to the greater of one percent (1%) of the
outstanding shares of Interface Stock or the average weekly
reported trading volume of Interface Stock during the four
calendar weeks preceding the sale, if current public
information about Interface is available as described in
Rule 144(c) and if the shares are sold in a "broker's
transaction" or in a transaction directly with a "market
maker", each as defined or described in Rule 144.
Operations Pending Closing. Pursuant to the
Acquisition Agreement, the Shareholders have agreed, during the
period from the date of the Acquisition Agreement until the
Closing Date, except as permitted by the Acquisition Agreement
or as consented to in writing by Interface, to carry on the
respective businesses of PST and PSHC only in the ordinary and
usual course and consistent with prior practices, without
the creation of any additional indebtedness for borrowed
money. Pending the Closing, PST and PSHC have agreed (a) not
to enter into any material contract, or otherwise to
contract or effect any transaction with a related party; (b)
not to sell, distribute or supply goods or services to any
customer or any third party except in the ordinary course of
business at prices and on terms consistent with prior
operating practices; (c) not to sell, otherwise dispose of or
encumber any of the assets or properties of PST or PSHC,
except for the sale of inventory and the normal disposal of
used motor vehicles and equipment in the ordinary course of
business; (d) not to contract for the purchase of raw materials,
products, services and supplies other than as is necessary to
conduct normal business operations and to maintain normal
inventories at prices and on terms consistent with prior
operating practices; (e) to maintain, preserve and protect
all of their assets and properties; (f) to maintain in full
force and effect all insurance policies with respect to
their assets and properties; (g) to maintain their books,
records and accounts in the usual, regular and ordinary
course of business; (h) to use their best efforts to preserve
their business organizations, to keep available the services
of their present employees, to preserve the goodwill of their
suppliers, customers and others having business relations with
either of them, and to assist in retaining the services of key
employees and agents of each after the Closing Date; (i) not to
amend their articles of incorporation or bylaws; (j) not to
change their authorized or issued share capital, nor to
transfer any shares of stock beneficially or of record; (k)
not to grant any right or option to purchase or otherwise
acquire any share capital or other security of either company,
or declare a dividend or other distribution or payment with
respect to any share capital or redeem or otherwise acquire
any of their share capital; (l) not to make any changes
affecting the banking arrangements of either company; (m) not
to increase the compensation payable to any director,
officer, employee or agent of either company, nor declare
and pay any bonuses or profit sharing payments or other
arrangements except for the payment of bonuses that were
previously disclosed to Interface pursuant to the Acquisition
Agreement; (n) not to permit any of their employee benefit
plans to enter into a "prohibited transaction" within the
meaning of ERISA; (o) not to fail to take any action necessary
to maintain the qualification of each employee benefit plan under
ERISA and Section 501(a) of the Internal Revenue Code of 1986,
as amended (the "Code"); and (p) to timely make all
contributions or other payments to employee benefit plans
that either company is obligated to make as of the date
of the Acquisition Agreement.
Conditions to Closing
The obligations of the Shareholders to effect the
PST/PSHC Combination and the Merger are subject to a number of
conditions, including, among others, that: (a) Interface
pays the Merger Consideration as required; and (b) the
representations and warranties of Interface contained in the
Acquisition Agreement are true and correct as of the date when
made and as of the Closing Date. The obligations of
Interface to effect the Merger are subject to a number of
conditions, including, among other, that: (a) a certificate
evidencing that there are no material adverse changes in the
business of either PST or PSHC as of the Closing Dateis
delivered by the Shareholders to Interface; (b) a legal
opinion of counsel to the Shareholders, satisfactory to counsel
for Interface, is delivered to Interface; (c) all governmental
consents required for the consummation of the transactions
contemplated by the Acquisition Agreement have been received and
such transactions do not violate any order or decree of any
court or governmental body; (d) the delivery to Interface by
the Shareholders of all consents necessary for the
continuation, in full force and effect after the Closing, of
each of PST's and PSHC's leases, loan agreements and other
contracts and agreements to maintain each company's business
in the same manner as conducted prior to the Closing
[,except as affected by the PST/PSHC Combination]; (e) the
termination by PST and PSHC, without further liability, of
all agreements with the Shareholders or their affiliates or
relatives; and (f) no stop order suspending the
effectiveness of the Registration Statement of which this
Prospectus forms a part has been issued and remains in effect.
REGULATORY APPROVALS
No governmental regulatory approvals are required with
respect to the Merger, except for the acceptance by the Georgia
Secretary of State of articles or certificate of merger that will
be filed by Interface and PST with the Georgia Secretary of
State. Filings have been made with the FTC with respect to
the Merger under the HSR Act, and early termination of the
waiting period has been received.
ACCOUNTING TREATMENT OF THE MERGER
Interface will account for the Merger as a "purchase"
under GAAP. Accordingly, PST's results of operations will be
included in Interface's consolidated results of operations from
and after the Effective Time. For purposes of preparing
Interface's consolidated financial statements, Interface will
establish a new accounting basis for PST's assets and
liabilities based upon the fair values thereof and PST's
purchase price, including the transaction costs of consummating
the acquisition. Final determination of required purchase
accounting adjustments and of the fair value of the assets and
liabilities of PST has not yet been made. Interface will
undertake a study to determine the fair value of certain of
PST's assets and liabilities and will make appropriate
purchase accounting adjustments based upon completion of that
study.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
While Interface believes the following to be an
accurate summary of the material federal income tax
consequences resulting from the Merger, neither Interface
nor PST has made any representation regarding the
federal income tax consequences resulting from the Merger or
the other transactions contemplated by the Acquisition
Agreement, and no opinion of counsel has been rendered with
respect to such matters. Accordingly, no assurance is given
regarding the federal income tax consequences of the Merger,
and the Shareholders are urged to consult their own
respective tax advisors regarding such consequences (and
the consequences of other tax laws) to them. For purposes
of the following discussion, Interface assumes, in each
case where a belief as to a "tax-free" reorganization treatment
of the Merger is expressed, that the Shareholders will retain a
sufficient amount of Merger Shares to meet the continuity of
proprietary interest requirement of Section 368 of the Code.
No Exercise of Cash Option. If Interface pays all of
the Merger Consideration in shares of Interface Stock,
Interface believes that the Merger would be treated as
a "tax-free reorganization" for federal income tax purposes
under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code. In
such event, the principal federal income tax consequences of the
Merger would be as follows:
(1) Except for the recognition of gain as required by
Section 356(a) of the Code with respect to (a) expenses of the
Shareholders paid by PST or Interface, (b) cash received by the
Shareholders in lieu of the issuance of fractional shares of
Interface Stock or (c) cash received by the Shareholders upon
exercise by such Shareholder of his, her or its dissenters'
rights, no gain would be recognized by the Shareholders upon the
exchange of capital stock of PST for Interface Stock as a result
of the Merger; and
(2) In general, transaction expenses of the Shareholders
paid by PST or Interface, cash received by the Shareholders in
lieu of fractional shares or cash received by the Shareholders
exercising their dissenters' rights would be treated as amounts
distributed in lieu of their shares and would be taxable under
the provisions of Section 302 of the Code.
Exercise of Twenty-Percent Cash Option. If
Interface exercises its option to pay up to twenty percent
(20%) of the Merger Consideration in cash, Interface believes
that the federal income tax characterization of the Merger
depends on the amount of cash consideration paid by Interface.
If the quotient obtained by dividing (a) the sum of the amount
of cash paid by Interface as part of the Merger Consideration
plus the transaction expenses of the Shareholders paid by
Interface or PST by (b) the sum of the total Merger
Consideration plus the transaction expenses of the
Shareholders paid by Interface or PST (the "Cash
Consideration Quotient"), does not exceed twenty percent
(20%), Interface believes that the Merger would be
characterized as a tax-free reorganization under Section
368(a)(1)(A) and Section 368(a)(2)(E) of the Code. In such
event, the principal federal income tax consequences of the
Merger would be identical to the consequences described above,
if Interface makes no election to pay any of the Merger
Consideration in cash, as discussed above, except that in
addition to such consequences, any part of the Merger
Consideration that Interface elects to pay in cash would be
treated as amounts distributed in lieu of the shares of the
Shareholders and would be taxable under the provisions of Section
302 of the Code.
If the Cash Consideration Quotient exceeds 20%,
however, Interface believes that the Merger would not qualify as
a tax-free reorganization under the Code. In such event, the
sum of (a) the fair market value of the Interface Stock
received by the Shareholders, (b) any cash received by the
Shareholders, and (c) transaction expenses of the Shareholders
paid by PST or Interface would be treated as amounts distributed
in lieu of their shares and would be taxable under the provisions
of Section 302 of the Code.
Exercise of One-Hundred-Percent Cash Option. If Interface
has and exercises its option to pay 100% of the Merger
Consideration in cash (as a result of the Closing Date Price
being less than $12.00 per share), Interface believes that the
Merger would not qualify as a tax-free reorganization under the
Code. In such event, the sum of (1) the cash Merger
Consideration and (2) transaction expenses of the Shareholders
paid by PST or Interface would be treated as amounts
distributed in lieu of their shares and would be taxable under
the provisions of Section 302 of the Code.
THE FOREGOING DISCUSSION ISINTENDED ONLY AS A SUMMARY
OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND
DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR LISTING OF ALL
POTENTIAL TAX EFFECTS. THE DISCUSSION IS BASED UPON THE
CODE, TREASURY REGULATIONS THEREUNDER AND ADMINISTRATIVE
RULINGS AND COURT DECISIONS AS OF THE DATE HEREOF. ALL OF
THE FOREGOING ARE SUBJECT TO CHANGE, AND ANY SUCH CHANGE COULD
AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION. THE
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN RESPECTIVE TAX
ADVISORS CONCERNING ALL TAX CONSEQUENCES OF THE MERGER TO THEM.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Interface and PST expect that all of the executive
officers and employees of PST who are also shareholders of PST
will continue as PST employees after the Merger, although none
of these persons has entered into an employment agreement with
PST. Interface is discussing with these persons their
possible roles with PST and Interface after the Merger,
including the nature and scope of responsibilities, base
and performance bonus compensation arrangements, and other
terms of employment. No agreements or definitive terms have
been reached, and no such matter is a condition to
consummation of the Merger or will affect the amount (or manner
of payment) of the Merger Consideration or any other term of
the Merger.
RIGHTS OF DISSENTING SHAREHOLDERS
SET FORTH BELOW IS A SUMMARY OF THE PROCEDURES RELATING TO
THE EXERCISE OF DISSENTERS' RIGHTS UNDER ARTICLE 13 OF THE
GEORGIA BUSINESS CORPORATION CODE (THE "GBCC"). THE FOLLOWING
SUMMARY DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE
PROVISIONS OF ARTICLE 13 OF THE GBCC AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO APPENDIX B HERETO AND TO ANY
AMENDMENTS TO SUCH PROVISIONS AS MAY BE ADOPTED AFTER THE DATE
OF THIS PROSPECTUS. THE PROVISIONS FOR DEMANDING APPRAISAL
ARE COMPLEX AND MUST BE COMPLIED WITH PRECISELY. ANY
PST SHAREHOLDER INTENDING TO DISSENT FROM THE PROPOSED MERGER
SHOULD CONSULT CAREFULLY THE TEXT OF APPENDIX B AND IS ALSO
ADVISED TO CONSULT LEGAL COUNSEL.
EACH HOLDER OF PST SHARES IS A PARTY TO AND HAS EXECUTED
THE ACQUISITION AGREEMENT. AS A RESULT, INTERFACE BELIEVES
THAT NO SHAREHOLDER CAN VOTE AGAINST OR OBJECT TO THE MERGER
AND EXERCISE DISSENTERS' RIGHTS WITHOUT BREACHING THE
ACQUISITION AGREEMENT. Moreover, each Shareholder has granted
an irrevocable proxy in favor of Robert S. Weiner to vote
their PST Shares with respect to the Merger and any other
matter arising as a result of the Acquisition Agreement,
and Dr. Weiner has informed Interface that he intends to vote
the PST Shares to approve the Acquisition Agreement and the
Merger. Subject to the consequences of a resulting breach
of the Acquisition Agreement, Shareholders may have
dissenters' rights under the GBCC if Dr. Weiner votes the
Shareholder's PST Shares against the Merger or if a
Shareholder successfully revokes the irrevocable proxy and
votes his, her or its PST Shares against the Merger.
Under the GBCC, any holder of record of PST Shares who
objects to the Merger and who fully complies with all the
provisions of Article 13 of the GBCC will be entitled to
demand and receive payment in cash of an amount equal to the
fair value of all, but not less than all, of such holder's
PST Shares if the Merger is consummated. A shareholder of
record may assert dissenters' rights as to fewer than the shares
registered in such holder's name only if the holder dissents
with respect to all shares beneficially owned by any
particular beneficial owner and notifies PST in writing of
the name and address of each person on whose behalf he asserts
dissenters' rights. For the purpose of determining the amount
to be received in connection with the exercise of statutory
dissenters' rights under the GBCC, the fair value of a
dissenting shareholder's PST Shares equals the value of the
shares immediately before the Effective Time of the Merger,
excluding any appreciation or depreciation in anticipation of the
Merger.
Any holder of PST Shares desiring to receive payment of
the fair value of such holder's PST Shares in accordance
with the requirements of the GBCC: (a) must deliver to PST
prior to the time the vote or consent is taken, a written notice
of the holder's intent to demand payment for the holder's
shares if the Merger is consummated; (b) must not vote
(personally or through any proxy, including any proxy previously
granted to Dr. Weiner) such holder's shares in favor of the
Merger or otherwise consent to the Merger; and (c) must
demand payment and deposit stock certificates representing
the holder's PST Shares in accordance with the terms of a notice
which will be sent to the shareholder by PST no later than 10
days after the Merger is approved. A filing of the written
notice of intent to dissent with respect to the Merger
Agreement should be sent to: Robert S. Weiner, Prince Street
Technologies, Ltd., 36 Enterprise Boulevard, Atlanta,
Georgia 30336. A shareholder who votes for the Merger
will have no dissenters' rights. A shareholder who does
not satisfy each of the aforementioned requirements is not
entitled to payment for such holder's PST Shares under the
dissenters' rights provisions of the GBCC and will be bound by
the terms of the Merger as set forth in the Acquisition
Agreement.
Within 10 days of the later of the Effective Time of
the Merger or receipt of a payment demand by a shareholder who
deposits stock certificates in accordance with PST's
dissenters'notice sent to those shareholders who notified PST of
their intent to dissent, PST must offer to pay to such dissenting
shareholder the amount PST estimates to be the fair value of
the dissenting shareholder's shares, plus accrued interest.
Such notice and offer must be accompanied by: (a) PST's
balance sheet as of the end of a fiscal year ending not more
than 16 months before the date of making an offer, an income
statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim
financial statements, if any; (b) an explanation of how the
interest was calculated; (c) a statement of the
dissenting shareholder's right to demand payment of a different
amount under Section 14-2-1327 of the GBCC; and (d) a copy of
the dissenters' rights provisions of Article 13 of the GBCC.
If the dissenting shareholder accepts PST's offer by
written notice to PST within 30 days after PST's offer (or is
deemed to have accepted such offer by failure to respond
within such 30 days), PST must make payment for such holder's
shares within 60 days after the making of the offer or the
Effective Time of the Merger, whichever is later. Upon payment
of the agreed value, the dissenting shareholder will cease to
have any interest in such holder's PST Shares.
If within 30 days after PST offers payment for the shares of
a dissenting shareholder, the dissenting shareholder notifies
PST in writing that the holder does not accept PST's estimate
of fair value of the holder's shares and interest due thereon
and demands payment of the holder's own estimate of the fair
value of the shares and interest due thereon, then PST, within
60 days after receiving the payment demand of a different
amount from a dissenting shareholder, must file an action in a
court of competent jurisdiction requesting that the fair value of
such shares be found and determined. PST must make all
dissenting shareholders whose demands remain unsettled parties
to the proceeding. If PST does not commence the proceeding
within such 60-day period, it shall be required to pay each
dissenting shareholder whose demand remains unsettled the amount
demanded by the dissenting shareholder.
RESALES OF INTERFACE STOCK
The Merger Shares that would be issued to the
Shareholders have been registered under the Securities Act
pursuant to the Registration Statement of which this
Prospectus is a part. However, because certain of the
Shareholders will be affiliates of PST as of the time the
Merger is approved (or is deemed to have been approved) by the
shareholders of PST, such persons will not be able to resell
the Merger Shares received by them unless such shares are
subsequently registered for resale under the Securities Act or
are sold in compliance with the restrictions contained in Rule
145(d) under the Securities Act or pursuant to an exemption
from the registration requirements of the Securities Act.
In addition, there are certain contractual restrictions on
sales by all of the Shareholders of any Interface Stock, whether
or not such Interface Stock constitutes Merger Shares received
in the Merger. See "The Acquisition Agreement - Certain Other
Agreements".
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF PST
GENERAL
The following discussions are based on the combined,
financial results of PST and PSHC as if they were a single
entity during the periods discussed, and most references are
made (for purposes of convenience) solely to "PST". During
these periods, PSHC had no business operations except
indirectly through PST. PSHC is the parent company of PST and
does not own any significant assets other than its shares of PST
Class A common stock.
RESULTS OF OPERATIONS
During the three fiscal years ended October 3, 1993,
PST's primary focus was to increase its market share in the
mid- to upper-end designer specified commercial market. PST
introduced many products in the lower price range of the mid- to
upper-end market in order to facilitate its entry into
the end-user/national accounts market and to accommodate
the generally lower renovation/improvement budgets of PST's
customers that resulted from recessionary conditions in the
United States economy that were prevalent during most of the
period. During the same time period, PST also expanded and
upgraded its sales force.
As a result of PST's continuing product introduction and
sales force expansion, PST's net sales increased from $28.1
million for the year ended September 29, 1991 to $30.7 million
for the year ended October 3, 1993. This 9.3% increase was
achieved in spite of the recessionary economic conditions.
During the same period, however, operating income decreased
from $2.6 million for the year ended September 29, 1991 to $1.9
million for the year ended October 3, 1993, and PST experienced
a net loss of approximately $225,000 for the intervening year
ended September 27, 1992. In each case such declines were due
primarily to increases in cost of sales and selling expenses.
The reduction in operating income from the 1991 fiscal
year level is primarily the result of an increase in cost of
sales as a percentage of net sales for the respective years
(68.5%, 69.8% and 66.1% for the 1993, 1992 and 1991 fiscal
years, respectively), which reflects both a reduction in
average selling price of PST's products during the last three
fiscal years and a slight shift in PST's product mix to
include more lower-priced products necessary for the end-
user/national account markets. These lower-priced products
contributed to the reduced average selling price of all
products sold, but they also had an offsetting effect on
average cost of sales because of the lower costs associated with
them; as a result, these products did not cause the increase in
cost of sales as a percentage of net sales. The primary factor
in the reduction in average selling price was increased
competition within the carpet industry brought on by the
recessionary economic conditions in the United States that
prevailed for most of the period.
Selling, general and administrative expenses also
increased during this period, with the fiscal year 1993 level
exceeding the fiscal year 1991 level by 12.9%. The rate of
theseincreases exceeded the net sales growth rate during those
fiscal years. The increase in these expenses, however,
reflects PST's initiatives to strengthen its market position
through new and innovative product introductions and expanding
and upgrading its sales force.
The following table shows, as a percentage of net
sales, certain items from PST's combined statements of income
for the three fiscal years ended October 3, 1993.
<TABLE>
<CAPTION>
Fiscal Years
----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 68.5 69.8 66.1
----- ------ ------
Gross margin 31.5 30.2 33.9
Operating expenses:
Selling expenses 18.3 20.4 17.6
General and administrative expense 7.1 7.7 7.0
---- ---- ----
Total operating expenses 25.4 28.1 24.6
---- ---- ----
Operating income 6.1 2.1 9.3
Other income (expense):
Interest (2.2) (2.4) (2.5)
Factoring commissions (0.9) (0.9) (1.0)
Other 0.2 0.1 --
---- ---- ------
Other income (expense) -- net (2.9) (3.2) (3.5)
Income (loss) before income taxes
and extraordinary item 3.2 (1.1) 5.8
Income taxes (provision) benefit:
Current (1.4) - (1.5)
Deferred 0.1 0.3 (0.9)
---- ---- ----
Total income taxes (provision) benefit) (1.3) 0.3 (2.4)
Income (loss) before
extraordinary item 1.9 (0.8) 3.4
Extraordinary item - utilization of
operating loss carryforward 0.3 - 0.8
--- ------ ---
Net income (loss) 2.2% (0.8)% 4.2%
=== ====== ===
</TABLE>
1993 COMPARED WITH 1992
For the fiscal year ended October 3, 1993, PST's net
sales increased $2.9 million (10.3%) compared to the prior
fiscal year. This increase was the result of a 10% increase in
unit sales, and a 2.6% increase in average selling price, of
PST's products over the prior fiscal year. Unit sales and
average selling price of PST's products had been lower in the
1992 fiscal year than in the 1991 fiscal year.
Cost of sales, which is comprised of direct labor
and materials costs and other variable manufacturing expenses,
as well as fixed manufacturing expenses, decreased as a
percentage of net sales during the 1993 fiscal year as compared
to the prior fiscal year (although it remained higher than the
percentage for the 1991 fiscal year). This cost reduction was
primarily the result of increased efficiency in PST's
utilization of raw materials resulting from PST's emphasis
on controlling waste, and the reduction of workers'
compensation costs resulting from PST's continuing efforts to
significantly reduce workers' compensation claims.
Selling, general and administrative expenses as a
percentage of net sales decreased for the 1993 fiscal year as
compared to the 1992 fiscal year. As discussed above, PST
has been committed during the past three fiscal years to
increased new product introductions and expansions in its
sales force, both of which continued during the 1993 fiscal
year. The amounts incurred for these initiatives were lower
during the 1993 fiscal year than during the 1992 fiscal year,
but the 1993 levels were higher than in years prior to 1992 as
PST continued to seek to improve its market position.
PST's other income (expense) - net continued to be a
negative for the 1993 fiscal year, as PST's other expenses
continued to be greater than its other income. However, the
amount of this item for the 1993 fiscal year was slightly less
as a percentage of net sales as compared to the 1992 fiscal
year. The decrease was mainly due to a reduction in variable
interest rates, which offset the effect of higher levels
of borrowing under PST's factoring agreement. Under this
agreement, the factor (a commercial bank) provides credit
services and working capital advances of up to 90% of the value
of approved invoices for carpet shipped in the normal course of
PST's business.
1992 COMPARED WITH 1991
For the fiscal year ended September 27, 1992, PST's net
sales decreased by $0.25 million (0.9%) compared with the 1991
fiscal year. This decrease was the result of some price
erosion and a change in the product mix, which combined to
offset a 5% increase in unit sales. 1992 was a fiercely
competitive period in the carpet industry, as the slowdown in
the United States real estate markets continued, which affected
adversely the demand for carpet products.
Cost of sales increased as a percentage of net sales for
the 1992 fiscal year as compared to the 1991 fiscal year
primarily because of competitive pressures on pricing.
During the 1992 fiscal year, PST's average manufacturing
cost per square yard remained virtually unchanged, while its
average selling price per square yard decreased by 6%. This
price reduction was a result of increased competition.
Selling, general and administrative expense as a percentage
of net sales increased for the 1992 fiscal year as compared
with the previous year. This increase was due to the
increased marketing and product development initiatives that are
described above.
Other income (expense) - net decreased as a percentage
of net sales for the 1992 fiscal year as compared to the 1991
fiscal year due to the fall in the prime interest rate in
1992, which determines the rates for PST's bank debt, factor
advances and the Floating Rate Note to Interface. Factor
commissions also dropped as a percentage of net sales due to a
reduction in the rate charged by the factor.
LIQUIDITY AND CAPITAL RESOURCES
PST's primary capital requirements are for working
capital (including inventory, raw materials and other
supplies, and receivables financing) and debt service. These
needs are currently met by a combination of cash from operations,
funds available under a factoring agreement with a bank and
open account credit from suppliers. At October 3, 1993 working
capital was $2.4 millon as compared to $2.3 million at
September 27, 1992 and $3.0 million at September 29, 1991.
PST's capital expenditures for equipment and for expansion
or improvements to its physical facilities vary from year to
year. During the three fiscal years ended October 3, 1993, PST
had an aggregate of approximately $3.5 million of capital
expenditures, primarily for expansion of its yarn skein dyeing
facility and for tufting equipment. (Capital expenditures for
1993, 1992 and 1991 were approximately $1.2 million, $1.3
million and $1.0 million, respectively.) PST also repaid $1.4
million in debt during this period, which had been incurred
primarily to finance the above-described expansion of the
dyeing facility. PST anticipates approximately $1.0 million
of capital expenditures for the 1994 fiscal year. PST
believes that cash from operations plus funds available under
its factoring agreement will be sufficient to meet its liquidity
requirements for the next twelve months,including its debt
service requirements. As a result of consummation of the
Merger, PST may be liable for certain payments, as described
in note 10 to the combined financial statement of PST and PSHC.
CERTAIN INFORMATION REGARDING PST AND PSHC
BUSINESS AND GENERAL
PST, which was incorporated in Georgia in 1987, is engaged
in the manufacture and distribution of technically advanced
tufted broadloom carpeting in approximately 50 different
styles and textures for use in mid to upscale
commercial interiors. Approximately 85% of PST's sales during
1993 were to or through "specified-to-buy" firms, such as
interior design firms and architects, and approximately 15%
were sold to flooring contractors for use by end-users of carpet
products. While most of PST's sales are in the corporate segment
of the commercial market, PST also has sales in the hospitality,
healthcare, and retail segments of the commercial market.
PST's Prince Street Technologies (REGISTERED TRADEMARK)
products center around multi-dimensional textured carpets with
a hand-tufted look. Its texturing mechanism is its proprietary
tufting and "tip-shearing" process, which it markets under the
trademark SculptureWeave (REGISTERED TRADEMARK). PST has also
developed a new proprietary process, SculptureWeave II, which
provides PST with the capability to create new types of
products that have both styling and performance advantages
over existing techniques. PST has also developed Access Back
(REGISTERED TRADEMARK), a patented broadloom backing system that
offers the virtues of tufted carpet with the benefits of carpet
tiles. PST's carpets contain anti-static fibers in both the
yarn and carpet backing to ensure that the user will not
experience electric shocks.
PST focuses on developing unique products that replicate
a designer's specifications, and it emphasizes service to
designers. PST believes it provides the interior design
industry with the widest range of colors and styles in the
carpet industry, and it can generally provide samples of
standard carpets to customers in as little as one day and
samples of customized products in less than one week. As a
result of its emphasis on service and unique products, PST has
received design awards from the interior design industry,
including the 1993 "DOC" Awards - Monsanto Challenge - for
outstanding product development (four awards); the 1992 "DOC"
Awards - Monsanto Challenge - for outstanding product
development (three awards); 1991 Roscoe Award for outstanding
achievement and product design; and 1991 "DOC" Awards -
Monsanto Challenge - for outstanding product development (one
award).
PSHC, which was incorporated in Georgia in 1987, serves as
the parent holding company of PST and has no other operating
subsidiary and no direct business operations. Its only material
asset is its investment in PST Class A common stock.
FACILITIES
PST's headquarters and certain manufacturing and
support activities are located near the Hartsfield Atlanta
International Airport, approximately eight miles from downtown
Atlanta, Georgia. PST's corporate offices and showroom occupy
approximately 25% of an approximately 55,000 square foot
building, which is leased. The remainder of the building
is used to store carpet samples, architectural sample book
inventories and yarns. PST also leases an approximately
58,000 square foot tufting facility and an approximately
20,000 square foot facility located adjacent to its corporate
offices. In addition, PST has a skein dye facility in
Cartersville, Georgia. The Cartersville facility comprises
two separate buildings, one of which is owned and one of
which is leased, totalling approximately 60,000 square feet.
PST also leases showrooms in four cities: New York, Chicago,
Houston, and San Francisco.
EMPLOYEES
As of December 28, 1993, PST employed a total of
approximately 255 persons, the majority of whom were
employed in production positions. PSHC has no employees.
STOCK OWNERSHIP AND OTHER STOCK INFORMATION
The following table sets forth certain information
regarding the Class A and Class B common stock of PST and the
common stock of PSHC beneficially owned as of December 28, 1993
by (i) each person who is the beneficial owner of more than 5%
of such stock; (ii) each director of PST or PSHC; (iii)
each of PST's or PSHC's executive officers; and (iv) all
directors and executive officers of PST as a group and all
directors and executive officers of PSHC as a group. Except as
otherwise indicated, all shares shown in the table below are
held with sole voting and investment power. The share
ownership does not reflect the PST/PSHC Combination.
<TABLE>
<CAPTION>
Percentage of PST Stock
------------------------
Name and Address No. and Class of Of Class Of Combined No. of Shares Percentage of
or No. in Group PST Common Stock Indicated Voting Power <F3> of PSHC of PSHC Shares
- --------------- ---------------- --------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert S. Weiner 114 Class B <F1> 59.7% 49.7% <F4> 1,085,991.5 <F1><F4> 64.2% <F4>
1016 Old Powers Ferry Road
Atlanta, Georgia 30327
John and Nancy O'Donnell 40 Class B <F2> 20.9% 17.4% 206,609 <F2> 12.2%
12 Weathervane
Westport, Connecticut 06880
Jacqueline A. Colando 22 Class B <F2> 11.5% 9.6% 113,816 <F2> 6.7%
7609 Woodland Lane
Burr Ridge, Illinois 60525
Randall J. Hatch 8 Class B <F2> 4.2% 3.5% 149,182.5 <F2> 8.8%
4702 Ageratum Court
Acworth, Georgia 30102
Robert D. Williams 0 -- -- 57,043 <F2> 3.4%
PSHC 500 Class A <F2> 100.0% 16.8% -- --
36 Enterprise Blvd.
Atlanta, 30336
All directors and executive 162 Class B <F1> 84.8% 70.6% 1,498,826 <F1> 88.5%
officers of PST as a group
(4 persons)
All directors and executive 162 Class B <F1> 84.8% 70.6% 1,498,826 <F1> 88.5%
officers of PSHC as a group
(4 persons)
____________________________
<FN>
<F1> Does not include 77 shares of PST Class B common stock, 500
shares of PST Class A common stock, and 606,757.5 shares of
PSHC common stock, with respect to which Dr. Weiner holds
irrevocable proxies granting him sole voting power. As a
result of such proxies, Dr. Weiner may be deemed
beneficially to own 100% of the Class A and Class B common
stock of PST and 100% of the PSHC common stock.
<F2> Shares are subject to an irrevocable proxy in favor of
Robert S. Weiner that grants sole voting power to Dr. Weiner.
<F3> The Class A and Class B common stock vote as a single
class, with each share of Class A common stock entitled to
one vote and each share of Class B common stock entitled to
13 votes.
<F4> As a result of his controlling stock ownership of PSHC
shares (64.2%), Dr. Weiner controls the vote of PSHC's
shares of PST Class A common stock, and accordingly he
controls 66.4% of the combined voting power of PST's
outstanding shares, without regard to the irrevocable
proxies he has received from the other Shareholders.
</TABLE>
As of December 31, 1993, there were outstanding 500 shares
of PST Class A common stock, 191 shares of PST Class B common
stock, and 1,692,750 shares of PSHC common stock. As of that
same date, there were seven holders of record of PST Class B
common stock, one holder of record of PST Class A common stock
and six holders of record of the PSHC common stock. There is no
public trading market for the PST Class A or Class B common
stock or the PSHC common stock.
Neither PST nor PSHC paid any cash dividends on its
respective Class A or Class B common stock during the 1992
and 1993 fiscal years.
COMPARISON OF SECURITIES OF INTERFACE AND PST
GENERAL
The following is a summary of material differences between
the rights of holders of PST Shares and the rights of
holders of Interface Stock. If the Merger is consummated, and
Interface does not have or does not exercise the option to pay
100% of the Merger Consideration in cash, then holders of PST
Shares at the Effective Time will become holders of shares of
Interface Stock. The rights of such former PST Shareholders
(including the former PSHC shareholders) as holders of
Interface Stock will be governed by the laws of the State of
Georgia and by the Interface articles of incorporation and
the Interface bylaws. Because each of PST and Interface is
organized under the laws of Georgia, these differences arise
from various provisions of the respective articles of
ncorporation and bylaws of PST and Interface. This summary
is qualified in its entirety by reference to the full text of
such documents.
VOTING RIGHTS
The Interface articles of incorporation divide the
common stock of Interface into two classes and provide that,
except with respect to the election and removal of directors
and except as required by the GBCC, holders of both classes of
Interface common stock vote as a single class on all matters
and are entitled to cast one vote per share. Neither class
has cumulative voting rights. Holders of the Interface Class B
Common Stock ("Interface Class B Stock") are entitled as a class
to elect a majority of the Interface Board of Directors.
Holders of the Interface Stock are entitled as a class to
elect the remaining directors, and accordingly the holders
of a majority of the Interface Class B Stock are able to
control the management of Interface.
The common stock of PST is also divided into two classes
with disparate voting rights. The PST Class B Common Stock and
the PST Class A Common Stock vote together as a single class on
all matters as to which the PST shareholders are entitled to
vote, except as required by the GBCC. In all such matters, the
holders of the PST Class B Common Stock are entitled to 13
votes per share, and the holders of the PST Class A Common
Stock are entitled to one vote per share. Upon consummation of
the PST/PSHC Combination, all of the outstanding shares of
PST Class A Common Stock will be cancelled and retired.
PREFERRED STOCK PREFERENCE
Interface currently has outstanding 250,000 shares of Series
A Cumulative Convertible Preferred Stock ("Series A Preferred")
which are entitled to a preferential 7% annual cumulative cash
dividend, payable quarterly, and to preferential liquidation
rights. Shares of Series A Preferred are non-voting, except as
required by law and in limited circumstances to protect their
preferential dividend and liquidation rights, although they are
convertible into shares of Interface Stock at the rate of one
share of Interface Stock for each $14.7875 of face value
(plus accrued dividends) of Series A Preferred.
PST has no shares of preferred stock outstanding.
SPECIAL MEETINGS OF SHAREHOLDERS
The Interface bylaws require the Interface chairman of
the board or president to call a special meeting of the
Interface shareholders upon the request of the holders of 75% or
more of all classes of Interface common stock outstanding. In
addition, the Interface bylaws impose certain other requirements
as to the form of the request and the length of time an
Interface shareholder must hold his, her or its stock prior to
making such a request.
The PST articles of incorporation permit the holders of 25%
or more of the outstanding PST common stock to call a special
meeting of the PST Shareholders.
SHAREHOLDER ACTION WITHOUT MEETING
The Interface bylaws permit the Interface shareholders to
take action without a meeting by a written consent signed by the
holders of all of the outstanding shares of Interface common
stock entitled to vote.
The PST articles of incorporation permit the PST
Shareholders to take action without a meeting by a written
consent signed by the holders of PST common stock holding the
amount of shares of PST common stock that would be necessary
to approve the action at a meeting of PST Shareholders.
SHAREHOLDER PROPOSALS AND NOMINATIONS
The Interface bylaws require notice to the Interface Board
of Directors, in advance of any shareholders meeting, of
any shareholder proposals or nominations by any
shareholders of candidates for election as directors. In
addition, Interface shareholders that wish to make shareholder
proposals or director nominations must provide the information
specified by the Interface bylaws with respect to such
proposals or nominations to the Interface Board of Directors.
PST has no similar provisions in its bylaws or articles
of incorporation.
SUPERMAJORITY BOARD VOTE
The Interface bylaws require in certain circumstances
the affirmative vote of two-thirds of the entire Interface
Board of Directors to recommend or approve certain
extraordinary corporate transactions specified in the
Interface bylaws involving certain 10% shareholders and persons
commencing or announcing an intention to commence a tender
offer or proxy contest involving Interface common stock.
PST has no similar provisions in its bylaws or articles
of incorporation.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS
The provision of the GBCC concerning "Business
Combinations with Interested Shareholders" (the "Business
Combinations Provision") generally prohibits Georgia
corporations who have chosen in their bylaws to be covered by
the statute from entering into certain business combination
transactions with any "interested shareholder" (generally
defined as any person other than the corporation or its
subsidiaries beneficially owning at least 10% of the voting
stock of the corporation), unless the corporation's board of
directors approves the business combination (a) prior to the
date the interested shareholder became an interested
shareholder or acquired 90% or more of the outstanding voting
stock of the corporation as part of the transaction in which it
became an interested shareholder; or (b) after the date the
interested shareholder became an interested shareholder, if it
acquired 90% or more of the outstanding voting stock of the
corporation and a majority of the remaining outstanding
voting stock approved the business combination.
Interface has elected in its bylaws to be governed by
the Business Combinations Provision. The Business
Combinations Provision is not applicable to PST because PST has
not indicated in its bylaws that it would so apply.
LEGAL MATTERS
Certain legal matters regarding the issuance of
Interface Stock in connection with the Merger have been
passed upon for Interface by the law firm of Kilpatrick & Cody,
Atlanta, Georgia.
EXPERTS
The consolidated financial statements and schedules
of Interface incorporated by reference in this Prospectus have
been audited by BDO Seidman, independent certified public
accountants, to the extent and for the periods set forth in
their reports incorporated herein by reference and are
incorporated herein in reliance upon such reports given upon the
authority of said firm as experts in auditing and accounting.
The combined financial statements of PST and PSHC at
October 3, 1993 and September 27, 1992 and for each of the
three years in the period ended October 3, 1993, appearing in
this Prospectus, have been audited by Deloitte & Touche,
independent certified public accountants, to the extent set
forth in their report appearing elsewhere herein (which
report expresses an unqualified opinion and includes an
explanatory paragraph referring to a potential future
liability relating to a proposed merger), and are included
herein in reliance upon such report thereon given upon the
authority of said firm as experts in auditing and accounting.
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND APPENDICES
COMBINED FINANCIAL STATEMENTS OF PST AND PSHC
Independent Auditors' Report
Combined Balance Sheets at October 3, 1993 and September 27, 1992
Combined Statements of Operations for the three years ended
October 3, 1993
Combined Statements of Shareholders' Equity for the three years
ended October 3, 1993
Combined Statements of Cash Flows for the three years ended
October 3, 1993
Notes to Combined Financial Statements
APPENDICES
Acquisition Agreement
Article 13 of the Georgia Business Corporation Code
<PAGE>
PRINCE STREET HOLDING COMPANY
AND PRINCE STREET TECHNOLOGIES, LTD.
Combined Financial Statements
for the Years Ended October 3, 1993,
September 27, 1992, and September 29, 1991,
and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Boards of Directors and Stockholders of
Prince Street Holding Company and Prince Street Technologies,
Ltd.:
We have audited the accompanying combined balance sheets of
Prince Street Holding Company ("PSHC") and Prince Street
Technologies, Ltd. ("PST") (as so combined "the Company") as
October 3, 1993 and September 27, 1992 and the related
combined statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended
October 3, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such combined financial statements present
fairly, in all material respects, the financial position of the
Company at October 3, 1993 and September 27, 1992 and the results
of its operations and its cash flows for each of the three years
in the period ended October 3, 1993 in conformity with generally
accepted accounting principles.
As discussed in Note 10, the shareholders of the Company have
entered into an acquisition agreement with Interface, Inc.
which provides for PSHC to merge into PST and immediately
thereafter for PST to merge with a subsidiary of Interface, Inc.
Consummation of such merger could cause the Company to incur
certain future liabilities to another potential merger partner.
s/ Deloitte & Touche
DELOITTE & TOUCHE
December 29, 1993
<PAGE>
<TABLE>
PRINCE STREET HOLDING COMPANY
AND PRINCE STREET TECHNOLOGIES, LTD.
COMBINED BALANCE SHEETS
<CAPTION>
- ---------------------------------------------------------------------------------------
October 3, September 27,
1993 1992
--------- ------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 185,381 $ 460,662
Accounts receivable:
Trade 186,002 138,181
Factor 1,248,702 591,600
Rebates and other 525,592 178,334
Income tax refund receivable 58,289
Officers, employees, and affiliate 88,517 223,788
---------- ---------
Total accounts receivable 2,048,813 1,190,192
Inventory 5,213,195 5,218,067
Sample books 440,465 443,565
Prepaid expenses and other current assets 53,106 98,387
---------- ---------
Total current assets 7,940,960 7,410,873
PROPERTY AND EQUIPMENT:
Land 54,200 54,200
Buildings 662,480 648,350
Leasehold improvements 276,229 239,003
Machinery and equipment 4,771,529 3,795,022
Furniture and fixtures 743,949 712,244
Vehicles 156,198 146,611
--------- ----------
6,664,585 5,595,430
Less accumulated depreciation and
amortization 2,441,457 1,796,094
--------- ---------
Property and equipment - net 4,223,128 3,799,336
OTHER ASSETS 156,591 144,843
LOANS TO SHAREHOLDERS 100,000
DUE FROM AFFILIATES 43,794
----------- -----------
$12,320,679 $11,498,846
=========== ===========
October 3, September 27,
LIABILITIES AND SHAREHOLDERS' EQUITY 1993 1992
---------- -------------
CURRENT LIABILITIES:
Accounts payable $ 4,056,832 $ 3,674,508
Accrued payroll and commissions 393,826 357,169
Customer deposits 195,219 334,197
Current maturities of long-term debt 454,499 456,624
Current income tax payable 152,993
Other current liabilities 224,274 297,472
Due to affiliates 29,069
----------- ----------
Total current liabilities 5,506,712 5,119,970
LONG-TERM DEBT - Net of current maturities 3,860,853 4,173,871
DEFERRED INCOME TAXES 188,081 89,968
DEFERRED RENT 19,035 27,303
SHAREHOLDERS' EQUITY:
Prince Street Holding Company common stock,
$.01 par value; 10,000,000 shares
authorized, 1,692,749 shares issued
and outstanding 16,928 16,928
Prince Street Holding Company additional
paid-in capital 774,883 774,883
Prince Street Technologies, Ltd. common stock,
Class B, $.01 par value; 10,000,000 shares
authorized, 191 shares issued and outstanding 2 2
Prince Street Technologies, Ltd. additional
paid-in capital 689,810 689,810
Retained earnings 1,274,375 616,111
Stock subscription receivable (10,000) (10,000)
--------- ----------
Total shareholders' equity 2,745,998 2,087,734
---------- -----------
$12,320,679 $11,498,846
=========== ===========
See notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
PRINCE STREET HOLDING COMPANY
AND PRINCE STREET TECHNOLOGIES, LTD.
COMBINED STATEMENTS OF OPERATIONS
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended
October 3, September 27, September 29,
1993 1992 1991
-------------- ------------- -------------
<S> <C> <C> <C>
NET SALES $ 30,671,460 $27,814,070 $ 28,066,119
COST OF GOODS SOLD 21,013,566 19,413,580 18,560,165
-------------- ------------ --------------
Gross margin 9,657,894 8,400,490 9,505,954
OPERATING EXPENSES:
Selling expenses 5,611,475 5,683,816 4,931,196
General and administrative expenses 2,189,432 2,137,632 1,976,429
-------------- ------------ --------------
Total operating expenses 7,800,907 7,821,448 6,907,625
-------------- ------------ --------------
OPERATING INCOME 1,856,987 579,042 2,598,329
OTHER INCOME (EXPENSES):
Interest (679,530) (662,579) (716,461)
Factoring commissions (261,772) (255,586) (273,062)
Other 51,974 33,172 7,366
-------------- ------------ --------------
Other income (expenses) - net (889,328) (884,993) (982,157)
-------------- ------------ --------------
EARNINGS (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 967,659 (305,951) 1,616,172
INCOME TAXES (PROVISION) BENEFIT:
Current (418,452) (433,013)
Deferred 20,840 80,520 (243,226)
-------------- ------------ -------------
EARNINGS (LOSS) BEFORE EXTRAORDINARY
ITEM 570,047 (225,431) 939,933
EXTRAORDINARY ITEM - Utilization of
operating loss carryforward 88,217 225,946
-------------- ------------ -------------
NET EARNINGS (LOSS) $ 658,264 $ (225,431) $ 1,165,879
============== ============ =============
PRO FORMA EARNINGS (LOSS) PER SHARE OF
COMMON STOCK BEFORE EXTRAORDINARY
ITEM $ 824.96 $ (326.24) $ 1,360.25
============== ============ ==============
PRO FORMA NET EARNINGS (LOSS) PER
SHARE OF COMMON STOCK $ 952.63 $ (326.24) $ 1,687.23
============== ============ ===============
PRO FORMA WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (See Note 10) 691 691 691
See notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
PRINCE STREET HOLDING COMPANY
AND PRINCE STREET TECHNOLOGIES, LTD.
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Prince Street Prince Street
Holding Company Technologies, Ltd.
------------------------------------------------------------------------------------------------
Additional Common Additional Retained Stock
Common Paid-in Stock Paid-in Earnings Subscription
Stock Capital Class B Capital (Deficit) Receivable Total
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1990 $ 16,928 $ 774,883 $ 2 $ 689,810 $ (324,337) $(10,000) $ 1,147,286
Net income 1,165,879 1,165,879
-------- --------- ---- --------- ---------- -------- -----------
BALANCE, SEPTEMBER 29, 1991 16,928 774,883 2 689,810 841,542 (10,000) 2,313,165
Net loss (225,431) (225,431)
-------- --------- ---- ---------- ---------- --------- ----------
BALANCE, SEPTEMBER 27, 1992 16,928 774,883 2 689,810 616,111 (10,000) 2,087,734
Net income 658,264 658,264
-------- --------- ---- --------- ---------- --------- ----------
BALANCE, OCTOBER 3, 1993 $ 16,928 $ 774,883 $ 2 $ 689,810 $1,274,375 $(10,000) $2,745,998
======== ========= ==== ========= ========== ========= ==========
See notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
PRINCE STREET HOLDING COMPANY
AND PRINCE STREET TECHNOLOGIES, LTD.
COMBINED STATEMENTS OF CASH FLOWS
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Year Ended
----------------------------------------------------------------
October 3, September 27, September 29,
1993 1992 1991
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income(loss) $ 658,264 $ (225,431) $ 1,165,879
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation 722,294 641,823 494,815
Amortization of discount on note payable
and deferred loan cost 149,931 133,905 118,971
Loss (gain) on disposals of assets (6,575) 10,604 38,292
Loan forgiven in lieu of consulting fees 118,867
Changes in operating assets and liabilities:
Accounts receivable - trade and other (395,079) (48,397) 155,535
Accounts receivable factor (657,102) 1,801,941 (1,699,388)
Tax refund receivable 58,289 (24,715) (33,574)
Inventory 4,872 (409,040) (13,501)
Sample books 3,100 (131,373) 35,023
Prepaids and other assets 4,735 172,737 (297,457)
Accounts payable 382,324 913,355 338,357
Taxes payable 152,993 (278,822) 278,822
Accrued payroll and commissions 36,657 (58,039) 144,526
Customer deposits (138,978) (248,622) 331,308
Other current liabilities (73,198) 33,641 37,595
Deferred income taxes 98,113 (80,520) 170,488
Deferred rent (8,268) (12,624) 1,741
--------------- ------------ -------------
Net cash provided by
operating activities 1,111,239 2,190,423 1,267,432
INVESTING ACTIVITIES:
Purchases of property and equipment (1,205,381) (1,330,242) (1,022,491)
(Increase) decrease in due from
affiliates 72,863 (174,049) (4,127)
Decrease in investments 20,000
Cash received on asset disposal 65,870 500
Increase (decrease) in short-term
investment 69,096 (69,096)
(Increase) decrease in officer, employee,
and affiliate receivables 135,271 (124,531) (20,277)
-------------- ------------- ---------
Net cash used in investing
activities (931,377) (1,559,226) (1,095,991)
FINANCING ACTIVITIES:
Cash overdraft (637,607) 637,607
Proceeds from long-term debt 564,813
Principal payments on long-
term debt and capital
lease obligations (455,143) (450,544) (398,888)
Repayment of notes payable to shareholder (111,100)
--------------- ------------- ------------
Net cash provided by (used in)
financing activities (455,143) (523,338) 127,619
--------------- -------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 275,281 107,859 299,060
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 460,662 352,803 53,743
------------- ------------- --------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 185,381 $ 460,662 $ 352,803
============ =========== ============
</TABLE>
<PAGE>
PRINCE STREET HOLDING COMPANY
AND PRINCE STREET TECHNOLOGIES, LTD.
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 3, 1993, SEPTEMBER 27, 1992,
AND SEPTEMBER 29, 1991 (continued)
- -----------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest during the years ended October 3,
1993, September 27, 1992, and September 29, 1991 was
approximately $57,000, $539,000 and $607,000, respectively.
Cash paid for income taxes during the years ended October 3,
1993, September 27, 1992, and September 29, 1991 was $0,
approximately $303,000, and $0, respectively.
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
During the year ended October 3, 1993, PST exchanged equipment
with an aggregate net book value of approximately $23,000 for
similar equipment. The exchange was accounted for as a like
kind exchange of similar equipment. PSHC forgave a loan
receivable and the related interest of approximately $132,000
from a shareholder in lieu of consulting services performed by
the shareholder.
During the year ended September 27, 1992, PST sold a piece
of equipment to a vendor in exchange for a credit memo in the
amount of $18,000. PST applied the credit memo against
purchases during the year ended September 27, 1992.
During the year ended September 29, 1991, PST made a deposit
of $123,000 with an affiliated company for the purchase of a
machine. During the year ended September 27, 1992, PST applied
the deposit to the cost of the machine.
<PAGE>
PRINCE STREET HOLDING COMPANY
AND PRINCE STREET TECHNOLOGIES, LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 3, 1993, SEPTEMBER 27, 1992,
AND SEPTEMBER 29, 1991
- -------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Prince Street Technologies, Ltd., ("PST") is a carpet
manufacturer whose products are sold throughout the
United States for commercial use. The combined financial
statements include the financial statements of Prince Street
Holding Company ("PSHC") and PST (as so combined "the Company").
PSHC will be merged into PST in 1994. Such acquisition will
be accounted for as if it were a pooling-of-interests since the
transaction will be between related parties (Note 10).
Inventory - Inventories are stated at the lower of cost or
market. Cost includes materials, direct and indirect labor,
and factory overhead. Market for finished goods and work in
process is net realizable value, and for raw materials is
replacement cost. PST uses the first-in, first-out (FIFO)
method of valuing its inventories.
Sample Books - The cost of manufacturing sample books
is capitalized and amortized on a straight-line basis over
the estimated period of benefit of 12 months.
Property and Equipment - Property, plant, and equipment
is recorded at cost. Additions, renewals, and betterments
are capitalized. Maintenance and repairs are charged to
expense as incurred. Depreciation of property for
financial reporting purposes is generally provided on the
straight-line method over the following useful lives:
Buildings 30 years
Leasehold improvements 7-10 years
Furniture, fixtures, and equipment 7 years
Vehicles 5 years
Income Taxes - Deferred income taxes are provided for
timing differences in recording various items for financial
and income tax reporting purposes. The Company does not expect
the adoption of FASB 109, Accounting for Income Taxes, which
is required for fiscal years beginning after December 15, 1992,
to have a material effect on the consolidated financial
statements.
Cash and Cash Equivalents - Cash and cash equivalents include
cash on hand and highly liquid investments that are readily
convertible to known amounts of cash and have original
maturities of three months or less.
Fiscal Year - The Company's fiscal year is either a 52- or 53-
week period with year-end falling on the Sunday closest to
September 30.
Pro Forma Earnings Per Share - The Company's earnings per share
are computed by dividing net earnings by the pro forma
weighted average outstanding common shares computed after
giving effect to the pending merger described in Note 10 between
PST and PSHC.
Recently Issued Accounting Standards - The FASB has
issued Statement 106, "Employers' Accounting For
Postretirement Benefits Other Than Pensions" and
Statement 112, "Employers' Accounting For Postemployment
Benefits." The Company does not offer any benefits of the
type addressed in these statements and, therefore, does not
expect these pronouncements to have any impact on the Company's
operating results or financial position.
Reclassifications - Certain amounts have been reclassified
to conform to the current year presentation.
2. FACTORED RECEIVABLES
PST maintains a factoring agreement for substantially all
sales. This agreement provides PST immediate payment for
receivables sold to the factor. These payments are for
receivables that are currently due or are advances for
receivables that are due in the future.
PST sold certain receivables to the factor on a recourse
basis. Receivables subject to recourse in the amount of
$144,524 and $255,198 were uncollected by the factor at
October 3, 1993 and September 27, 1992, respectively.
3. INVENTORIES
At October 3, 1993 and September 27, 1992, inventories
comprised the following:
1993 1992
Raw materials $1,727,473 $1,641,584
Work in process 506,822 543,478
Finished goods 2,978,900 3,033,005
---------- ----------
$5,213,195 $5,218,067
========== ==========
4. LONG-TERM DEBT
The following represents PST's long-term debt and capital
lease obligations at October 3, 1993 and September 27, 1992:
<TABLE>
<CAPTION>
1993 1992
------- -------
Subordinated $3,000,000 note payable to Interface, Inc. net
of unamortized discount of $183,126 and $323,116 at October 3,
1993 and September 27, 1992, respectively, maturing October
1994. The stated rate of interest of 8% is payable quarterly and
the
<S> <C> <C>
effective interest rate is 14% $ 2,816,874 $2,676,874
Installment note payable having receivables and certain
equipment as collateral, due September 1995 with monthly
principal payments of $25,000 beginning December 1990. Interest
at 1.5% above prime is payable monthly. The rate of interest was
8% at October 3, 1993 and September 27, 1992, respectively 650,000 950,000
Advances under the additional credit facility with Interface,
Inc., as described below, maturing October 1994. Interest at
1/2% above prime is payable quarterly. The rate of interest was
6.5% at October 3, 1993 and September 27, 1992, respectively $ 563,498 $ 563,498
Capital lease obligations due March 1995 with aggregate
monthly payments of principal and interest of $9,408. The
effective interest rate is 11.28% 205,050 288,402
Note payable with certain equipment as collateral, due April
1994 with monthly principal and interest payments of $4,250. The
rate of interest is 12.1% 28,589 73,163
Capital lease obligation due through April 1995 with
combined monthly principal and interest payments of $2,962. The
effective interest rate is 12.4% 51,341 78,558
------------- -------------
4,315,352 4,630,495
Less current maturities 454,499 456,624
------------- -------------
Long-term debt and capital lease obligations, net of
current maturities $ 3,860,853 $ 4,173,871
============= ============
</TABLE>
In connection with the note payable to Interface, PST issued
stock warrants with an ascribed value of $575,109 to acquire
common stock (see Note 6). Accordingly, the principal
amount of the note payable was discounted by the value
ascribed to the warrants and is reflected in the financial
statements through recording a credit to additional paid-in
capital and a charge to the discount on the note. Such discount
will be amortized to interest expense over the term of the loan.
The note payable to Interface is subordinate to a limited extent
to the secured installment note payable due September 1995 as
well as any advances under the factoring agreement. The
Interface note payable has as collateral certain inventory,
equipment, and buildings and provides for an additional loan
facility of $700,000 upon the occurrence of certain events.
The additional advances bear interest at 1/2% above the prime
rate (6.5% at October 3, 1993) and have the same repayment
terms as the $3,000,000 note. At October 3, 1993 and September
27, 1992, PST had borrowed $563,498 against the additional
facility.
Aggregate maturities of long-term debt and capital
lease obligations are as follows:
Fiscal Year Ending
1994 $ 454,499
1995 3,810,687
1996 50,000
-----------
$ 4,315,186
===========
The Interface loan agreement requires PST to maintain, among
other things, certain levels of net worth and certain financial
ratios, as well as restricts dividends, officers'
compensation, and property additions.
At September 27, 1992, PST was in default of the
following financial statement ratio covenants; current ratio of
notless than 150% - actual ratio 146%; ratio of net income
plus income taxes plus interest expense (net of amortization
of loan discount) to interest expense (net of amortization of
loan discount) not less than 2.75 - actual 0.50; audited
financial statements furnished to lender no later than 90 days
after year end; as well as a covenant not to guarantee
indebtedness of others, and on January 14, 1993 obtained a
waiver of such defaults.
In fiscal 1993, PST exceeded the restrictions on
capital expenditures and lease obligations. Capital
expenditures and new lease obligations limited to $700,000
actual $1,205,381. Subsequent to October 3, 1993, PST
obtained a waiver of such default.
The installment note payable also contains restrictive
covenants requiring maintenance of certain levels of net worth
and certain financial ratios along with limitations on
obligations incurred for capital expenditures. In fiscal
1993, PST exceeded the restrictions on capital
expenditures and lease obligations. Capital expenditures and
new lease obligations were limited to $413,873 - actual
expenditures $1,205,381. Subsequent to October 3, 1993, PST
obtained a waiver of such default.
5. INCOME TAXES
For the year ended October 3, 1993, PST utilized its entire
net operating loss carryforward for book and tax
purposes of approximately $228,000 and $535,000, respectively,
resulting in an extraordinary item of $88,217. At October 3,
1993, PST has an alternative minimum tax credit
carryforward for income tax purposes of approximately
$200,000.
Income tax expense for the years ended October 3, 1993,
September 27, 1992, and September 29, 1993 consists of the
following:
1993 1992 1991
------ ----- ------
Current tax expense:
Federal $(399,148) $(371,108)
State (19,304) (61,905)
--------- ---------
(418,452) (433,013)
Deferred tax expense:
Federal 28,703 $ 80,520 (198,512)
State (7,863) (44,714)
---------- -------- --------
20,840 80,520 (243,226)
---------- -------- ---------
$(397,612) $ 80,520 $(676,239)
========== ======== =========
The actual income tax expense differs from the income tax
expense that would result from the application of the
U.S. Federal Corporate income tax rate of 34% in each of the
three fiscal years as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
Computed tax expense at the U.S. federal corporate
<S> <C> <C> <C>
income tax rate $ (329,004) $104,023 $(549,498)
Increase resulting from:
State income tax, net of federal benefit (17,930) (70,369)
Permanent differences (22,461) (18,359) (20,716)
Other - net (28,217) (5,144) (35,656)
--------- ------- ---------
$ (397,612) $(80,520) $ (676,239)
=========== ========= ===========
</TABLE>
Deferred taxes arise from the recognition of certain items
of revenue and expense for tax purposes in different years from
those in which they are recognized in the financial
statements. The sources of these differences and the tax effect
of each for each of the three fiscal years are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Depreciation $(42,544) $(104,852)
Inventories (6,824) (37,694)
Alternative minimum tax 96,000 $ 80,520 11,888
Workers' compensation (27,915)
Contingency 13,600
Other - net (39,392) (84,653)
-------- --------- ---------
Net deferred income tax (provision) benefit $ 20,840 $ 80,520 $(243,226)
========= ======== =========
</TABLE>
6. SHAREHOLDERS' EQUITY
During 1989, PST was involved in a recapitalization whereby 25%
of the ownership of the Class A common stock of PST was
reissued as Class B common stock which has a 13-to-1 voting
preference. The remaining 500 shares of Class A common stock
are held by PSHC, an entity owned by the Class B common
shareholders of PST. All of the Class B common stock is
subject to shareholder agreements restricting its transfer.
In connection with the $3,000,000 note payable to Interface,
Inc., PST entered into a stock warrant agreement entitling
Interface to acquire common stock representing 20% of the
outstanding common stock of PST for a purchase price of
$3,000,000. The warrant agreement contains antidilution
provisions which prevent the percentage of ownership subject
to purchase from being reduced by issuance of additional stock
or stock options at a price per share ower than certain stated
minimum amounts per share. In addition to the stock warrant
agreement, the shareholders entered into a stock option
agreement granting Interface the right and option to purchase
all, but not less than all, of the capital stock of PST owned by
the shareholders at a purchase price equal to the greater of
$8,750,000 or an amount calculated pursuant to certain formulae
based upon the average net income of PST over the three-year
period ending September 30, 1994. The option is
exercisable at any time from October 1, 1994 to March 31, 1995
(the "Option Period"). The stock option agreement also
granted Interface a right of first refusal if the
shareholders received prior to the commencement of the Option
Period an offer from a third party to purchase their PST
shares. The purchase price for the shares of PST under the
right of first refusal was stated as the lesser of (i) the
aggregate consideration proposed to be paid to the shareholders
in the offer by the third party, and (ii) the greater of (a)
such amounts determined by the application of certain formulae
calculated on PST's (1) net sales and (2) average net income, or
(b) $7,500,000.
The warrant agreement also specifies that the percentage of
common stock purchasable under the warrant agreement for
$3,000,000 will be adjusted downwards or upwards between 2%
and 6% per year if annual earnings, as defined, fall below or
exceed certain threshold amounts. The maximum percentage
purchasable is 40% and the minimum is 15%. For the years
ended October 3, 1993 and September 27, 1992, the percentage of
common stock purchasable under the warrant agreement was
adjusted upwards 5%, based on annual earnings, as defined.
No adjustment of the percentage of ownership occurred based on
annual earnings, as defined, for the year ended
September 28, 1991. The aggregate percentage available
to Interface at October 3, 1993 is 30%.
The warrant agreement is exercisable through July 20, 2000 and
may be redeemed by PST on March 31, 1995 by repayment of
the $3,000,000 note to Interface plus an amount equal to 12% per
annum of $3,000,000 or such lesser amount as shall be
outstanding under the note, which shall increase to 20% per
annum on any portion of such note repaid prior to redemption of
the warrant agreement.
7. STOCK OPTIONS
At October 3, 1993, 83 shares of Class B common stock are
reserved for issuance upon exercise of options granted to
officers and key employees. The options, which were granted
during 1989, have an option price of $10 and expire ten years
from the issue date. At October 3, 1993 and September 27,
1992, all 83 options were outstanding and exercisable. On
November 22, 1993, all 83 stock options were canceled by the
option holders.
8. RENT EXPENSE AND LEASE COMMITMENTS
Rent expense charged against income amounted to
approximately $609,000, $548,000, and $443,000 in 1993,
1992, and 1991, respectively. Deferred rent is provided to
recognize rent expense on the straight-line basis.
Future minimum rental commitments under noncancelable capital
and operating leases at October 3, 1993 are as follows:
Capital Operating
Fiscal Year Ending Leases Leases
1994 $148,457 $530,210
1995 144,831 495,918
1996 141,509
1997 50,290
Thereafter 45,714
------- ----------
Future minimum lease payments 293,288 $1,263,641
==========
Less amount representing interest 36,897
-------
Present value of future minimum
lease payments $256,391
========
Property and equipment includes equipment under capital ease
of $653,736 with accumulated depreciation of $343,476 and
$244,660 at October 3, 1993 and September 27, 1992, respectively.
9. RELATED PARTY TRANSACTIONS
In 1988, PSHC entered into an agreement with a former officer
to purchase common stock and prohibit competition from such
former officer for $180,000, payable $5,000 monthly for 36
months. PST has an equipment maintenance agreement with
a company ("Traccton") which is controlled by the majority
shareholder of PST. During 1991, PST expensed approximately
$96,000 under this maintenance agreement. During 1991, PST
purchased $261,200 of machinery and equipment from Traccton and
made a $123,000 deposit on future equipment purchases. The
deposit was applied against equipment purchases in 1992. PST
purchased $850,000 and $297,612 of machinery and equipment
from Traccton during 1993 and 1992, respectively.
In 1989, PST entered into a consulting agreement with a
shareholder to provide certain consulting services through 1993.
In 1991, PST paid the remaining future amounts due under
the agreement of $150,000 at a discount.
10. SUBSEQUENT EVENT
On December 3, 1993, the shareholders of the Company signed
an acquisition agreement which provided for PSHC to merge into
PST and immediately thereafter for PST to merge with a
subsidiary of Interface, Inc. In the merger of PSHC into PST,
all of the shares held by PSHC will be canceled and the
existing shareholders of PSHC, who are also the remaining
shareholders of PST, will be issued 500 shares of PST Class B
common stock in exchange for the outstanding shares of PSHC.
The number of outstanding shares of PST Class B common stock
after the merger of PSHC and PST will be 691.
On October 13, 1993, Mohawk Industries, Inc. ("Mohawk")
entered into a letter of intent to acquire the Company which
contained certain provisions for liquidated damages payable to
Mohawk if the Company did not close such transaction with
Mohawk. Interface exercised its right of first refusal as
discussed in Note 6 and, therefore, the Company may have
incurred a liability to Mohawk of up to $750,000 under such
liquidated damages provision. Certain shareholders have
agreed to indemnify the Company for up to $350,000 of such
liquidated damages if the Company becomes obligated to
make such payments.
<PAGE>
APPENDIX A
Execution
Counterpart
_________________________________________________________________
INTERFACE, INC.
_____________________________________
December 3, 1993
____________________________________
ACQUISITION
OF
PRINCE STREET TECHNOLOGIES, LTD.
AND
PRINCE STREET HOLDING COMPANY
_________________________________________________________________
<PAGE>
ACQUISITION AGREEMENT
PRINCE STREET TECHNOLOGIES, LTD.
PRINCE STREET HOLDING COMPANY
TABLE OF CONTENTS
Section Page
------- ----
1. MERGER . . . . . . . . . . . . . . . . . . . . . . . ... 2
1.1 Agreement to Cause Merger . . . . . . . . . . . ... 2
1.2 Conversion of Shares . . . . . . . . . . .. . . .. 2
1.3 Payment of Merger Consideration . . .. . . . . . .. 3
1.4 Adjustment to Merger Consideration . . . . . . . .. 4
1.5 Determination of Shareholder EBIT Shortfall
Adjustment Amount . . . . . . . . . . . . . . ... 4
1.6 Resolution of Merger Consideration Dispute . . . .. 5
1.7 Closing . . . . . . . . . . . . . . .. . . . . . .. 5
1.8 Transactions and Documents at Closing . . . . . . .. 6
1.9 Default by One Shareholder . . . . . . . . . . . .. 6
2. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . ... 7
2.1 Purchaser's Access and Inspection . . . . . . . ... 7
2.2 Confidentiality . . . . . . . . . . . . . .. . . .. 7
2.3 Cooperation . . . . . . . . . . . . .. . . . . . .. 8
2.4 Expenses . . . . . . . . . . .. . . . . . . . . .. 8
2.5 Brokers . . . . . . . . .. . . . . . . . . . . . .. 9
2.6 Covenant Against Competition . . . . . . . . . . .. 9
2.7 Termination of Certain Contracts . . . . . . . . .. 11
2.8 Publicity . . . . . . . . . . . . . . . . . . . . .. 11
2.9 Other Proceedings At Closing . . . . . . . . . . .. 11
2.10 Hart-Scott-Rodino Filing . . . . . . . . . . . . .. 11
2.11 Registration Statement . . . . . . . . . . . . . .. 12
2.12 Affiliates of PST and PSHC . . . . . . . . . .. .. 12
2.13 Restriction on Purchaser Shares . . . . . . . . . .. 12
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . ... 13
3.1 Disclosure Memorandum . . . . . . . . . . . . . ... 13
3.2 Organization and Compliance . . . . . . . .. . . .. 14
3.3 Capitalization, Ownership of Shares and
Related Matters . . . . . . . . . . . . . . .. . .. 14
3.4 No Inconsistent Obligations . .. . . . . . . . . .. 16
3.5 Corporate Records . . . .. . . . . . . . . . . . .. 16
3.6 Consents . . . . .. . . . . . . . . . . . . . . .. 16
3.7 No Default .. . . . . . . . . . . . . . . . . . .. 17
3.8 Possession of Franchises, Licenses, Etc . . . . . .. 17
3.9 Financial Statements . . . . . . . . . . . . . . .. 17
3.10 Liabilities . . . . . . . . . . . . . . . . . . . .. 17
3.11 Title to Properties . . . . . . . . . . . . . . . .. 18
3.12 Bank Accounts and Safety Deposit Boxes . . . .. .. 18
3.13 Receivables . . . . . . . . . . . . . . .. . . . .. 18
3.14 Inventories . . . . . . . . . . . .. . . . . . . .. 19
3.15 Returns and Consignments . .. . . . . . . . . . .. 20
3.16 Personal Property . . .. . . . . . . . . . . . . .. 20
3.17 Real Property . .. . . . . . . . . . . . . . . . .. 21
3.18 Authority to Conduct Business and
Intellectual Property Rights . . . . . . . . . . . .24
3.19 Material Contracts . . . . . . . . . . . . . . . .. 24
3.20 Insurance . . . . . . . . . . . . . . . . . . . . .. 25
3.21 Customers and Suppliers . . . . . . . . . . . . . .. 26
3.22 Contingencies . . . . . . . . . . . . . . . . . . .. 26
3.23 Taxes . . . . . . . . . . . . . . . . . . . . .. .. 27
3.24 Parachute Payments . . . . . . . . . . .. . . . .. 28
3.25 Employment and Labor Matters . . .. . . . . . . .. 28
3.26 Employee Benefit Matters . . . . . . . . . . . . .. 29
3.27 Environmental Matters . . . . . . . . . . . . . . .. 32
3.28 Absence of Certain Business Practices . . . . . . .. 33
3.29 Government Reports . . . . . . . . . . . . . . . .. 33
3.30 Agreements and Transactions with Related Parties .. 34
3.31 Absence of Changes . . . . . . . . . . . . . . . .. 34
3.32 Adequacy of Purchaser's Disclosures . . . . . . . .. 37
3.33 Full Disclosure . . . . . . . . . . . . . . . . . .. 38
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . ... 38
4.1 Organization . . . . . . . . . . . . . . . . . ... 39
4.2 Authorization; No Inconsistent Agreements .. . . .. 39
4.3 Full Disclosure . . . . . . . . . . .. . . . . . .. 39
5. CONDUCT OF BUSINESS OF COMPANY PENDING CLOSING . . . ... 39
5.1 Business in the Ordinary Course . . . . . . . . ... 39
5.2 No Material Changes . . . . . . . . . . . .. . . .. 40
5.3 Compensation . . . . . . . . . . . .. . . . . . .. 41
5.4 Employee Benefit Plans . . . .. . . . . . . . . .. 41
5.5 Notice of Change . . . .. . . . . . . . . . . . .. 42
6. CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . 42
6.1 Proceedings and Documents Satisfactory . . . . ... 42
6.2 Representations and Warranties . . . . . .. . . .. 42
6.3 Compliance with Agreements and Conditions . . . . .. 42
6.4 Certificate of Shareholders . . . . . . . . . . ... 42
6.5 Certificate of Incorporation and Bylaws . . . . . .. 43
6.6 Opinion of Counsel . . . . . . . . . . . . . . . .. 43
6.7 Government Consents . . . . . . . . . . . . . . . .. 43
6.8 Other Consents . . . . . . . . . . . . . . . . . .. 43
6.9 Termination of Certain Contracts . . . . . . .. .. 43
6.10 Miscellaneous . . . . . . . . . . . . . .. . . . .. 44
6.11 Financing . . . . . . . . . . . .. . . . . . . .. 44
6.12 Registration Statement . . .. . . . . . . . . . .. 44
7. CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS . . . . . ... 44
7.1 Representations and Warranties . . . . . . . . ... 44
7.2 Resolutions . . . . . . . . . . . . . . . .. . . .. 44
7.3 Payment of Purchase Price . . . . . . . . . . . . .. 44
8. INDEMNITIES . . . . . . . . . . . . . . . . . . . . ... 44
8.1 Indemnification of Purchaser . . . . . . . . . ... 44
8.2 Payment . . . . . . . . . . . . . . . . . .. . . .. 46
8.3 Defense of Claims . . . . . . . . . .. . . . . . .. 46
8.4 Computation of Indemnified Losses . . . . . . . . .. 47
8.5 Action by Company . .. . . . . . . . . . . . . . .. 48
8.6 No Liability or Contribution by Companies . . . . .. 48
9. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS . . ... 48
9.1 Survival . . . . . . . . . . . . . . . . . . . ... 48
10. TERMINATION . . . . . . . . . . . . . . . . . . . . ... 49
10.1 Termination for Certain Causes . . . . . . . . ... 49
11. POWER-OF-ATTORNEY . . . . . . . . . . . . . . . . . ... 49
11.1 Appointment of Agent . . . . . . . . . . . . . ... 49
11.2 Liability of Agent . . . . . . . . . . . .. . . .. 50
11.3 Succession . . . . . . . . . . . . .. . . . . . .. 50
11.4 Irrevocable; Binding on Successors, Etc . . . . .. 50
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . ... 50
12.1 Notices . . . . . . . . . . . . . . . . . . . . ... .51
12.2 Counterparts . . . . . . . . . . . . . . .. . . .. 52
12.3 Entire Agreement . . . . . . . . . .. . . . . . .. 52
12.4 Governing Law . . . . . . . . .. . . . . . . . . .. 53
12.5 Successors and Assigns .. . . . . . . . . . . . .. 53
12.6 Partial Invalidity and Severability . . . . . . .. 53
12.7 Waiver . . .. . . . . . . . . . . . . . . . . . .. 53
12.8 Headings . . . . . . . . . . . . . . . . . . . . .. 54
12.9 Number and Gender .. . . . . . . . . . . . . . . .. 54
12.10 Time of Performance . . . . . . . . . . . . . . .. 54
12.11 Definition of Knowledge . . . . . . . . . . . . .. 54
13. INDEX TO DEFINITIONS . . . . . . . . . . . . . . . . ... 54
<PAGE>
ACQUISITION AGREEMENT
THIS AGREEMENT is made this 3rd day of December, 1993,
by and among Interface, Inc., a Georgia corporation
("Purchaser"), and Robert S. Weiner, Randall J. Hatch,
Nancy O'Donnell, John O'Donnell, Jacqueline A. Colando,
Traccton Corp. ("Traccton"), Prince Street Holding Company
(collectively the "PST Shareholders") and Steven C. Andrade,
and Robert D. Williams (collectively with the PST
Shareholders, the "PST/PSHC Shareholders");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the total authorized share capital of Prince
Street Technologies, Ltd., a Georgia corporation ("PST"),
consists of 10,000,000 shares of Class A common stock and
10,000,000 shares of Class B common stock, both with a par
value of $.01 per share, of which 500 and 191 shares of
Class A common stock and Class B common stock, respectively,
are presently issued and outstanding (collectively the
PST Shares", and together with the Additional PST Shares,
as hereinafter defined, the "Shares"); and
WHEREAS, the PST Shareholders are the record and beneficial
owners of all the PST Shares; and
WHEREAS, the total authorized share capital of Prince Street
Holding Company, a Georgia corporation ("PSHC", and together with
PST, individually a "Company" and collectively the "Companies,"
which terms shall include PST as the surviving corporation in the
mergers provided for herein), consists of 10,000,000 shares of
common stock, with a par value of $.01 per share, of which
1,692,749 shares are presently issued and outstanding (collectively the
"PSHC Shares"), 10,000,000 shares of Class B common stock, with
a par value of $.01 per share, of which no shares are
presently issued and outstanding, and 1,000,000 shares of
preferred stock, with a par value of $.01 per share, of
which no shares are presently issued and outstanding; and
WHEREAS, the PST/PSHC Shareholders, other than
PSHC and Traccton, are the record and beneficial owners of
all of the PSHC Shares (the PST/PSHC Shareholders other than
PSHC being hereinafter referred to as the "Shareholders");
and
WHEREAS, PST and Purchaser are parties to that certain
Stock Subscription Warrant No. W-1 dated July 20, 1990,
whereby, as of the date hereof, Purchaser is entitled to
subscribe to and purchase from PST so much of the Class A
common stock and Class B common stock of PST that after the
exercise of such warrant would entitle Purchaser to own 30%
of the outstanding common stock of PST on a fully diluted
basis (the "Warrant"); and
WHEREAS, the Shareholders have provided Purchaser with a
copy of a letter of intent dated October 13, 1993,
from Mohawk Industries, Inc. (the "Mohawk Letter")
providing for a total valuation of the Companies of
$15,000,000 on a fully-diluted basis, subject to adjustment
(the "Total Company Amount"); and
WHEREAS, the PST/PSHC Shareholders' collective portion
of the Total Company Amount on a fully-diluted basis is 70%
of the Total Company Amount, or $10,500,000 in the absence
of any adjustments; and
WHEREAS, in reliance on and subject to the terms,
conditions, representations, warranties, covenants and
agreements herein contained, Purchaser desires to acquire
the PST/PSHC Shareholders' interests in PST and PSHC from
the PST/PSHC Shareholders, and the PST/PSHC Shareholders
desire to dispose of such interests on a tax free basis,
subject and pursuant to this Agreement.
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements herein
contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. MERGER.
1.1 AGREEMENTS TO CAUSE MERGERS. (a) On or before
the Closing Date (as defined in Paragraph 1.3 below), and
prior to the Closing (as defined in Paragraph 1.3
below), the PST/PSHC Shareholders shall take such actions as
shall be necessary to cause PSHC to be merged with and into
PST (hereinafter referred to as the "PST/PSHC Merger.") PST
shall be the surviving corporation in the PST/PSHC Merger,
and the PST/PSHC Merger shall be consummated in accordance
with an Agreement and Plan of Merger in the form
attached hereto as Exhibit A (the "PST/PSHC Merger
Agreement"). The PST/PSHC Shareholders shall cause PST and
PSHC to execute and deliver the PST/PSHC Merger Agreement,
with the approval of their respective Boards of Directors
and shareholders, on or before the Closing Date and prior
to the consummation of the PST/PSHC Merger. The PST/PSHC
Merger Agreement shall require the filing of Articles of
Merger or Certificate of Merger with the Secretary of State of
Georgia and the effectiveness of the PST/PSHC Merger at the
time of such filing. The PST/PSHC Shareholders shall cause
such filing and effectiveness (the "PST/PSHC Closing") to be
accomplished prior to the Effective Time of the Merger (as
defined in subparagraph 1.1(b) below). The PST/PSHC
Merger Agreement shall provide that upon consummation of
the PST/PSHC Merger, by virtue of the PST/PSHC Merger and
without any action on the part of any record holder of PST
or PSHC:
(i) all of the PST Shares held by PSHC shall be
cancelled and retired and shall cease to exist and
no shares of PST or other consideration shall be
delivered in respect thereof;
(ii) all of the PST Shares held by shareholders of PST
other than PSHC issued and outstanding immediately
prior to the PST/PSHC Closing shall continue
unchanged and shall continue to evidence the same
number of shares of common stock of PST as the
surviving corporation in the PST/PSHC Merger; and
(iii) all of the PSHC Shares issued and outstanding
immediately prior to the PST/PSHC Closing shall be
converted in the aggregate into 500 shares of Class
B common stock of PST (the "Additional PST
Shares"). In exchange for each such PSHC Share,
each of the shareholders of PSHC shall be entitled
to receive a portion of the Additional PST Shares
in accordance with Attachment A to the form of
PST/PSHC Merger Agreement attached to this
Agreement as Exhibit A.
(b) At the Closing, upon the terms, conditions,
representations, warranties, covenants and agreements
contained herein, Purchaser and the Shareholders
shall take such actions as shall be necessary to cause
PST Acquisition Corp., a Georgia corporation ("Sub"),
which is, or will be, a wholly-owned subsidiary of
Purchaser to be merged with and into PST, as the
surviving corporation in the PST/PSHC Merger. PST shall be
the surviving corporation in such merger (hereinafter
referred to as the "Merger"), and the Merger shall be
consummated in accordance with an Agreement and Plan of
Merger in the form attached hereto as Exhibit B, which
shall be completed in accordance with this Agreement
and executed and delivered at Closing (the "Merger
Agreement"), and which shall require the filing of Articles
of Merger or Certificate of Merger with the Secretary of
State of Georgia and the effectiveness of the Merger at
the time of such filing on the Closing Date (the "Effective
Time of the Merger").
1.2 CONVERSION OF SHARES IN MERGER OF PST AND SUB.
Upon the consummation of the Merger at Closing, by virtue of the
Merger and without any action on the part of any record holder of
PST or Sub:
(a) each share of the common stock of Sub
issued and outstanding immediately prior to the Closing
shall be converted into the right to receive continue
unchanged and shall continue to evidence the same number of
shares of the Class B common stock of PST as the surviving
corporation in the Merger (the "Surviving Corporation");
and
(b) all of the PST Shares and the Additional PST
Shares (collectively the "Converted Shares") shall in the
aggregate be converted into the right to receive Ten
Million Five Hundred Thousand and No/100 Dollars
($10,500,000) in the aggregate (the "Merger
Consideration"), subject to adjustment as provided in
Paragraph 1.4 below, and payable as provided in Paragraph
1.3 below. In exchange for each Converted Share, former
shareholders of PST (including former shareholders of PSHC
becoming shareholders of PST in the PST/PSHC Merger)
shall be entitled to receive a portion of the aggregate
Merger Consideration in accordance with Exhibit C, attached
to this Agreement.
1.3 PAYMENT OF MERGER CONSIDERATION. Subject
to the following provisions of this Paragraph 1.3,
the Merger Consideration shall be payable in shares of Class
A Common Stock of Purchaser ("Purchaser Shares"). For
purposes of paying Merger Consideration in Purchaser
Shares, each Purchaser Share shall be valued at the average
of closing sale prices for Purchaser Shares as reported on
the NASDAQ National Market System for the 60 trading days
immediately preceding the Closing Date (the "Closing Date
Price"). Notwithstanding the foregoing, (a) Purchaser shall
have the option to pay up to 20% of the aggregate Merger
Consideration in cash, with the balance payable in Purchaser
Shares, such option to be exercised by notice to the
Shareholders given not later than 5 days prior to Closing and
specifying the percentage of the Merger Consideration that
Purchaser will pay in cash, and (b) if the Closing Date
Price is less than $12.00 per share, Purchaser shall be
entitled to pay the entire Merger Consideration at Closing in
cash. If the Merger Consideration is paid by a combination of
cash and Purchaser Shares as set forth in clause (a) of
the preceding sentence, each Converted Share shall be
converted upon consummation of the Merger into the right to
receive cash and Purchaser Shares in the same ratio as each
of the other Converted Shares, provided, however, that any
fractional shares that would otherwise be issuable based
upon the ratable portion of the Merger Consideration to be
paid in Purchaser Shares, may be paid in cash in lieu of
issuing any fractional shares of Purchaser. At or before
Closing, the PST/PSHC Shareholders shall cause PST, as
the surviving corporation in the PST/PSHC Merger, and
Purchaser shall cause Sub, to enter into, with the
approval of their respective Boards of Directors, the
Merger Agreement in substantially the form of Exhibit B
hereto, duly completed in a manner consistent with this
Agreement and providing for conversion of the Converted Shares
into the right to receive Purchaser Shares, to receive a
combination of Purchaser Shares and cash, or to receive
cash, as designated by Purchaser consistent with this
Paragraph 1.3, the Shareholders and Purchaser shall duly
approve the Merger in their respective capacities as
shareholders of the parties to the Merger Agreement, and the
Shareholders and Purchaser shall cause the Merger to become
effective on the Closing Date by the filing of Articles of
Merger or a Certificate of Merger with the Secretary of State
of Georgia.
1.4 ADJUSTMENT TO MERGER CONSIDERATION. If
PST's Adjusted EBIT for the fiscal year ended October 3,
1993 ("1993 EBIT") is less than $2,060,371, the Merger
Consideration shall be subject to adjustment by reducing the
Merger Consideration by the amount, if any, of the
Shareholder EBIT Shortfall Adjustment Amount. As used
herein, "Shareholder EBIT Shortfall Adjustment Amount"
shall mean an amount equal to 70% of the result of (i) 6.8,
multiplied by (ii) $2,060,371 minus 1993 EBIT. As used
herein, "Adjusted EBIT", shall mean PST's earnings before
interest and taxes ("EBIT"), calculated in accordance with
generally accepted accounting principles consistently
applied, with the adjustments to EBIT set forth on Exhibit
1.4. If the total Merger Consideration shall be reduced in
accordance with the foregoing, the allocable portion of
the Merger Consideration into which each Shareholder's
Converted Shares are convertible, as set forth on Exhibit C,
shall be correspondingly reduced by such Shareholder's
ratable portion of the Shareholder EBIT Shortfall Adjustment
Amount, determined on the basis of the amount of Merger
Consideration such Shareholder would receive in the absence
of an adjustment, as compared to the total Merger
Consideration in the absence of an adjustment, as set forth
on Exhibit C.
1.5 DETERMINATION OF SHAREHOLDER EBIT
SHORTFALL ADJUSTMENT AMOUNT. The Shareholder EBIT
Shortfall Adjustment Amount, if any, shall be determined as
follows. Not later than December 17, 1993 (provided
Purchaser timely responds to any loan confirmation request
delivered to it pursuant to PST's year-end audit), the
Shareholders shall cause PST to provide to Purchaser PST's
audited financial statements for the fiscal year ended
October 3, 1993 and prepared in accordance with generally
accepted accounting principles consistently applied,
together with an unqualified audit opinion thereon of
Deloitte & Touche in standard form, and together with
schedules certified by PST showing PST's computation of
1993 EBIT. Upon receipt thereof, Purchaser and the
Shareholders shall each be entitled to review all work papers
and documents of the Shareholders, PST, PSHC, and, as
soon as practicable, Deloitte & Touche relating to the
preparation of such audited financials and computation of
1993 EBIT. Unless within 7 business days after receipt of
the financial statements, schedules and other documents
referred to above including but not limited to work papers
prepared by or for Deloitte & Touche, Purchaser (i) gives
notice, with reasonable specificity, that it disputes PST's
computation of 1993 EBIT and proposes a greater adjustment to
the amount of Merger Consideration than any shown on PST
computations, or (ii) gives notice that Purchaser has not
received the schedules, work papers and documents
required to be provided, or other information that
Purchaser has reasonably requested be provided, such PST
computations shall be binding on all parties. In the
event Purchaser gives notice in accordance with (ii) above,
the time periods in Paragraph 1.6 below shall be tolled and
suspended until such information is provided to Purchaser
in which case Purchaser shall have an additional 5
business days from the delivery of all requested
information, to provide the notice in (i) above.
1.6 RESOLUTION OF MERGER CONSIDERATION DISPUTE.
If Purchaser gives notice to the Shareholders that it
disputes PST's computation of 1993 EBIT as provided in
Paragraph 1.4 and proposes an adjustment to the amount of the
Merger Consideration, Purchaser and the Agent shall
cooperate in good faith with the purpose of reaching
agreement in writing on Purchaser's proposed adjustment. If
they cannot agree on or before the fifteenth (15th) business day
after the Purchaser gives notice of its proposed adjustment to
the Merger Consideration, then either Purchaser or the Agent
may give written notice to the other that it proposes
to arbitrate Purchaser's proposed adjustment, and either
party may then submit the disputed adjustments to
arbitration by the Atlanta office of KPMG Peat Marwick,
or, if such firm is unable or unwilling to serve, such
other firm of nationally recognized certified public
accountants as shall be independent of and reasonably
satisfactory to Purchaser and the Agent (the "Independent
Accountant"). All work papers and related records of
Deloitte & Touche, PST and PSHC shall be made available to
the Independent Accountant. The Independent Accountant
shall determine whether any of Purchaser's proposed
adjustments are required under the principles applicable to
computation of the amount of the Merger Consideration as
provided herein and issue its report within forty-five (45)
business days after either party notifies the other that
it proposes to arbitrate. The determination of the
Independent Accountant will be finaland binding upon
the parties. The Shareholders and Purchaser shall each
pay one-half of the reasonable fees of the Independent
Accountant in serving as arbitrator hereunder.
1.7 CLOSING. The closing of the transactions
contemplated in this Agreement (the "Closing") shall take
place at the principal offices of Kilpatrick & Cody in
Atlanta, Georgia, or such other place in Atlanta, Georgia,
as is selected by Purchaser, at 10:00 a.m. local time on
the second business day after the date on which (i) all
conditions to closing contained in Sections 6 and 7 have
been satisfied, and (ii) any dispute between the parties
regarding any proposed adjustment to the Merger
Consideration as provided in Paragraph 1.4 shall have been
resolved, but in no event later than the date which is 120
days after the Registration Statement has been filed, and
by such date all such conditions shall be satisfied (the
"Closing Date"); provided, however, the parties hereto agree
to use their best reasonable efforts to have the Closing on
or before January 31, 1994; provided further, however,
that if notwithstanding the reasonable efforts of the
parties to have the Registration Statement become effective
within the period provided above, the Registration
Statement has not become effective within 120 days after
its filing, but all other conditions to Purchaser's
obligation are satisfied, Purchaser shall be required to
proceed with Closing on the date which is 120 days after
the Registration Statement is filed and pay all of the
Merger Consideration at Closing in cash.
1.8 TRANSACTIONS AND DOCUMENTS AT CLOSING.
(a) At the Closing, each PST/PSHC Shareholder shall
deliver to Purchaser certificates representing all PST
Shares, Additional PST Shares, and PSHC Shares held (or
held prior to the PST/PSHC Merger) by such party, duly
endorsed for transfer, with all required stock transfer
stamps, if any, affixed, and upon such delivery of such
certificates by all PST/PSHC Shareholders, the parties shall
cause the Effective Time of the Merger to occur, and
Purchaser shall cause the Surviving Corporation to pay to
the Shareholders the Merger Consideration, (1) by wire
transfer of immediately available funds, to an Atlanta,
Georgia, account to be designated by the Agent in writing,
of any portion of the Merger Consideration payable in
cash, and (2) delivery of certificates representing all
Purchaser Shares issuable in satisfaction of all or a
portion of the Merger Consideration, in either case in
accordance with Paragraphs 1.3, 2.11, 2.13 and the other
provisions of this Agreement. Purchaser Shares into which
Converted Shares shall be converted pursuant to the Merger
shall be deemed to have been issued at the Effective Time
of the Merger. All deliveries, payments and other
transactions and documents relating to the Closing shall
be interdependent and none shall be effective unless and
until all are effective (except for any of the same as to which
the party entitled to the benefit thereof has waived
satisfaction or performance thereof as a condition precedent
to Closing).
(b) From time to time and at any time, at
Purchaser's request, whether on or after the Closing Date,
and without further consideration, the PST/PSHC Shareholders
or their Agent shall, at the expense of the PST/PSHC
Shareholders, execute and deliver such further documents and
instruments of conveyance and transfer and shall take such
further reasonable actions as may be necessary or
convenient, in the opinion of Purchaser, to transfer and convey
to the Surviving Corporation all of their right, title and
interest in and to the Shares, free and clear of any and
all liens, caims, charges and encumbrances, or as may
otherwise be necessary or convenient to carry out the
intent of this Agreement.
1.9 Default by One Shareholder. If any
PST/PSHC Shareholder fails or refuses to deliver to
Purchaser or the Surviving Corporation, at the Closing as
provided in Paragraph 1.7 hereof, any of the Shares to be
converted or cancelled by such party hereunder, then such
failure or refusal shall not relieve the other PST/PSHC
Shareholders of any obligation under this Agreement, and
Purchaser, at its option and without prejudice to its rights
against such defaulting party, may either proceed with the
Merger, or refuse to proceed and thereby terminate all of
its obligations hereunder, without any liability to any of
the PST/PSHC Shareholders as a result of such termination.
2. ADDITIONAL AGREEMENTS.
2.1 PURCHASER'S ACCESS AND INSPECTION. The PST/PSHC
Shareholders shall provide Purchaser and its authorized
representatives full access during normal business hours from and
after the date hereof until the Closing to all of the Companies'
assets, properties, contracts, commitments, books and records for
the purpose of making such investigation as Purchaser may desire,
including, without limitation, having surveys made of the
Companies' Real Property (as defined in Paragraph 3.17(a) below),
and the Shareholders shall furnish Purchaser such information
concerning the Companies' affairs as Purchaser may request. The
PST/PSHC Shareholders shall cause the personnel of each Company to
assist Purchaser in making such investigation and shall cause the
counsel, accountants, engineers, consultants and other non-employee
representatives of each Company to be reasonably available to
Purchaser for such purposes. Purchaser agrees that it will not
require access to or assistance from any personnel of the Companies
or any of their counsel, accountants, engineers, consultants and
other non-employee representatives other than as reasonably
necessary and customary in performing due diligence in connection
with a business combination. No investigation made heretofore or
hereafter by Purchaser shall limit or affect the representations or
warranties of the Shareholders hereunder, each of which shall
survive any such investigation.
2.2 CONFIDENTIALITY. If the transactions contemplated
herein are not consummated, then Purchaser shall return to the
Shareholders all documents and other written information furnished
by the Shareholders or any Company to Purchaser pursuant to this
Agreement, and Purchaser shall not reveal to any third party any of
the Companies' trade secrets or confidential business information
learned as a result of disclosures made pursuant to this Agreement,
provided that the obligations of Purchaser hereunder
shall not apply to:
(a) any information which was known to Purchaser prior to
its disclosure by the Shareholders or a Company;
(b) any information which was in the public domain (it
being agreed that information disclosed by Companies to Mohawk
Industries, Inc., subject to a confidentiality agreement is not,
merely because of such disclosure, in the public domain prior to
the disclosure thereof by the Shareholders or a Company to
Purchaser;
(c) any information which comes into the public domain
through no fault of Purchaser; or
(d) any information which is disclosed to Purchaser by
a third party (which term shall not include the counsel,
accountants, employees and other non-employee representatives of a
Company or the Shareholders) having a legal right to make such
disclosure.
Nothing herein relieves any party hereto of any duties
pursuant to any other agreement.
2.3 COOPERATION. The parties shall cooperate fully with
each other and with their respective counsel and accountants in
connection with any steps required to be taken as part of their
respective obligations under this Agreement, and all parties shall
use their best efforts to consummate the transactions contemplated
herein and to fulfill their obligations hereunder, including,
without limitation, causing to be fulfilled at the earliest
practical date the conditions precedent to the obligations of the
parties to consummate the transactions contemplated hereby.
Without the prior written consent of the other parties, no party
hereto shall take any intentional action that would cause the
conditions precedent to the obligations of the parties hereto to
effect the transactions contemplated hereby not to be fulfilled,
including, without limitation, taking or causing to be taken any
action which would cause the representations and warranties made by
such party herein not to be true, correct and complete as of the
Closing.
2.4 EXPENSES. Except as noted below, the expenses incurred
by Purchaser in connection with the authorization, preparation,
execution and performance of this Agreement, including, without
limitation, all fees and expenses of agents, representatives,
counsel and accountants for Purchaser, shall be paid by Purchaser.
PST may pay up to $500,000 of valid and verifiable bona fide
expenses (including brokerage commissions, if any to Bollinger,
Wells, Lett & Co., Inc., but not any such brokerage commissions
based on any consideration to the PST/PSHC Shareholders in excess
of $12,000,000) associated with the negotiation and closing of this
Agreement, whether incurred by the Shareholders or either Company.
Such $500,000 of expenses may also include attorney fees and
accounting fees associated with negotiation of the Mohawk Letter.
All other expenses incurred by the Shareholders or the Companies in
connection with the negotiation, authorization, preparation,
execution and performance of this Agreement or the negotiation of
the Mohawk Letter shall be paid by the Shareholders.
Notwithstanding any of the foregoing to the contrary, Purchaser and
Shareholders shall each pay fifty percent (50%) of all costs and
out-of-pocket expenses (including, but not limited to, fees and
expenses of Purchaser's attorneys, accountants and other
professionals, and filing fees paid to the Commission or
otherwise), incurred by Purchaser with respect to the preparation
and filing of the Registration Statement and any other costs and
expenses related to the registration of the Purchaser Shares
pursuant to Paragraph 2.11.
2.5 BROKERS. Each party hereto represents and warrants
that, with the exception of Bollinger, Wells, Lett & Co., Inc.,
which has acted for the Shareholders and PST, no broker or finder
has acted on its behalf in connection with this Agreement or the
transactions contemplated herein. Each party shall indemnify the
other parties and hold them harmless from and against any and all
claims or demands for commissions or other compensation by any
broker, finder or similar agent claiming to have been employed by
or on behalf of such party; provided that the Shareholders shall
indemnify Purchaser, Sub, PST, PSHC and the Surviving Corporation
and hold them harmless for any such commissions or compensation to
Bollinger, Wells, Lett & Co., Inc. in excess of that permitted to
be paid pursuant to Paragraph 2.4.
2.6 COVENANT AGAINST COMPETITION.
(a) In order to induce Purchaser to enter into this
Agreement and acquire the Shares as provided herein, and in partial
consideration thereof, Robert S. Weiner ("Weiner") agrees that, for
a period beginning on the Closing Date and ending on the fourth
(4th) anniversary date thereof, he will not, without the prior
written consent of Purchaser, for his own account or jointly with
another, directly or indirectly, for or on behalf of any
individual, partnership, corporation or other legal entity, as
principal, agent or otherwise:
(i) engage in, consult with, or own,
control, manage or otherwise participate in
the ownership, control or management of a
business engaged in the manufacture, purchase
for resale, sale, or distribution within any
part of the Company Territory (as defined in
subparagraph (c) below) of broadloom carpet
(including without limitation tufted carpet
in any roll width, including but not limited
to 6 foot widths) or carpet tile
("Products"), except as an employee and on
behalf of PST, Purchaser, Sub or any
affiliated entities of Purchaser, and except
that this provision shall not prohibit Weiner
from engaging in, consulting with, or owning,
controlling, managing or otherwise
participating in the ownership, control or
management of a Residential Manufacturer (as
defined in subparagraph (c) below); or
(ii) solicit, call upon, or attempt to
solicit the patronage of any individual,
partnership, corporation or other legal
entity having an office or place of business
within the Company Territory and to whom PST
sold any Products during the 12 month period
immediately preceding the Closing Date, for
the purpose of obtaining the patronage of any
such individual, partnership, corporation or
other legal entity for the purchase of any
Products from anyone other than PST, except
as an employee and on behalf of PST,
Purchaser, Sub or any affiliated entities of
Purchaser; or
(iii) solicit or induce, or in any
manner attempt to solicit or induce, any
person employed by either Company to leave
such employment, whether or not such
employment is pursuant to a written contract
with either Company or otherwise.
(b) Each Shareholder agrees that he will not, without
the prior written consent of Purchaser, for his own account or
jointly with another, directly or indirectly, for or on behalf of
any individual, partnership, corporation or other legal entity, as
principal, agent or otherwise, use or authorize any other person to
use the name "Prince Street" or "Prince Street Technologies", or
any name similar thereto, in connection with the manufacture,
assembly, purchase for resale, sale, or distribution of any
Products.
(c) For the purposes of this Paragraph 2.6, the term
"Company Territory" means the continental United States and Canada,
which is the territory within which PST has offices and conducts
its business and within which PST's customers and accounts are
located and PST solicits substantially all of its patronage. For
the purposes of this Paragraph 2.6, the term "Residential
Manufacturer" shall mean an individual, partnership, corporation or
other legal entity which manufactures, sells or distributes
broadloom carpet solely and exclusively for use in the residential
end user market (the "Residential Market") and which neither
manufactures, sells or distributes any Products for use in any
market other than the Residential Market, nor controls, is
controlled by, or is under common control with, any individual,
partnership, corporation or other legal entity which manufactures,
sells or distributes any Products for use in any market other than
the Residential Market.
(d) Notwithstanding anything herein to the contrary (i)
it shall not be a breach of the covenants contained in Paragraph
2.6(a) for any Shareholder to own not more than two percent (2%) of
the capital stock of any corporation whose shares are publicly
traded, and (ii) the covenants described in this Paragraph 2.6
shall apply only if the transactions contemplated by this Agreement
are consummated at the Closing.
(e) If .58 of the aggregate Merger Consideration, after
any adjustment as provided in Paragraph 1.4, is less than $5
million, then Purchaser may, at its option, elect to enter into an
employment agreement with Weiner, which guarantees a minimum annual
compensation of $150,000 for a four year period commencing the
Closing Date and provides for Weiner to perform such duties as are
defined by PST's Board of Directors and Weiner agrees to enter into
such employment as a condition to the Closing. Purchaser agrees to
negotiate in good faith in order to cause Weiner to be paid a
salary pursuant to such employment agreement that is commensurate
with the duties he provides to PST and generally comparable to
similarly situated executives of Purchaser. If Purchaser elects to
enter into such employment agreement, the provisions of this
Section 2.6 shall cease to apply at such time as the employment
agreement is terminated by PST without cause and not before. The
provisions of this Section 2.6 shall not apply if Purchaser elects
not to enter into such employment agreement with Weiner.
2.7 TERMINATION OF CERTAIN CONTRACTS. If the transactions
contemplated herein are consummated at the Closing, then the
Companies shall terminate on or prior to Closing, without further
liability of the Companies to any Shareholder or to any other party
(except to the extent such liability was accrued prior to or
relates to a period prior to such termination), all contracts
presently in force between the Companies and any Shareholder or any
relative or affiliate of any Shareholder.
2.8 Publicity. All press releases and other public
announcements respecting the subject matter hereof shall be made
only with the mutual agreement of the parties hereto; provided,
however, that Purchaser is a publicly held company and may make
such announcements and disclosures as may be necessary or
convenient to comply with the rules and regulations of the National
Association of Securities Dealers, Inc. and any and all applicable
federal and state securities laws; provided, further, with respect
to any public announcement of the subject matter hereof, Purchaser
agrees to use its best efforts consistent with such rules,
regulations and laws to discuss the contents of such announcement
with the Agent to obtain his comments prior to making such
announcement.
2.9 OTHER PROCEEDINGS AT CLOSING. At the Closing,
Purchaser shall cancel the Warrant without exercise.
2.10 HART-SCOTT-RODINO FILING. Within 15 days after the
execution and delivery of this Agreement, each party that is
required to file a notification report under the rules and
regulations promulgated under the Hart-Scott-Rodino Antitrust
Improvements Act shall file such notification report in all places
and with all parties as so required thereunder.
2.11 REGISTRATION STATEMENT.
(a) As promptly as practicable following the execution
and delivery of this Agreement, Purchaser shall file with
the Securities and Exchange Commission (the "Commission") a
Registration Statement (the "Registration Statement") on
Form S-4 for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act") the issuance
of Purchaser Shares pursuant to the Merger. Purchaser and
the PST/PSHC Shareholders shall, and the PST/PSHC
Shareholders shall cause PST to, (i) use all reasonable
efforts to have the Registration Statement declared
effective under the Securities Act at the earliest
practicable time; and (ii) prepare and file any other
filings required under the Securities Act, the Securities
Exchange Act of 1934, as amended, or any other federal or
state securities or blue sky laws relating to the Merger and
the other transactions contemplated hereby at the earliest
practicable time.
(b) The information to be provided by PST, PSHC, and
the Shareholders for use in the Registration Statement shall
not contain any untrue statement of any 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, not misleading at
the time the Registration Statement or other documents are
filed with the Commission, and at the time the Registration
Statement is declared effective by the Commission.
2.12 AFFILIATES OF PST AND PSHC. Prior to the time the
Registration Statement is declared effective by the Commission,
PST, PSHC and the Shareholders shall deliver to Purchaser a letter
identifying all persons whom they believe are "affiliates" of PST
or PSHC as that term is used in Rule 145 under the Securities Act
(the "Affiliates").
2.13 RESTRICTION ON PURCHASER SHARES.
(a) Each Shareholder agrees that, on any single day
during the period commencing on the Closing Date and continuing
through the third anniversary date thereof (the "Restriction
Period"), the Shareholder shall not sell or otherwise dispose of
any Purchaser Shares in excess of the Day's Maximum Sale Number in
effect for that particular day. As used herein, "Day's Maximum
Sale Number" shall mean a number of Purchaser Shares that changes
daily and is determined separately for each day in the Restriction
Period on which any Shareholder proposes to sell or dispose of
Purchaser Shares as the number equal to (i) 100,000 shares (the
"Base Monthly Number"), minus (ii) the aggregate number of
Purchaser Shares sold or disposed of by all of the Shareholders
during the 30 calendar day period ending on the day before the day
for which the Day's Maximum Sale Number is being computed;
provided, however, that in computing the Day's Maximum Sale Number
for any day during the period commencing with the Closing Date and
continuing through the 30th calendar day after the Closing Date,
the Base Monthly Number shall be deemed to be 250,000 shares,
instead of 100,000 shares. The Day's Maximum Sale Number for any
day during the Restriction Period shall constitute a maximum limit
on the aggregate sales of Purchaser Shares by all of the
Shareholders on that day. If more than one Shareholder proposes to
sell or dispose of Purchaser Shares on the same day during the
Restriction Period, Purchaser shall be entitled to accept aggregate
requests for transfers up to the Day's Maximum Sale Number for that
day on a "first come - first served" basis or any other reasonable
basis. The foregoing restriction shall apply whether or not Rule
145 under the Securities Act or any other restriction on transfer
applies to such Shareholder or any other Shareholder, whether or
not such Shareholder or any other Shareholders are "affiliates" of
Purchaser as defined in Rule 144 under the Securities Act, and
notwithstanding that the Purchaser Shares may not be restricted
securities within the meaning of Rule 144. Anything in this
Agreement to the contrary notwithstanding, it is acknowledged and
agreed that this Paragraph 2.13 shall not be interpreted or
construed as being in lieu of any volume limitations or other
restrictions provided in Rule 145 or any successor provision
thereto; and each Shareholder acknowledges and understands that
Rule 145, as the same may now be in effect or hereafter amended,
may impose on such Shareholder and the Purchaser Shares additional
or different volume limitations on sales of Purchaser Shares. Each
Shareholder agrees to comply with any applicable restrictions of
Rule 145, and further agrees that he, she or it will not offer to
sell, sell or otherwise dispose of any of the Purchaser Shares
issued to such Shareholder except pursuant to an effective
registration statement or another exemption from registration
requirements of the Securities Act, and in compliance with all
applicable requirements of Rule 145.
(b) With respect to any such sale or disposition any
Shareholder shall make in accordance with the preceding
subparagraph (a) (and, if applicable, Rule 145), such Shareholder
will furnish to Purchaser upon request such information as its
counsel may deem necessary to assure that such sale or disposition
is made in full compliance with this Agreement and such rule.
(c) There shall be placed on all certificates
representing Purchaser Shares issued to the Shareholders pursuant
to this Agreement appropriate restrictive legends referencing the
restrictions of this Agreement and of applicable securities laws.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS.
To induce Purchaser to enter into this Agreement, the
transactions contemplated herein, and to issue the Purchaser
Shares, the Shareholders jointly and severally represent, warrant
and covenant to Purchaser as follows:
3.1 DISCLOSURE MEMORANDUM. The Shareholders have
heretofore caused the Companies to deliver to Purchaser a memoran-
dum (the "Disclosure Memorandum") containing certain information
regarding the Companies, the PST Shares, and the PSHC Shares as
indicated at various places in this Agreement; in each case all
disclosures in the Disclosure Memorandum relate solely to PST or
the PST Shares, except where the Disclosure Memorandum expressly
states that a disclosure relates to PSHC or the PSHC Shares. All
information set forth in the Disclosure Memorandum is true,
correct, complete and set forth in a manner that is not misleading
as of the date of this Agreement. Unless otherwise indicated, all
capitalized terms used in the Disclosure Memorandum shall have the
same meanings as in this Agreement. All documents and other
writings furnished to Purchaser pursuant to this Agreement or the
Disclosure Memorandum are true, correct and complete as of the date
furnished and any and all modifications or amendments of the same
have been delivered to Purchaser. At all times prior to and
including the Closing Date, the Shareholders shall promptly provide
Purchaser with written notification of any event, occurrence or
other information of any kind whatsoever which affects, or may
affect, the continued truth, correctness or completeness of any
representation, warranty or covenant made in this Agreement, the
Disclosure Memorandum or any other document or writing furnished to
Purchaser pursuant to this Agreement.
3.2 ORGANIZATION AND COMPLIANCE. Each Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia with its principal office
and place of business at the location specified in Schedule 3.2 of
the Disclosure Memorandum. Neither Company has any interest,
direct or indirect, and has no commitment to purchase or otherwise
acquire any interest, direct or indirect, in any other corporation,
partnership, joint venture or other business enterprise, except
that PSHC is at the date of this Agreement and will be until
consummation of the PST/PSHC Merger a shareholder of PST. Each
Company has all requisite corporate power and authority and is
entitled to own or lease its properties and to carry on its
business as and in the places where such business is now conducted
and such properties are owned or leased. Each Company has complied
in all material respects with all federal, state and local laws,
rules, regulations and ordinances with respect to its operations
and the conduct of its business. Each Company is duly licensed,
qualified or domesticated as a foreign corporation in the
jurisdictions listed as to it in Schedule 3.2 of the Disclosure
Memorandum, which are all jurisdictions where the character of the
property owned by it or the nature of the business transacted by it
makes such license, qualification or domestication necessary.
Schedule 3.2 of the Disclosure Memorandum lists (a) all locations
where each Company owns property, has an office or place of
business or maintains any inventory, (b) all names under which each
Company has operated during the past five years, if different from
its present corporate name, and (c) all former subsidiaries, if
any, of each Company existing within a five year period prior to
the date hereof.
3.3 CAPITALIZATION, OWNERSHIP OF SHARES AND RELATED
MATTERS.
(a) PST has an authorized share capital consisting
solely of 10,000,000 shares of Class A common stock, par value $.01
per share, and 10,000,000 shares of Class B common stock, par value
$.01 per share, of which 500 and 191 shares of Class A and Class B
common stock, respectively, are issued and outstanding at the date
of this Agreement, and are owned of record and beneficially by the
PST Shareholders as set forth in Exhibit C attached hereto.
Immediately prior to the Effective Time of the Merger, PST will
have issued and outstanding no shares of its Class A common stock
and 691 shares of its Class B common stock, as set forth in Exhibit
C attached hereto. PSHC has an authorized share capital consisting
solely of 10,000,000 shares of Common Stock, par value $.01 per
share, of which 1,692,749 shares are issued and outstanding at the
date and are owned of record and beneficially by the Shareholders
as set forth on Exhibit C attached hereto, 10,000,000 shares of
Class B common stock, with a par value of $.01 per share, of which
no shares are issued and outstanding as of the date hereof, and
1,000,000 shares of preferred stock, with a par value of $.01 per
share, of which no shares are issued and outstanding as of the date
hereof. All the foregoing issued shares of PST and PSHC are duly
and validly issued, fully paid and nonassessable and were
authorized, offered, issued and sold in accordance with all
applicable federal and state securities laws. None of such shares
were issued in violation of the preemptive rights of any past or
present shareholder of either Company. Prior to the Effective Time
of the Merger, the PST/PSHC Merger will have been consummated, and
the foregoing issued shares of PSHC shall have been converted to
the Additional PST Shares, as provided in Paragraph 1.1. After
issuance pursuant to the PST/PSHC Merger, the Additional PST Shares
shall have been duly and validly issued, fully paid and
nonassessable and authorized, offered, issued and sold in
accordance with all applicable federal and state securities laws.
None of the Additional PST Shares will be issued in violation of
preemptive rights of any past or present shareholder of either
Company.
(b) Except as set forth on Schedule 3.3(b), neither
Company has any outstanding securities convertible into its share
capital or rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements or arrangements providing
for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its share
capital. Neither Company is subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any of
its share capital except pursuant to this Agreement, that certain
Shareholders Agreement dated December 30, 1988 with respect to PST
and that certain Shareholders Agreement dated September 18, 1987
with respect to PSHC. Neither Company has any liability for
dividends declared or accrued, but unpaid, with respect to any of
its share capital.
(c) Each PST/PSHC Shareholder is the sole owner (or
joint owner with another Shareholder) of the number of shares of
the Companies shown in Exhibit C attached hereto in each case free
and clear of any and all claims, liens, charges, encumbrances and
restrictions of any kind whatsoever, and has the full right, power
and capacity on his own behalf to enter into and perform this
Agreement in accordance with its terms. There are no outstanding
contracts, demands, commitments, or other agreements or
arrangements under which any PST/PSHC Shareholder is or may become
obligated to sell, transfer or assign any of the Shares or any of
the PSHC Shares, other than the Shareholders Agreement. Each
PST/PSHC Shareholder has the full power and authority to enter into
this Agreement and to carry out the transactions contemplated
hereby.
(d) All shares of either Company which have been
purchased or redeemed by such Company have been repurchased or
redeemed in accordance with all applicable federal, state and local
laws, rules, regulations, and ordinances, including, without
limitation, all federal and state securities laws. The repurchase
or redemption by either Company of its shares has not and will not
with the giving of notice or the lapse of time, or both, result in
a default or acceleration of the maturity of, or otherwise modify,
any agreement, note, mortgage, bond, security agreement, loan
agreement or other contract or commitment of such Company.
3.4 NO INCONSISTENT OBLIGATIONS. Except as disclosed
in Schedule 3.4 of the Disclosure Memorandum, neither the execution
and delivery of this Agreement, nor the consummation of the
transactions contemplated herein will result in a violation or
breach of, or constitute a default under (a) any term or provision
of any material indenture, note, mortgage, bond, security
agreement, loan agreement, guaranty, pledge, or other instrument,
contract, agreement or commitment, (b) any applicable writ, order,
judgment, decree, law, rule, regulation, or ordinance, (c) any
applicable ruling or order of any administrative or governmental
body, or (d) any other commitment or restriction to which either
Company or any Shareholder is a party or by which any of them or
any of their respective assets or properties is subject or bound;
nor will such actions result in (i) the creation of any claim,
lien, charge or encumbrance on any of the Shares or the PSHC Shares
or on any of the Companies' assets or properties, or (ii) the
acceleration of any obligation of either Company, or (iii) the
forfeiture of any material right or privilege of either Company.
3.5 CORPORATE RECORDS. The share records and minute books
of each Company heretofore furnished to Purchaser by the
Shareholders reflect fully all issuances, transfers and redemptions
of its share capital, correctly show the total number of shares
issued and outstanding on the date hereof, correctly show all
corporate action taken by the directors and shareholders of the
Company (including actions taken by consent without a meeting), and
contain copies or originals of its articles of incorporation and
all amendments thereto, its bylaws as amended and currently in
force, and the minutes of all meetings or consent actions of its
directors and shareholders.
3.6 CONSENTS. The execution and delivery of this
Agreement by the PST/PSHC Shareholders and the consummation of the
transactions contemplated by this Agreement (a) do not require the
consent, approval or action of, or any filing with or notice to,
any person, firm or other entity, or any public, governmental or
judicial authority, except as specified in Schedule 3.6 of the
Disclosure Memorandum, (b) do not require the consent or approval
of any of the Companies' other shareholders or members of either
Company's board of directors pursuant to any business combination,
takeover or other similar law, rule, regulation or ordinance, and
(c) do not impose any other term, condition or restriction on the
Purchaser or the Shares pursuant to any business combination,
takeover or other similar statute, rule or regulation.
3.7 NO DEFAULT. Neither Company is in material default
under or in violation of (a) its articles of incorporation or
bylaws, or (b) any writ, order, judgment, decree, law, rule,
regulation, or ordinance, or (c) any applicable ruling or order of
any administrative or governmental body.
3.8 POSSESSION OF FRANCHISES, LICENSES, ETC. The
Companies possesses all material franchises, certificates,
licenses, permits and other authorizations from public,
governmental, regulatory or judicial authorities, free from
burdensome restrictions, that are necessary for the ownership,
maintenance and operation of its properties and assets, and the
Companies are not in violation in any material respect of any
thereof.
3.9 FINANCIAL STATEMENTS. Prior to the date hereof,
the PST Shareholders have caused PST to deliver to Purchaser copies
of the PST's Balance Sheet as at September 27, 1992, September 29,
1991 and September 30, 1990, and Statements of Income, Retained
Earnings and Cash Flows for the fiscal years then ended, together
with the report thereon of Deloitte & Touche, independent certified
public accountants. All of such financial statements (including
any related notes and schedules thereto) (the "Audited Financial
Statements") are true and correct and have been prepared in
accordance with generally accepted accounting principles applied on
a basis consistent with prior years and present fairly the
financial condition of PST as at the respective dates thereof and
the results of its operations and its cash flows for the periods
then ended. The PST/PSHC Shareholders have also caused PST to
deliver to Purchaser copies of PST's unaudited Balance Sheet as at
October 3, 1993 (the "PST Unaudited Balance Sheet"), and unaudited
Statements of Income, Retained Earnings and Cash Flows for the
twelve-month period then ended, and PSHC to deliver to Purchaser a
copy of PSHC's unaudited Balance Sheet as at November 30, 1993 (the
"PSHC Unaudited Balance Sheet") (such unaudited Statements of
Income, Retained Earnings and Cash Flows, together with the PST
Unaudited Balance Sheet, and the PSHC Unaudited Balance Sheet,
collectively the "Unaudited Financial Statements"). Except as
disclosed in Schedule 3.9 of the Disclosure Memorandum, the
Unaudited Financial Statements (including any related notes and
schedules thereto) are true and correct, have been prepared from
the books and records of PST and PSHC in accordance with generally
accepted accounting principles applied on a basis consistent with
prior years, and present fairly the financial conditions of PST and
PSHC as at the date thereof and the results of PST's operations for
the twelve-month period then ended.
3.10 LIABILITIES. Neither Company has any debt, liability
or obligation of any kind, whether accrued, absolute, known or
unknown, contingent or otherwise (including, without limitation,
(a) liability for any foreign, federal, state or local taxes up to
but not including the Closing, (b) product or warranty liability
arising from or by virtue of the production, manufacture, sale,
lease, distribution, delivery or other transfer or disposition of
personal property of any type, kind or variety, or (c) unfunded
liabilities with respect to any pension, profit-sharing or employee
stock ownership plan, whether operated by either Company or any
other entity, covering employees of either Company), except (i)
those of PST reflected on the Balance Sheet as at September 27,
1992 referred to in Paragraph 3.9 above (the "Audited Balance
Sheet") or reflected on the PST Unaudited Balance Sheet as at
October 3, 1993, or the PSHC Unaudited Balance Sheet as of November
30, 1993, (ii) liabilities incurred by PST in the ordinary course
of business since October 3, 1993 (the "Reference Date"), or PSHC
since the date of preparation of the PSHC Unaudited Balance Sheet,
and (iii) as specifically disclosed in Schedule 3.10 of the
Disclosure Memorandum.
3.11 TITLE TO PROPERTIES. PST owns or leases all assets
necessary to conduct its business as conducted during the periods
covered by the Audited Financial Statements. PST has good and
marketable title to all of its owned properties and assets, real
and personal, moveable and immovable, tangible and intangible,
including, without limitation, those reflected in the Audited
Balance Sheet, free and clear of any and all claims, liens,
charges, restrictions and encumbrances of any kind or character
except (a) as since sold or otherwise disposed of in the ordinary
course of business, (b) as expressly set forth in the Audited
Financial Statements as securing specific liabilities (with respect
to which no default exists), (c) as disclosed in Schedule 3.11 of
the Disclosure Memorandum, (d) liens for real estate taxes which
are not past due, and (e) minor imperfections of title and
encumbrances, if any, which are not substantial in amount, do not
detract from the value of the property subject thereto or impair
the operations of PST and have arisen only in the ordinary course
of business. Without limiting or being limited by any specific
representation regarding PSHC, except as disclosed on Schedule 3.11
of the Disclosure Memorandum, PSHC does not now, nor has it ever,
owned, controlled or managed any assets except its PST Shares, and
does not now, nor has it ever, conducted any business operations
since its organization except providing certain management
services.
3.12 BANK ACCOUNTS AND SAFETY DEPOSIT BOXES. Schedule 3.12
of the Disclosure Memorandum contains a list of each and every bank
in which either Company maintains an account or safety deposit box,
the account numbers, and the names of all persons who are presently
authorized to draw thereon or have access thereto.
3.13 RECEIVABLES. If PST has factored substantially all of
its accounts receivable which may be factored under customary
commercial terms during the preceding two fiscal years, then all
notes receivable and accounts receivable shown on the Audited
Balance Sheet and all such receivables held by PST on the date
hereof were and are valid obligations that arose in the ordinary
course of business and to the best knowledge of the Shareholders
are valid and collectible obligations of the respective makers
thereof and were not and are not subject to any offset or
counterclaim. Otherwise, all notes receivable and accounts
receivable shown on the Audited Balance Sheet and all such
receivables held by PST on the date hereof were and are valid and
collectible obligations of the respective makers thereof and were
not and are not subject to any offset or counterclaim. In either
case, except for amounts reserved against on the Audited Balance
Sheet and, with respect to notes and accounts arising after the
date of the Audited Balance Sheet and outstanding on the date
hereof, except for a percentage thereof equal to the percentage
which said reserved amounts on the Audited Balance Sheet
constituted of the aggregate of notes and accounts receivable at
the date of the Audited Balance Sheet. Schedule 3.13 of the
Disclosure Memorandum contains an accurate and complete aging
schedule, as of a date no earlier than the Reference Date, of all
of PST's receivables (including accounts receivable, loans
receivable and any advances), together with detailed information as
to each such listed receivable which has been outstanding for more
than 30 days.
3.14 INVENTORIES. The inventories of PST (including all
raw materials, component parts, work-in-process and finished goods)
shown on the Audited Balance Sheet, and the inventories produced or
acquired by PST subsequent to the date thereof, (a) if finished
goods, are merchantable and conform in all material respects to
customary trade standards for merchantable goods, except to the
extent reserves are taken and (b) if not finished goods, are of a
quality and quantity suitable and usable for the production or
completion of finished goods, for sale in the ordinary course of
PST's business as first quality goods, except to the extent
reserves are taken. Except as reflected in the Audited Balance
Sheet or disclosed in Schedule 3.14 of the Disclosure Memorandum,
none of such items of inventory is obsolete or below standard
quality, and each such item of inventory reflected on the Audited
Balance Sheet is so reflected on the basis of a complete physical
count. Each item of inventory reflected on the Audited Balance
Sheet, the Unaudited Balance Sheet, and the books and records of
PST is valued at the lower of cost or market in accordance with
generally accepted accounting principles consistently applied, PST
has recognized all loss resulting from the obsolescence, physical
deterioration, changes in prices, discontinuation of product lines
or any other change resulting in the valuation of any item of
inventory below cost. Except as disclosed in Schedule 3.14 of the
Disclosure Memorandum, (i) all firm, noncancelable purchase
commitments of PST for inventory goods ("Firm Purchase
Commitments") have been reflected in the Audited Balance Sheet and
the Unaudited Balance Sheet to the extent required in accordance
with generally accepted accounting principles, (ii) PST has not
entered into any Firm Purchase Commitments in excess of $50,000
since the date of the PST Unaudited Balance Sheet, and (iii) no
inventory has been acquired by PST for a specific customer
contract. All products manufactured or purchased by either Company
for sale to its customers, including all finished goods in its
inventories, meet in all material respects the standards of (A) all
applicable federal, state and local laws, rules, regulations and
ordinances pertaining to the legality of the manufacture and sale
of such products, and (B) all representations and warranties made
by such Company to its customers. Except as disclosed on Schedule
3.14, none of the goods sold or otherwise distributed by either
Company or their respective predecessors prior to the date of
Closing shall be, nor has the Company or its predecessors received
any notice claiming the same to be, hazardous or unsafe in design,
specification, material, content, function or otherwise. Except as
disclosed in Schedule 3.14 of the Disclosure Memorandum, neither
Company has given nor shall it give any express warranty with
respect to any goods or products sold or services performed prior
to the Closing Date.
3.15 RETURNS AND CONSIGNMENTS. Except as set forth in
Schedule 3.15 of the Disclosure Memorandum, no customer of either
Company has any right to return any goods for credit or refund
pursuant to any agreement, understanding or practice that the
Company will take back goods which are unsold. Without limiting
the generality of the foregoing, neither Company presently has any
goods in the possession of its customers on consignment or on a
similar basis.
3.16 PERSONAL PROPERTY.
(a) Except as set forth in Schedule 3.16(a) of the
Disclosure Memorandum, all of the machinery, equipment, vehicles,
vessels and all other tangible personal property owned or leased by
either Company and used or useable in its business are in good
condition and repair, subject to normal wear and tear, suited for
the use intended and operated in conformity in all material
respects with all applicable laws, rules, regulations and
ordinances, including, without limitation, all applicable building
and zoning laws, ordinances, and regulations. All leases pursuant
to which either Company is lessee or lessor of any personal
property are valid and effective as to such Company in accordance
with their terms. There is not under any of such leases (i) any
default or, to the knowledge of the Shareholders, any claimed
default by any Company or event of default or event which with
notice or lapse of time, or both, would constitute a default by any
Company and in respect of which any Company has not taken adequate
steps to prevent a default on its part from occurring, or (ii) to
the knowledge of the Shareholders any existing default by any
lessee of either Company or any event of default or event which
with notice or lapse of time, or both, would constitute a default
by any lessee. Except as disclosed on Schedule 3.16(a), neither
the Companies nor the Shareholders have any knowledge of any
defects or conditions which would cause such tangible personal
property to be or become inoperable or unsafe.
(b) Except as disclosed in Schedule 3.16(b) of the
Disclosure Memorandum, to the knowledge of the Shareholders, all
lessors of any machinery, equipment or other tangible personal
property leased by either Company have fully and completely
performed and satisfied their respective duties and obligations
under such leases, and neither Company has any claims, actions or
causes of action against any such lessor for failure to fully and
completely perform and satisfy its duties and obligations
thereunder.
3.17 REAL PROPERTY.
(a) PST owns or has the right to occupy and use all
real property which is used or useable in its business (the "Real
Property"). Schedule 3.17(a) of the Disclosure Memorandum
identifies each parcel or tract of the Real Property by location,
size and improvements (if any) and describes the nature of PST's
interest therein and use thereof.
(b) Except as disclosed in Schedule 3.17(b), PST has
good and marketable fee simple title to all Real Property owned by
it, and all buildings, structures and other improvements thereon
and all fixtures thereto which are used or useable in its business,
including, without limitation, all such property reflected on the
Audited Balance Sheet.
(c) All agreements with respect to leases, easements,
rights of way, licenses, usufructs and other non-ownership
interests granted to or by either Company in any Real Property
(collectively the "Real Property Leases") are valid and in full
force and effect in accordance with their terms. The Companies
have furnished Purchaser with copies of all written Real Property
Leases, all of which are identified on Schedule 3.17(c) of the
Disclosure Memorandum, and Schedule 3.17(c) of the Disclosure
Memorandum summarizes the terms of all verbal Real Property Leases.
All copies of the Real Property Leases furnished to Purchaser are
true, correct and complete and have not been modified in any
respect. There is not under any Real Property Lease (i) any
default or, to the knowledge of the Companies or any of the Share-
holders, any claimed default by either Company or event of default
or, to the best knowledge of the Shareholders, event which with
notice or lapse of time, or both, would constitute a default by
such Company and in respect of which such Company has not taken
adequate steps to prevent a default on its part from occurring, or
(ii) to the knowledge of either Company or any of the Shareholders,
any existing default by any other party to the Real Property Lease,
or any event of default or event which with notice or lapse of
time, or both, would constitute a default by any other party to the
Real Property Lease. The interest of each Company in and under
each Real Property Lease is unencumbered and subject to no present
claim, contest, dispute, action or, to the best knowledge of the
Shareholders, threatened action at law or in equity or otherwise.
(d) Each Company is lawfully in possession of all Real
Property which is the subject of a Real Property Lease and with
respect to which such Company is a lessee or has been granted an
interest in such Property ("Leased Real Property"); and all
conditions precedent to the obligation of such Company to take
possession and continue to occupy all Leased Real Property has been
fulfilled. Such Company is presently occupying the entirety of
each parcel of the Leased Real Property for the purposes set forth
in the Real Property Lease with respect thereto.
(e) All of the Real Property is free from any use or
occupancy restrictions, except those disclosed in Schedule 3.17(e)
and those imposed by applicable zoning laws, ordinances and
regulations, and from all special taxes or assessments, except
those generally applicable to other properties in the tax districts
in which the Real Property is located. No options have been
granted to others to purchase, lease or otherwise acquire any
interest in the Real Property, or any part thereof owned by either
Company. PST has the exclusive right of possession of each tract
comprising the Real Property. There is lawfully available to all
of the Real Property water, gas, sewers, electricity, and telephone
service sufficient to allow the Companies' business to continue to
be conducted as heretofore conducted by the Companies, and all of
which are now being utilized by the Companies. All of the Real
Property has reasonably suitable ingress and egress and each
parcel of Real Property has reasonably suitable access to existing
paved roads and other public rights of way. All of the Real
Property is free and clear of any liens, charges, claims, security
interests, encumbrances or other restrictions, whether existing of
record or otherwise, except the following (as to which no event of
default has occurred by either Company): (i) liens for ad valorem
taxes which are not past due, (ii) easements for the erection and
maintenance of public utilities serving the Real Property, and
(iii) the items specifically set forth in Schedule 3.17(e) of the
Disclosure Memorandum.
(f) The present use of and improvements on the Real
Property are in substantial conformity with all applicable laws,
rules, regulations and ordinances, including, without limitation,
all applicable zoning laws, ordinances and regulations and with all
deed restrictions of record, and the Shareholders have no knowledge
of any proposed change therein that would affect any of the Real
Property or its use. There exists no conflict or dispute to the
best knowledge of Shareholders with any regulatory authority or
other person relating to any Real Property or the activities
thereon. All improvements on the Real Property are located within
the lot lines (and within the mandatory set-backs from such lot
lines established by zoning ordinance or otherwise) and not over
areas subject to easements or rights of way to the best knowledge
of Shareholders.
(g) All buildings and improvements on the Real Property
are in good condition and repair, suited for the operation of the
Companies' business and are in substantial compliance with all
applicable material laws, rules, regulations, and ordinances,
including, without limitation, all applicable material building,
electrical, plumbing, gas, fire, environmental and other regulatory
laws, rules, regulations, and ordinances, and neither Company has
received any notice of any violation or alleged violation of any
thereof. To the best knowledge of the Shareholders, no toxic or
hazardous materials were used in the construction or improvements
of any building located on the Real Property.
(h) Neither PST, PSHC nor any other person has caused
any work or improvements to be performed upon or made to any of the
Real Property for which there remains outstanding any material
payment obligation, that would or might serve as the basis for any
claim, lien, charge or encumbrance in favor of the person or entity
which performed the work.
(i) All requisite certificates of occupancy and other
material permits or approvals required with respect to the improve-
ments on any of the Real Property and the occupancy and use thereof
have been obtained and are currently in effect.
(j) Except as set forth in Schedule 3.17(j) of the
Disclosure Memorandum, PST owns unencumbered title in and to the
improvements, if any, on the Leased Real Property.
(k) Except as set forth in Schedule 3.17(k) of the
Disclosure Memorandum, no rent or use fee has been paid in advance,
no security deposit has been paid and no brokerage commission is
payable by either Company with respect to any Real Property Lease.
(l) Neither Company has received any notice that the
owner of any Leased Real Property has made any assignment, pledge
or hypothecation of such Real Property Lease or the rents or use
fees due thereunder, except as set forth in Schedule 3.17(l) of the
Disclosure Memorandum.
(m) Prior to the date hereof, the PST/PSHC Shareholders
have caused the Companies to deliver to Purchaser true and correct
copies of all deeds, easements, servitudes, mortgages, title
insurance policies and other documents relating to or affecting the
title to the Real Property, and all of the same are identified on
Schedule 3.17(m) of the Disclosure Memorandum.
3.18 AUTHORITY TO CONDUCT BUSINESS AND INTELLECTUAL
PROPERTY RIGHTS. To the knowledge of the Companies and the
Shareholders, each Company has the means, rights and information
required to manufacture, process, sell, offer for sale and use the
items and perform the services as presently being manufactured,
processed, offered for sale, sold, used or performed by such
Company, including, without limitation, the means, rights and
information required to manufacture, process, offer for sale, sell
and use all such items and perform all such services without
incurring any liability for license fees or royalties or any claims
of infringement of patents, trade secrets, copyrights, trademark,
service mark, or other proprietary rights. Schedule 3.18 of the
Disclosure Memorandum describes all proprietary inventions,
designs, ideas, processes, methods and other know-how of each
Company which are valuable in the operation of such Company's
business and, with respect to each such item, indicates whether
such Company holds any patent or patent application therefor (in
each such case, identifying the date(s) and jurisdiction(s) in
which the patent was granted or applied for and the number of such
patent or application) or has sought any advice as to the patent-
ability of the same (in each such case, summarizing such advice) or
believes it has trade secret protection therefor (in each such
case, providing a description of the measures which have been taken
to protect the secrecy of the item). Neither Company is a party
to, either as licensor or licensee, or is bound by or subject to,
any license agreement for any patent, process, trademark, service
mark, trade name or copyright, except as described in Schedule 3.18
of the Disclosure Memorandum. All patents, copyrights, trademarks,
service marks, trade names, and applications therefor or
registrations thereof, owned or used by either Company listed
in Schedule 3.18 of the Disclosure Memorandum, and, to the extent
indicated thereon, have been duly registered in, filed in or issued
by the U.S. Patent and Trademark Office or the corresponding agency
or office of the states of the United States or foreign countries
indicated. There are no rights of third parties with respect to
any trademark, service mark, trade secrets, trade name, patent,
patent application, invention or device which would have a material
adverse effect on the operations or prospects of either Company.
Each Company has complied with all applicable laws, rules,
regulations and ordinances relating to the filing or registration
of "fictitious names" or trade names.
3.19 MATERIAL CONTRACTS. Schedule 3.19 of the Disclosure
Memorandum contains a list of all existing written or oral material
contracts and commitments of each Company ("Company Contracts"),
including, without limitation, all employment and consulting
contracts, union contracts, distributorship agreements, leases,
lease purchase agreements, licenses, stock options, employee
benefit plans, deferred compensation agreements, group life, health
and accident insurance, any other type of insurance, indentures,
notes, bonds, mortgages, security agreements, loan agreements,
guarantees, franchise agreements, agreements in respect of the
issuance, sale or transfer of each Company's share capital, bonds
or other securities, and any contract which involves a payment of
more than $25,000 or has a term or requires performance over a
period of more than one year, except purchase or sales orders
arising in the ordinary course of business. The PST/PSHC Share-
holders have heretofore caused each Company to deliver to Purchaser
a true, correct and complete copy of each of the written Company
Contracts and a complete and accurate summary of each oral Company
Contract on the aforesaid list to the extent requested. None of
the Company Contracts constitute a restraint of trade under any
applicable state or federal law. Each Company has performed all
material obligations to be performed by it as of the date of this
Agreement under all Company Contracts to which it is a party or by
which it is bound. Neither Company is in default or in arrears
under any of the terms thereof. No condition exists or has
occurred which, with the giving of notice or the lapse of time, or
both, would constitute a default or accelerate the maturity of, or
otherwise modify, any Company Contract, and all Company Contracts
are in full force and effect as to the Company shown as a party
thereto. To the best knowledge and belief of the Shareholders, no
default by any other party to any Company Contract is known or
claimed by the Company to exist, and neither Company is a party to
any contract, agreement or commitment which will likely result in a
loss to such Company upon completion of performance or which cannot
readily be fulfilled or performed by such Company in accordance
with its terms without undue or unusual expenditures of money or
effort.
3.20 INSURANCE. Schedule 3.20 of the Disclosure Memorandum
contains a complete list and description of all fire, theft,
casualty, life, title, automobile, liability and other policies of
insurance maintained by either Company, all of which are, and will
be maintained through the Closing Date, in full force and effect.
All premiums due thereon have been paid and neither Company has
received any notice of cancellation with respect thereto. All such
policies taken together to the best knowledge of Shareholders
provide adequate coverage to insure the properties and business of
the Companies against such risks and in such amounts as are prudent
and customary; and without limiting the foregoing, subject to any
specified deductibles as set forth in Schedule 3.20 of the
Disclosure Memorandum, the Companies' insurance coverage as in
effect as of the Closing and for periods prior thereto will insure
the Companies from and against any and all losses, damages, costs
and expenses which Purchaser may suffer or incur as a result of any
claim (as to which the applicable statute of limitations permits an
action) that products manufactured or sold by either Company (or
any of its predecessors for whose acts and omissions either Company
is legally responsible) in connection with such Company's business
were defective in any respect which resulted in an injury to a
third party. Neither Company will as of the Closing have any
liability for premiums or for retrospective premium adjustments for
any period prior to the Closing, except as set forth in Schedule
3.20 of the Disclosure Memorandum. The Shareholders have
heretofore caused each Company to deliver to Purchaser a true,
correct and complete copy of each such insurance policy requested
by Purchaser. Schedule 3.20 of the Disclosure Memorandum also
lists and describes all occurrences to the best knowledge of the
PST/PSHC Shareholders which may form the basis for a claim by or on
behalf of either Company under any such policy; and such Company
has timely given notice of all such occurrences to the appropriate
insurer and has not waived (either intentionally or inadvertently)
its right to make the related claim under any such policy.
3.21 CUSTOMERS AND SUPPLIERS. Schedule 3.21 of the
Disclosure Memorandum sets forth the names and addresses of any
sole source suppliers of significant goods, equipment or services
to either Company (other than public utilities) with respect to
which practical alternative sources of supply are not available,
and the names and addresses of each customer of either Company that
purchased $100,000 in goods or services from such Company in any of
the five prior years or that accounted for 5% or more of such
Company's gross revenues in any such year ("Significant
Customers"). The Shareholders are not aware, except as disclosed
in Schedule 3.21 of the Disclosure Memorandum: (a) that any
supplier (including, without limitation, suppliers of energy) or
Significant Customers of either Company intends to discontinue or
substantially diminish or change its relationship with either
Company or the terms thereof, or (b) that any supplier of either
Company (including, without limitation, suppliers of energy)
intends to increase prices or charges for goods or services
presently supplied.
3.22 CONTINGENCIES. Except as set forth in Schedule 3.22
of the Disclosure Memorandum, there are no actions, suits, claims,
demands or proceedings pending or, to the best knowledge of the
Shareholders, threatened against, by or affecting either Company in
any court or before any arbitrator, private alternative dispute
resolution system or governmental agency, nor do there exist any
other "loss contingencies" (as such term is defined in Statement of
Financial Standards No. 5 of the Financial Accounting Standards
Board), the eventual outcome of which might have a material adverse
effect on either Company or on the operation of its business or on
its assets or which would prevent or impede the transactions
contemplated by this Agreement. Except as set forth in Schedule
3.22 of the Disclosure Memorandum, neither Company has been charged
with, nor, to the best knowledge of the Shareholders, is it under
investigation with respect to any charge concerning, any violation
of any provision of any federal, state or other applicable law,
rule, regulation, or ordinance, or order, decree or governmental
restriction with respect to its business. Except as disclosed in
Schedule 3.22, there are no unsatisfied judgments against either
Company or any consent decrees, writs, restraining orders, or
preliminary or permanent injunctions to which either Company is
subject.
3.23 TAXES. Except as disclosed in Schedule 3.23 of the
Disclosure Memorandum, all taxes (including, without limitation,
all income, property, sales, use, customs, franchise, value added,
ad valorem, withholding, employees' income withholding, and social
security taxes, and all other taxes imposed on either Company or
its income, properties, sales, franchises, operations or Employee
Benefit Plans or trusts), and all deposits in connection therewith
required by applicable law, imposed by any federal, state, local or
foreign jurisdiction, or by any other governmental unit or taxing
authority, and all interest and penalties thereon (all of the
foregoing hereafter collectively referred to as "Taxes"), which are
due and payable by both Companies for all periods through the date
hereof have been paid in full, and adequate reserves for all other
Taxes, whether or not due and payable, and whether or not disputed,
have been set up on the books of PST. From the date of this
Agreement to but not including the Closing, the Companies shall pay
all Taxes as and when the same become due and payable except those
that are being disputed in good faith, and shall set up reserves on
PST's books in amounts adequate to cover all liabilities for Taxes
arising out of the operation of the Companies prior to but not
including the Closing. Except as disclosed in Schedule 3.23, there
is not now to the knowledge of the Shareholders any proposed
assessment against either Company of additional Taxes of any kind.
Each Company has duly filed all federal, state, local and foreign
tax returns and reports (including, without limitation, returns for
estimated tax), and all returns and reports of all other
governmental units or taxing authorities having jurisdiction, with
respect to all Taxes, all such returns and reports show the correct
and proper amount due, and all Taxes shown on such returns or
reports and all assessments received by either Company have been
paid to the extent that such Taxes, or any estimates thereon, have
become due. There are no waivers or agreements by either Company
for the extension of time for the assessment of any Taxes. The
federal income tax returns of each Company have been examined by
the Internal Revenue Service through the date set forth in Schedule
3.23 of the Disclosure Memorandum, and, except as set forth
therein, all the deficiencies proposed and indicated as a result of
the examination of such tax returns have been paid and settled.
Schedule 3.23 of the Disclosure Memorandum sets forth any position
taken by either Company on its federal income tax returns for
unexamined years which is substantially at variance with the
published position of the Internal Revenue Service. PSHC has been
duly qualified and operating as an S Corporation pursuant to the
Code at all times from October 1, 1989, and shall continue to be an
S Corporation until its existence is terminated by its merger into
PST. PST is and at all times has been a C Corporation pursuant to
the Code. Neither Company is a "United States real property
holding corporation" within the meaning of the Internal Revenue
Code of 1986, as amended.
3.24 PARACHUTE PAYMENTS. Neither of the Companies nor the
Shareholders have taken any actions or entered into any agreements
providing compensation to employees or officers, the effect of
which will continue after the Closing Date, or any other agreement
of a similar nature. Except as set forth on Schedule 3.24, neither
of the Companies nor any subsidiary or affiliate of either of them
has made any payment which constitutes an "excess parachute
payment" within the meaning of Section 280(G) of the Code, and no
payment by either Company or any subsidiary or affiliate of either
of them required to be made under any contract or other agreement
will, if made, constitute an "excess parachute payment" within the
meaning of Section 280(G) of the Internal Revenue Code. The
consummation of the transactions contemplated by this Agreement
will not entitle any employee of either Company to severance pay
nor will it accelerate the time of payment, vesting or increase the
amount of any compensation or benefits due to any employee of
either Company.
3.25 EMPLOYMENT AND LABOR MATTERS.
(a) Schedule 3.25(a) of the Disclosure Memorandum lists
all employees and agents who on the date hereof perform services on
a regular basis in the business operations of or for either Company
and whose annualized rate of compensation exceeds $50,000 per year.
Except as described on Schedule 3.25(a), no such employee or agent
has terminated his employment, nor, to the best knowledge and
belief of the Shareholders, plans not to continue his employment
with the Company with which he or she is employed after the date
hereof or after the Closing Date. To the best knowledge of the
Shareholders, except as shown on Schedule 3.25(a) of the
Disclosure Memorandum, no employee or agent shown on such list has
suffered any major illness or hospitalization within the past three
years.
(b) Except as set forth in Schedule 3.25(b) of the
Disclosure Memorandum, (i) neither Company is a party to any
collective bargaining agreement or agreement of any kind with any
union or labor organization, (ii) no union or other collective
bargaining unit has been certified or recognized by either Company
as representing any employee nor, to the knowledge of the
Shareholders, is a union or other collective bargaining unit
seeking recognition for such purpose, (iii) there are no
controversies pending, or to the knowledge of the Shareholders
threatened, between either Company and any labor union or
collective bargaining unit representing, or seeking to represent,
any of its employees, and (iv) there has been no attempt by any
union or other labor organization to organize any of the employees
of either Company at any time in the past five years to the
knowledge of the Shareholders. Each Company has substantially
complied with all obligations under the National Labor Relations
Act, as amended, Title VII of the Civil Rights Act of 1964, as
amended, the Age Discrimination in Employment Act, as amended, and
all other federal, state and local labor or labor related laws
applicable to persons employed in connection with such Company's
business, including, without limitation, those laws, rules and
regulations relating to wages, hours, health and safety, payment of
social security withholding and other taxes, maintenance of
workers' compensation insurance, labor and employment relations and
employment discrimination.
(c) Except as set forth in Schedule 3.25(c) of the
Disclosure Memorandum, each Company has substantially complied with
all federal, state and local laws, rules, regulations and
ordinances respecting health, safety and working conditions of its
employees noncompliance with which could reasonably be expected to
subject such Company to risk of material adverse consequences,
including, without limitation, the Occupational Safety and Health
Act of 1970, Pub. L. 91-596, as amended, and all similar federal,
state and local laws, rules, regulations and ordinances, and has
provided Purchaser with copies of all reports filed and notices
provided under any such laws, rules, regulations and ordinances
during the last five years to the extent requested. Neither
Company's operations involve any risk unusual for the carpet
industry to the health or safety of its employees (including, but
not by way of limitation, any risk associated with hazardous
airborne contaminants or hazardous chemicals or waste materials)
and, except as disclosed in Schedule 3.25(c) of the Disclosure
Memorandum, to the best knowledge of the Shareholders no employee
of either Company has suffered any adverse health consequence or
personal injury as a result of his or her working conditions or
employment by either Company within the past five years.
3.26 EMPLOYEE BENEFIT MATTERS.
(a) Schedule 3.26(a) lists all plans, programs, and similar
agreements, commitments or arrangements maintained by or on behalf
of either Company or any other party that provide benefits or
compensation to, or for the benefit of, current or former employees
of either Company ("Plan" or "Plans"). Except as set forth on
Schedule 3.26(a), only current and former employees of PST
participate in the Plans. To the extent requested, copies of all
Plans and, to the extent applicable, all related trust agreements,
actuarial reports, summary plan descriptions, prospectuses, Annual
Report Form 5500s and Internal Revenue Service determination
letters, and any related documents requested by Purchaser, have
been delivered to Purchaser, and all of the same are true and
correct and have not been amended, modified or supplemented.
(b) With respect to each Plan, except as set forth on
Schedule 3.26(b): (i) no litigation or administrative or other
proceeding is pending or, to the best knowledge of the
Shareholders, threatened involving such Plan; (ii) such Plan has
been administered and operated in substantial compliance with, and
has been amended to comply with all applicable laws, rules, and
regulations, including, without limitation, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the Internal
Revenue Code of 1986, as amended ("Code"), and the regulations
issued under ERISA and the Code; (iii) each Company and its
predecessors, if any, have made and as of the Closing Date will
have made or accrued, all payments and contributions required, or
reasonably expected to be required, to be made under the provisions
of the Plans or required to be made under applicable laws, rules
and regulations, with respect to any period prior to the Closing
Date, such amounts to be determined using the ongoing actuarial and
funding assumptions of the Plan; (iv) such Plan is fully funded in
an amount sufficient to pay all liabilities accrued (including
liabilities and obligations for health care, life insurance and
other benefits after termination of employment) and claims incurred
to the date hereof, or the Unaudited Balance Sheet contains
adequate reserves or paid-up insurance has been provided, therefor;
(v) on the Closing Date such Plan will be fully funded in an amount
sufficient to pay all liabilities accrued (including liabilities
and obligations for health care, life insurance and other benefits
after termination of employment) and claims incurred to the Closing
Date, or adequate reserves will be set up on PST's books and
records, or paid-up insurance will be provided, therefor; and (vi)
such Plan has been administered and operated only in the ordinary
and usual course and substantially in accordance with its terms,
and there has not been in the four years prior hereto any material
increase in the liabilities of such Plan.
(c) Schedule 3.26(c) lists each Plan which is an
"employee benefit plan" as defined in Section 3(3) of ERISA,
including any terminated pension plans and Multiemployer Benefit
Plans, which covers or covered any employee of either Company
("ERISA Plan").
(d) None of the ERISA Plans is a "multiemployer plan"
within the meaning of Section 3(37) of ERISA ("Multiemployer
Benefit Plan"), which is contributed to by an employer other than
PST or an entity under common control with PST. Neither Company is
or has ever been a party to or obligated in any manner to
contribute to, or otherwise participate in, any Multiemployer
Benefit Plan.
(e) With respect to each ERISA Plan, except as set
forth on Schedule 3.26(c), neither such Plan, nor any trustee,
administrator, fiduciary, agent or employee thereof, has at any
time been involved in a transaction which would constitute a
"prohibited transaction" within the meaning of Section 406 of ERISA
or Section 4975 of the Code, nor has any such person been involved
in or caused such Plan to be involved in a breach of fiduciary duty
under Section 404 of ERISA.
(f) Of the ERISA Plans, only the Prince Street
Technologies, LTD 401(K) Retirement Plan (collectively the "Company
Plans") are "employee pension benefit plans" within the meaning of
Section 3(2) of ERISA. With respect to each Company Plan, except
as set forth on Schedule 3.26(f): (i) such Company Plan
constitutes a qualified plan within the meaning of Section 401(a)
of the Code and the trust thereunder is exempt from federal income
tax under Section 501(a) of the Code; (ii) all minimum funding
standards required by law with respect to the funding of benefits
payable or to be payable under such Company Plan have been met;
(iii) there is no "accumulated funding deficiency" within the
meaning of Code Section 412 under such Company Plan; (iv) no
reportable event as described in Section 4043 of ERISA has
occurred, or is continuing, with respect to such Company Plan, and
neither Company has incurred any liability to the Pension Benefit
Guaranty Corporation; (v) if such Company Plan is a defined benefit
plan, the fair market value of the assets of the Company Plan trust
are not less than the actuarial present value of benefits (both
vested and nonvested) accrued under such Company Plan with respect
to participants and beneficiaries, determined on a termination
basis and as though all such accrued benefits were fully vested and
nonforfeitable as of the Closing Date, taking into consideration
the subsidies required under the Code and the regulations and
rulings thereunder and using the ongoing actuarial methods and
assumptions of such Company Plan, which methods and assumptions are
reasonable both individually and in the aggregate; and (vi) if the
Company Plan is a defined contribution plan, it is funded in an
amount equal to the participants' account balances, whether or not
vested.
(g) Each Plan which covers, or is intendedprimarily to
cover, only employees who are located in a country other than the
United States ("Foreign Plan") is listed on Schedule 3.26(g) and,
except as set forth on Schedule 3.26(g): (i) each Foreign Plan
covers only employees of PST or an employer which is a part of the
same controlled group of corporations as PST; (ii) each Foreign
Plan has been funded, administered and operated in compliance with
the laws of the jurisdiction(s) to which it is subject; and (iii)
with respect to each Foreign Plan, adequate reserves have been
provided on the Unaudited Balance Sheet with respect to the
liabilities for such Plans, and from the date thereof to the
Closing Date PST has and shall continue to provide for adequate
reserves therefor on PST's books and records.
(h) Except as set forth on Schedule 3.26(h), neither of
the Companies nor any of the Plans, has any obligation to provide,
or liability for, health care, life insurance or other benefits
after termination of employment ("Post-employment Benefits"),
except for retirement benefits under the Company Plans or except as
required by Section 601 of ERISA and Section 4980B of the Code.
With respect to (i) all persons terminated or retired on the
Closing Date, and (ii) active employees and other participants and
beneficiaries, to the extent Post-employment Benefits (other than
qualified retirement plan benefits under the Company Plans) have
been, or are reasonably expected to be, earned by service to the
Closing Date, paid-up insurance or plan funding will be provided,
or the books and records of PST will contain adequate reserves in
an amount not less than the present value of all such benefits,
determined as though all such Post-employment Benefits were fully
vested and nonforfeitable and assuming the continuation of all such
Plans, using actuarial methods and assumptions which are reasonable
individually and in the aggregate. As of the Closing Date, notice
of the unavailability of continuation coverage (as defined in
Section 602 of ERISA and Section 4980B of the Code) will have been
provided to all persons entitled thereto and all persons electing
such coverage have been or will be provided such coverage.
(i) Except as set forth on Schedule 3.26(i), neither of
the Companies nor any member of the controlled group of
corporations or businesses of which it is a part has taken, or
intends to take, any action and no event has occurred which has
resulted or could reasonably be expected to result in withdrawal
liability under Title IV of ERISA with respect to any Multiemployer
Pension Plan.
(j) To the extent either Company or Purchaser is
adopting or continuing any Plan, nothing contained in this
Agreement shall limit or restrict Purchaser's right from and after
the Closing Date to amend or to modify any of the Plans in such
manner as the Purchaser deems appropriate or to terminate any of
the Plans.
3.27 ENVIRONMENTAL MATTERS. Each Company (including its
predecessors for whose acts and omissions it is responsible) have
complied in all material respects with all applicable laws, rules,
regulations and ordinances relating to pollution and environmental
control. All hazardous or toxic waste, materials and substances
on, in, under or off-site from the Real Property, have been
properly removed and disposed of, and no past or present disposal,
spill or other release of, or treatment, transportation or other
handling of, hazardous waste, materials or substances on, in, under
or off-site from any Real Property, or adjacent property, will
subject such Company to corrective or compliance action or any
other liability. Adequate reserves have been established on the
Audited Balance Sheet to cover all costs of environmental
compliance of the Companies and such reserves will be adequate on
the Closing Date. Schedule 3.27 of the Disclosure Memorandum
contains a true, accurate and complete description of (a) all
permits, regulatory plans and compliance schedules with respect to
either Company or its properties and assets, and (b) all
litigation, investigations, inquiries, and other proceedings,
rulings, orders or citations pending, or to the knowledge of the
Shareholders, threatened or contemplated by government officials
with respect to either Company or its properties and assets, in
each case relating to emissions or potential emissions into the
environment of solids, liquids, gases, heat, light, noise,
radiation and other forms of matter or energy ("Emissions") or the
proper disposal of materials, including solid waste materials
("Disposals"). The Shareholders have delivered to Purchaser true,
accurate and complete copies of the permits, regulatory plans and
compliance schedules, if any, described in Schedule 3.27 of the
Disclosure Memorandum to the extent requested. The terms of such
permits, regulatory plans and schedules have not been modified from
those set forth in the copies delivered to Purchaser. Neither
Company is in violation of any of the permits, plans or compliance
schedules described in or required to be described in the
Disclosure Memorandum or of any law, rule, regulation, ordinance,
order or decree regulating Emissions and Disposals. Each Company
has received all permits and approvals with respect to Emissions
and Disposals required for the operation of its business. Each
Company has kept all records and made all filings required by
applicable laws, rules, regulations and ordinances with respect to
Emissions and Disposals.
3.28 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither of the
Companies, nor any officer, employee or agent of either Company,
nor any other person acting on behalf of either Company, has,
directly or indirectly, within the past five years given or agreed
to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a
position to help or hinder the business of either Company (or
assist either Company in connection with any actual or proposed
transaction) which (a) might subject either Company to any material
damage or penalty in any civil, criminal or governmental litigation
or proceeding, (b) if not given in the past, might have had a
material adverse effect on the assets, business or operations of
both Companies as reflected in the Audited or Unaudited Financial
Statements or (c) if not continued in the future, might adversely
affect in a material manner either Company's assets, business,
operations, cash flows or prospects or which might subject either
Company to suit or material penalty in any private or governmental
litigation or proceeding.
3.29 GOVERNMENT REPORTS. Schedule 3.29 of the Disclosure
Memorandum contains a full, accurate and complete list, and the
Shareholders have heretofore furnished Purchaser to the extent
requested with complete copies of, all reports, if any, filed
during the past five years, by either Company with (a) the Equal
Employment Opportunity Commission, Federal Trade Commission,
Department of Justice, Occupational Safety and Health
Administration, Internal Revenue Service (other than tax returns
and standard forms relating to compensation or remuneration of
employees), Environmental Protection Agency and Securities and
Exchange Commission or (b) any state or local agency which performs
equivalent functions.
3.30 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES.
Except as set forth in Schedule 3.30 of the Disclosure Memorandum,
neither Company is directly or indirectly a party to any contract,
agreement, or lease with, or any other commitment to, (i) any party
owning, or formerly owning, beneficially or of record, directly or
indirectly, any of the Shares, (ii) any person related by blood,
adoption or marriage to any such party, (iii) any director or
officer of either Company, (iv) any corporation or other entity in
which any of the foregoing parties has, directly or indirectly, at
least a five percent (5.0%) beneficial interest in the share
capital or other type of equity interest in such corporation, or
(v) any partnership in which any such party is a general partner
(any or all of the foregoing being herein referred to as "Related
Parties"). Without limiting the generality of the foregoing,
except as disclosed in Schedule 3.30 of the Disclosure Memorandum,
(A) no Related Party, directly or indirectly, owns or controls any
assets or properties which are or have been used in the business of
either Company, and (B) no Related Party, directly or indirectly,
engages in or has any significant interest in or connection with
any business (X) which is or which within the last three years has
been a competitor, customer or supplier of either Company or has
done business with either Company, or (Y) which as of the date
hereof sells or distributes products or services which are similar
or related to either Company's products or services.
3.31 ABSENCE OF CHANGES. Except as expressly provided for
in this Agreement or as may be set forth in Schedule 3.31 of the
Disclosure Memorandum, since the Reference Date:
(a) there has been no change in the business, assets,
liabilities, results of operations, financial condition or
prospects of either Company or in its relationships with suppliers,
customers, employees, lessors or others, other than changes in the
ordinary course of business, none of which have been or will be, in
the aggregate, materially adverse to the business or condition
(financial or otherwise) of either Company;
(b) there has been no damage, destruction or loss to
the properties or business of either Company, whether or not
covered by insurance, which has or will have a material adverse
effect on such properties or business, or the operations, or
prospects of the Company;
(c) the business of each Company has been operated in
the ordinary course and consistent with its prior practices, and
not otherwise;
(d) the properties and assets of each Company used or
useable in its business have been maintained in good order, repair
and condition, ordinary wear and tear excepted;
(e) the books, accounts and records of each Company
have been maintained in the usual, regular and ordinary manner on a
basis consistent with prior years;
(f) there has been no declaration, setting aside or
payment of any dividend or other distribution on or in respect of
the share capital of either Company, nor has there been any direct
or indirect redemption, retirement, purchase or other acquisition
of any of the share capital or other securities of either Company;
(g) there has been no (i) increase in the compensation
or in the rate of compensation or commissions payable or to become
payable by either Company to any director, officer, manager, or to
any other employee or agent of either Company earning $50,000 or
more per annum, (ii) general increase in the compensation or in the
rate of compensation payable or to become payable to hourly or
salaried employees earning less than $50,000 per annum ("general
increase" for the purpose hereof shall mean any increase generally
applicable to a class or group of employees and shall not include
increases granted to individual employees for merit, length of
service, change in position or responsibility or other reasons
applicable to specific employees and not generally applicable to a
class or group thereof), (iii) employee hired at a salary in excess
of $50,000 per annum, or (iv) payment of or commitment to pay any
bonus, profit share or other extraordinary compensation to any
employee;
(h) there has been no change in the articles of
incorporation or bylaws of either Company;
(i) there has been no labor dispute, organizational
effort by any union or unfair labor practice charge involving
either Company;
(j) there has been no issuance or sale by either
Company of any of its authorized share capital, bonds, notes,
debentures or other corporate securities, or any options, warrants
or other rights with respect thereto, nor any modification or
amendment of the rights of the holders of any outstanding share
capital, bonds, notes, debentures or other corporate securities of,
either Company, or any options, warrants or other rights with
respect thereto;
(k) there has been no mortgage, charge, lien, claim or
other encumbrance or security interest (other than liens for
current taxes which are not past due) created on or in any asset or
assets of either Company or assumed by either Company with respect
to any asset;
(l) there has been no indebtedness or other liability
or obligation (whether absolute, accrued, contingent or otherwise)
incurred by either Company, except current liabilities incurred in
connection with the purchase of goods or services in the ordinary
course of business and consistent with its prior practice, none of
which individually or in the aggregate adversely affects the
business or financial condition of either Company;
(m) no indebtedness, liability or obligation (whether
absolute, accrued, contingent or otherwise) has been discharged or
satisfied, other than current liabilities reflected in the Audited
Balance Sheet of PST, and current liabilities of PST incurred
since the date thereof in the ordinary course of business and
consistent with its prior practice;
(n) there has been no sale, transfer, lease or other
disposition of any asset or assets of either Company, except sales
of inventory by PST in the ordinary course of business, and no debt
to, or claim or right of, either Company has been cancelled,
compromised, waived or released;
(o) there has been no amendment, termination or waiver
of, or any notice of any amendment, termination or waiver of, any
material right of either Company under any contract, agreement or
lease, or governmental license, permit or permission;
(p) neither Company has not made any loans which remain
outstanding on the date hereof to a Related Party or guaranteed or
entered into any agreement in the nature of a guarantee for the
benefit of any Related Party;
(q) there have been no amendments or other corporate
actions having the effect of an amendment increasing past or future
contributions of any kind whatsoever to any Employee Benefit Plan
of either Company;
(r) neither Company has paid for or agreed to pay for,
or otherwise incurred, any expenses with respect to any products or
services which were delivered or rendered to, or for the benefit
of, or guaranteed the indebtedness or any other obligation of, any
person, firm or corporation, including, without limitation, the
Shareholders or any Related Party, other than PST;
(s) neither Company has (i) paid any judgment resulting
from any suit, proceeding, arbitration, claim or counterclaim or
(ii) made any payment to any party of more than $10,000 in
settlement of any suit, proceeding, arbitration, claim or counter-
claim;
(t) PST has not discontinued or determined to
discontinue the production or sale of any products previously
produced or sold by such Company, representing more than one
percent (1.0%) of such Company's annual sales during the period
covered by the Audited Financial Statements;
(u) neither Company has transferred or granted any
rights under, or entered into any settlement regarding the breach
or infringement of, any United States or foreign license, patent,
copyright, trademark, trade name, trade secret, invention or
similar rights, or modified any existing rights with respect
thereto;
(v) neither Company has acquired any capital shares or
other securities of any corporation or any interest in any business
enterprise, or otherwise made any loan or advance to or investment
in any person, firm, or corporation; and
(w) PST has not failed to replenish its inventories and
supplies in a normal and customary manner consistent with its prior
practice and prudent business practices prevailing in the industry,
or made any purchase commitment in excess of the normal, ordinary
and usual requirements of its business or at any price in excess of
the then-current market price or upon terms and conditions more
onerous than those normal, customary and consistent with its prior
practices (which are prudent business practices prevailing in the
industry), or made any change in its selling, pricing, advertising
or personnel practices inconsistent with its prior practice and
prudent business practices prevailing in the industry.
3.32 ADEQUACY OF PURCHASER'S DISCLOSURES.
(a) Each Shareholder individually hereby acknowledges
the receipt of a copy of the following documents or information:
(i) an executed copy of this Agreement; (ii) Purchaser's 1992
Annual Report to Shareholders; (iii) Purchaser's Definitive Proxy
Statement Relating to its 1993 Annual Shareholders Meeting; (iv)
Purchaser's Annual Report on Form 10-K for its Fiscal Year Ended
January 3, 1993; (v) Purchaser's Quarterly Report on Form 10-Q for
the First, Second and Third Quarters of its 1993 Fiscal Year; (vi)
Purchaser's Report on Form 8-K dated July 6, 1993; and (vii)
Purchaser's Report on Form 8-K/A dated September 1, 1993.
(b) Each Shareholder has had an opportunity to ask
questions of and receive answers from Purchaser concerning the
terms and conditions of the transactions outlined in this
Agreement, and to obtain additional information necessary to verify
the accuracy of the information concerning Purchaser furnished in
the other documents listed in subparagraph (a) above.
(c) Without limiting the foregoing, each Shareholder
has had the opportunity to become familiar with the business,
financial condition, management, prospects and operations of
Purchaser (and of PST and PSHC); such documents as each Shareholder
has requested pertaining to Purchaser's business have been made
available for inspection and review (to the extent they exist or
reasonably could be made available; and each Shareholder has (or
their representatives) have had a reasonable opportunity to ask
questions of, receive answers from, and obtain information
regarding Purchaser and its business. Each Shareholder has
knowledge and experience in financial and business matters
sufficient to enable such Shareholder to utilize the information
made available to such Shareholder in connection with the Merger,
and each Shareholder's investment in the Purchaser's Class A Common
Stock, to evaluate the merits and risks associated therewith
(including without limitation the potential tax effects of the
transactions contemplated herein as to the Shareholder or whether
the transactions contemplated herein qualify as a tax free exchange
of such Shareholders' stock, all as to which Purchaser makes no
representation or warranty whatsoever) and to make an informed
decision with respect thereto.
3.33 FULL DISCLOSURE. No representation, warranty or
covenant contained in this Agreement, the Merger Agreement or in
the Disclosure Memorandum or any other written statement delivered
pursuant hereto or in connection with the transactions contemplated
hereby contains or shall contain any untrue material statement nor
shall such representations, warranties and covenants taken as a
whole omit any statement necessary in order to make any material
statement not misleading. There is no fact known to the
Shareholders which adversely affects, or in the future may
adversely affect, the business, operations, cash flows, affairs,
prospects, properties or assets or the condition, financial or
otherwise, of either Company which has not been disclosed in this
Agreement, the Disclosure Memorandum or in the documents,
certificates and written statements furnished to Purchaser for use
in connection with the transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
As an inducement to the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby,
Purchaser represents, warrants and covenants as follows:
4.1 ORGANIZATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Georgia.
4.2 AUTHORIZATION; NO INCONSISTENT AGREEMENTS.
Purchaser has full corporate power and authority to make, execute
and perform this Agreement, and the transactions contemplated
hereby. This Agreement and all transactions required hereunder to
be performed by Purchaser have been duly and validly authorized and
approved by all necessary corporate action on the part of Pur-
chaser. This Agreement has been duly and validly executed and
delivered on behalf of Purchaser by its duly authorized officers,
and this Agreement constitutes the valid and legally binding
obligation of Purchaser enforceable, subject to general equity
principles, in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting the rights of creditors generally. Neither the
execution and delivery of this Agreement nor the consummation of
the transactions hereby contemplated will constitute a violation or
breach of the articles of incorporation or the bylaws of Purchaser
or any provision of any contract or other instrument to which
Purchaser is a party or by which any of the assets of Purchaser may
be affected or secured, or any order, writ, injunction, decree,
statute, rule or regulation to which Purchaser is subject, or will
result in the creation of any lien, charge, or encumbrance on any
of the assets of Purchaser or acceleration of any debt.
4.3 FULL DISCLOSURE. No representation or warranty of
Purchaser in this Agreement, nor any statement or certificate
furnished or to be furnished by Purchaser pursuant hereto or in
connection with the transactions contemplated herein, contains or
will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
5. CONDUCT OF BUSINESS OF COMPANY PENDING CLOSING.
The PST/PSHC Shareholders covenant and agree that, except as
may otherwise be provided herein, without the prior written consent
of Purchaser, between the date hereof and the Closing Date:
5.1 BUSINESS IN THE ORDINARY COURSE. The business of
each Company shall be conducted only in the ordinary and usual
course and consistent with prior practices, without the creation of
any additional indebtedness for borrowed money. Without limiting
the generality of the foregoing:
(a) Neither Company will enter into any contract of the
kind described in Paragraph 3.19 hereof and, except as otherwise
expressly provided herein, neither Company will enter into any
contract nor effect any transaction with any Related Party;
(b) Neither Company shall enter into any contracts,
agreements or other arrangements to sell, distribute or supply
goods or services to any customer or any third party except PST in
the ordinary course of its business at prices and on terms
consistent with the prior operating practices of PST;
(c) Except for sales by PST of inventory and normal
disposal of used motor vehicles and equipment in the ordinary
course of its business, neither Company shall sell, assign,
transfer, convey, pledge, mortgage, encumber or otherwise dispose
of, or cause the sale, assignment, transfer, conveyance, pledge,
mortgage, encumbrance or other disposition of any of the assets or
properties of such Company or any interest therein;
(d) All contracts on commitments of either Company for
the purchase of raw materials, products, services and supplies
shall be entered into only by PST in the ordinary course of
business as is necessary to enable PST to conduct its normal
business operations and to maintain its normal inventory of raw
materials and finished goods, at prices and on terms consistent
with the prior operating practices of PST;
(e) Each Company shall maintain, preserve and protect
all of its assets and properties, whether real or personal,
tangible or intangible, in good condition, except for ordinary wear
and tear and damage by fire or other casualty; and each Company
shall maintain in full force and effect all insurance policies
referred to in Paragraph 3.20 hereof or other insurance equivalent
thereto;
(f) The books, records and accounts of each Company
shall be maintained in the usual, regular and ordinary course of
business on a basis consistent with prior practices and in accor-
dance with generally accepted accounting principles; and
(g) The PST/PSHC Shareholders shall use their best
efforts, and shall cause each Company to use its best efforts, to
preserve each Company's business organization, to keep available
the services of each Company's present employees, to preserve the
good will of each Company's suppliers, customers and others having
business relations with such Company, and to assist each Company in
retaining the services of key employees and agents of each Company
after the Closing Date on terms satisfactory to Purchaser.
5.2 NO MATERIAL CHANGES. No action shall be taken by
the Shareholders or either Company which shall materially alter the
organization, capitalization, or financial structure, practices or
operations of either Company. Without limiting the generality of
the foregoing:
(a) No change shall be made in the articles of
incorporation or bylaws of either Company;
(b) No change shall be made in the authorized or issued
share capital of either Company, nor shall any of the shares be
transferred beneficially or of record;
(c) Neither Company shall issue or grant any right or
option to purchase or otherwise acquire any share capital or other
security of either Company;
(d) No dividend and other distribution or payment shall
be declared or made with respect to any share capital of either
Company, and neither Company shall, directly or indirectly, redeem,
purchase or otherwise acquire any of its share capital;
(e) No change shall be made affecting the banking
arrangements of either Company; and
(f) Neither Company shall liquidate or voluntarily
declare bankruptcy or seek the appointment of a receiver, trustee
or custodian.
5.3 COMPENSATION. No increase shall be made in the
compensation payable or to become payable to any director, officer,
employee or agent of either Company, and no bonus or profit-share
payment or other arrangement (whether current or deferred) shall be
made to or with any such director, officer, employee or agent,
except the payment of bonuses as set forth in Schedule 3.31 of the
Disclosure Memorandum.
5.4 EMPLOYEE BENEFIT PLANS.
(a) Neither Company shall cause or permit any ERISA
Plan to be involved in any transaction which constitutes a
"prohibited transaction" within the meaning of Section 406 of ERISA
or Section 4975 of the Code; and each Company shall timely make all
filings, returns and reports, and timely give all notices which are
required under ERISA or the Code.
(b) With respect to the Company Plans, each Company
shall take such actions, and refrain from such actions, as are
necessary to maintain the qualification of each such Plan under
Section 404(a) of ERISA, and the exemption of each such Plan under
Code Section 501(a).
(c) Each Company shall timely make all contributions
and other payments to its Plans which it is obligated to make as of
the date hereof. Other than contributions or payments declared or
obligated to be paid to the Plans as of the date hereof, no
contribution shall be declared for or paid to any Plan including,
without limitation, Company Plans.
(d) No amendment or change to the provisions of any
Company Plan of either Company shall be made or adopted prior to
the Closing Date.
5.5 NOTICE OF CHANGE. The Shareholders shall give
Purchaser prompt written notice of any change of any of the
information contained in the representations and warranties made in
Section 3 or elsewhere in this Agreement, or in the Disclosure
Memorandum, which occur prior to the Closing.
6. CONDITIONS TO OBLIGATIONS OF PURCHASER.
All obligations of Purchaser under this Agreement are
subject to the fulfillment and satisfaction of each and every of
the following conditions on or prior to the Closing, any or all of
which may be waived in whole or in part by Purchaser:
6.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All
proceedings taken in connection with the consummation of the
transactions contemplated herein and all documents and papers
relating thereto shall be reasonably satisfactory to Purchaser and
its counsel, and Purchaser and its counsel shall have timely
received copies of such documents and papers, all in form and
substance satisfactory to Purchaser and its counsel, as reasonably
requested by Purchaser or its counsel in connection therewith.
6.2 REPRESENTATIONS AND WARRANTIES. The representa-
tions and warranties contained in Section 3 of this Agreement, the
Merger Agreement, the Disclosure Memorandum and in any certificate,
instrument, schedule, agreement or other writing delivered by or on
behalf of either Company or the Shareholders in connection with the
transactions contemplated by this Agreement shall be true and
correct as of the date when made and shall be deemed to be made
again at and as of the Closing Date and shall be true at and as of
such time.
6.3 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. The
Shareholders and each Company shall have performed and complied
with all agreements and conditions required by this Agreement and
each other agreement or instrument to which they or any of them is
a party relating to the transactions contemplated by this Agreement
to be performed or complied with by each such party prior to or on
the Closing Date.
6.4 CERTIFICATE OF SHAREHOLDERS. The Shareholders
shall have delivered to Purchaser a certificate, executed by each
of the Shareholders, or on behalf of each of the Shareholders by
their Agent, dated the Closing Date, certifying in such detail as
Purchaser may reasonably request as to (a) the fulfillment and
satisfaction of the conditions specified in Paragraphs 6.2 and 6.3
above, and (b) the absence of any material adverse change in the
business of either Company prior to the Closing Date.
6.5 CERTIFICATE OF INCORPORATION AND BYLAWS. There
shall be delivered to Purchaser a copy of each Company's articles
of incorporation, certified by the Secretary of State of such
Company's state of incorporation not more than 15 days prior to the
Closing Date, and a copy of its bylaws certified by the Secretary
or an Assistant Secretary of such Company on the Closing Date. The
articles of incorporation and bylaws shall be in the form attached
to the Disclosure Memorandum. The Shareholders shall have
delivered to Purchaser certificates, dated not more than five days
prior to the Closing Date, from the Secretary of State of the state
of each Company's incorporation and of each other state where
either Company is qualified to transact business as to the good
standing of such Company under the laws of such states.
6.6 OPINION OF COUNSEL. Purchaser shall have received
from Kaufman, Chaiken & Sorensen, counsel for the Companies and the
Shareholders, an opinion, dated as of the Closing Date, in form and
substance reasonably satisfactory to Purchaser and addressing those
matters as shown on Exhibit D attached hereto and such other
matters customarily covered in opinions of sellers' counsel in the
sale of business context.
6.7 GOVERNMENT CONSENTS. Purchaser shall have received
from any and all persons, firms and other legal entities, or any
public or governmental authorities, bodies or agencies or judicial
authority having jurisdiction over the transactions contemplated by
this Agreement, or any part hereof, such consents, authorizations
and approvals as are necessary for the consummation thereof, and
all notices required to be given to government authorities shall
have been given and all applicable waiting periods shall have
expired.
(a) OTHER CONSENTS. The Shareholders shall have delivered
to Purchaser such consents and approvals from each Company's
lessors, lenders and other persons, firms and other entities having
business relations with either Company as are necessary in Pur-
chaser's reasonable opinion for the continuation in full force and
effect after the Closing (a) of each Company's leases, loan
arrangements, and other contracts and agreements and (b) of each
Company's business in the same manner as conducted prior to the
Closing.
6.8 TERMINATION OF CERTAIN CONTRACTS. Each Company shall
have terminated, without further liability of such Company to the
Shareholders or any other party, any agreements with the
Shareholders or their affiliates or relatives described in
Paragraph 2.7 hereof.
6.9 MISCELLANEOUS. Purchaser and its counsel shall have
received such other opinions, certifications and documents from
each Company or the Shareholders as Purchaser and its counsel may
reasonably request.
(a) FINANCING. Purchaser shall have secured adequate
financing for the payment of any cash portion of the Merger
Consideration.
6.10 REGISTRATION STATEMENT. The Registration Statement
shall have been declared effective by the Commission under the
Securities Act; no stop order shall have been issued with respect
thereto and all necessary approvals under state securities or blue
sky laws with respect thereto shall have been received.
7. CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS.
All of the obligations of the Shareholders under this
Agreement are subject to the fulfillment and satisfaction of each
and every of the following conditions on or prior to the Closing
Date, any or all of which may be waived in whole or in part by the
Shareholders:
7.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Section 4 of this Agreement and in the
Merger Agreement shall be true and correct as of the date when made
and shall be deemed to be made again at and as of the Closing Date
and shall be true at and as of such date.
7.2 RESOLUTIONS. Purchaser shall have delivered to the
Shareholders duly adopted resolutions of the Board of Directors of
Purchaser, certified by the Secretary or an Assistant Secretary of
Purchaser, dated the Closing Date, authorizing and approving the
execution of this Agreement by Purchaser and all other action
necessary to enable Purchaser to comply with the terms of this
Agreement.
7.3 PAYMENT OF PURCHASE PRICE. Purchaser shall have
caused the Merger Consideration due at Closing to be paid as
provided in Section 1.
8. INDEMNITIES.
8.1 INDEMNIFICATION OF PURCHASER. The Shareholders
shall, jointly and severally, indemnify and hold harmless Pur-
chaser, its affiliates, their officers and directors and each
Company (hereinafter collectively called "Indemnitees"), from and
against and in respect of any and all loss, damage, liability, cost
and expense, including reasonable attorneys' fees and amounts paid
in settlement pursuant to Paragraph 8.3(c) (all of the foregoing
being hereinafter called "Indemnified Losses"), suffered or
incurred by any Indemnitee by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach
or nonfulfillment of any agreement of the Shareholders or the
Companies or any of them contained in this Agreement or in any
certificate, schedule, instrument or document delivered to
Purchaser by or on behalf of the Shareholders pursuant to the
provisions of this Agreement, including, without limitation, the
Disclosure Memorandum and the Merger Agreement;
(b) all liabilities and obligations of, or claims,
demands or actions against, either Company of any nature
whatsoever, whether known or unknown, accrued, absolute, contingent
or otherwise, existing as of the Reference Date, to the extent not
a liability of PST reflected or reserved against in full in the
Audited Balance Sheet, which are not disclosed in this Agreement or
the Disclosure Memorandum, including, without limitation: (i) any
tax liabilities of PST (to the extent not so reflected or reserved
against) accrued in respect of, or measured by PST's income for any
period or portion of a period prior to the Reference Date or
arising out of transactions entered into or any state of facts
existing prior to such date; and (ii) any claims or liabilities
arising out of any act or omission of either Company or any of its
agents or employees or any claims or liabilities with respect to
defective, or allegedly defective, goods or services; and
(c) all liabilities and obligations of, or claims,
demands or actions against, either Company of any nature
whatsoever, whether known or unknown, accrued, absolute, contingent
or otherwise, arising out of the conduct of its business between
the Reference Date and the Closing Date other than in the ordinary
course, including, without limitation, any presently existing
contract or commitments of the character described in Paragraph
3.19 hereof and not listed in the Disclosure Memorandum, or any
contract or commitment entered into or made by either Company
between the date hereof and the Closing Date which contravenes the
provisions of Section 5 hereof, any act or omission of either
Company or any of its agents or employees, or any claims or
liabilities with respect to defective goods or allegedly defective
goods, which are not disclosed in this Agreement or the Disclosure
Memorandum.
The total amount of Indemnified Losses paid hereunder shall
be limited to fifty percent (50%) of the Merger Consideration,
provided that any Indemnified Losses attributable to a knowing
misrepresentation or knowing nondisclosure will not be so limited
so long as the total amount of Indemnified Losses paid hereunder do
not exceed the full amount of the Merger Consideration. Provided,
that Indemnified Losses shall not include any losses arising out of
any situation or circumstances that was disclosed in writing prior
to the Closing Date by the Companies or the Shareholders, whether
in the Disclosure Memorandum or otherwise, to any executive officer
of Purchaser. Provided, further, however, that the limitations
contained in this paragraph shall not apply to any Indemnified
Losses suffered or incurred by any Indemnitee by reason of, or
arising out of, any liabilities and obligations of, or claims,
demands or actions against PSHC, including without limitation any
tax liabilities of PSHC.
8.2 PAYMENT. The Shareholders shall, subject to the
provisions of Paragraphs 8.3 and 8.4 hereof, reimburse the Indem-
nitees, within 20 days after written demand on the Shareholders,
for any Indemnified Loss; provided, however, that payment shall be
required to be made hereunder only to the extent that the aggregate
Indemnified Losses exceed one-half percent (1/2%) of the Merger
Consideration.
8.3 DEFENSE OF CLAIMS.
(a) Should any claim or action by a third party arise
after the Closing Date for which the Shareholders are liable under
the terms of this Agreement, the Indemnitees shall notify the
Shareholders promptly after such claim or action arises and is
known to Indemnitees, and shall give the Shareholders a reasonable
opportunity:
(i) to take part in any examination of the
books and records of the Companies;
(ii) to conduct any proceedings or negotia-
tions in connection therewith and necessary or appropriate to
defend the Indemnitees;
(iii) to take all other required steps or
proceedings to settle or defend any such claim or action; and
(iv) to employ counsel to contest any such
claim or action in the name of the Indemnitees or otherwise.
The expenses of all proceedings, contests or lawsuits with respect
to such claims or actions shall be borne by the Shareholders. If
the Shareholders wish to assume the defense of such claim or
action, they shall give written notice to the Indemnitees within 30
days after notice from the Indemnitees of such claim or action
(unless the claim or action reasonably requires a response in less
than 30 days after the notice is given to the Shareholders, in
which event they shall notify Indemnitees at least 10 days prior to
such reasonably required response date), and the Shareholders shall
thereafter assume the defense of any such claim or liability,
through counsel reasonably satisfactory to the Indemnitees;
provided that Indemnitees may participate in such defense at their
own expense and shall, in any event, have the right to control the
defense of the claim or action.
(b) If the Shareholders shall not assume the
defense of, or if after so assuming they shall fail to defend, any
such claim or action, the Indemnitees may defend against any such
claim or action in such manner as they may deem appropriate
(provided that the Shareholders may participate in such defense at
their own expense) and the Indemnitees may settle such claim or
litigation on such terms as they may deem appropriate, and the
Shareholders jointly and severally shall promptly reimburse the
Indemnitees for the amount of all expenses, legal and otherwise,
reasonably and necessarily incurred by the Indemnitees in connec-
tion with the defense against and settlement of such claim or
action. If no settlement of such claim or litigation is made, the
Shareholders jointly and severally shall satisfy any judgment
rendered with respect to such claim or in such action, before
Indemnitees are required to do so, and pay all expenses, legal or
otherwise, reasonably and necessarily incurred by the Indemnitees
in the defense of such claim or litigation.
(c) If a judgment is rendered against any of
the Indemnitees in any action covered by the indemnification
hereunder, or any lien in respect of such judgment attaches to any
of the assets of any of the Indemnitees, the Shareholders shall
immediately upon such entry or attachment pay such judgment in full
or discharge such lien unless, at the Shareholders' expense and
direction, an appeal is taken under which the execution of the
judgment or satisfaction of the lien is stayed. If and when a
final judgment is rendered in any such action, the Shareholders
shall forthwith pay such judgment or discharge such lien before any
of the Indemnitees is compelled to do so.
8.4 COMPUTATION OF INDEMNIFIED LOSSES. The amount
of any Indemnified Loss otherwise payable to Indemnitees hereunder
shall be reduced: (a) by the amount of any insurance proceeds
received by the Companies as compensation for the damage or loss
caused by the act, omission, fact or circumstances giving rise to
the Indemnified Loss; (b) if the payment of any Indemnified Loss
will provide the Companies with income tax deductions or credits,
by the amount of the tax savings realized by the Companies as a
result of such deductions or credits, which amount shall be
discounted to its present value as of the date of the payment of
the Indemnified Loss by the Companies at the rate of interest
charged on such date by the Internal Revenue Service on
underpayment of taxes; and (c) by the net amount recovered by PST
during the Survival Period (as defined in Section 9 below) in
respect of accounts receivable and other amounts owing to PST which
were charged against PST's reserve for doubtful accounts in periods
prior to the Reference Date, or which were written off by PST prior
to such date, after deducting all costs of collection, including,
without limitation, all court costs, attorneys' fees and similar
expenses. Notwithstanding any provision to the contrary in this
Agreement, the Shareholders shall have no responsibility after the
Closing for any income tax liabilities of PSHC, PST or the
Surviving Corporation for any period, except that the Shareholders
shall be responsible for any such income tax liabilities solely to
the extent such liabilities are inconsistent with the
representations and warranties contained in Paragraph 3.23, and any
such inconsistent liabilities shall constitute Indemnified Losses
hereunder until the expiration of the applicable statute of
limitations for such taxes.
8.5 ACTION BY COMPANY. The failure of either
Company to give any notice or to take any action hereunder shall
not be deemed a waiver of any of the rights of such Company or any
of the other Indemnitees hereunder. Waivers of any rights of
either Company must be in writing and signed by Purchaser as well
as such Company. Any compromise, settlement or other resolution of
a claim of either Company hereunder shall be binding on such
Company only if approved in advance and in writing by Purchaser.
8.6 NO LIABILITY OR CONTRIBUTION BY COMPANIES.
Neither Company shall have any liability to any Shareholder as a
result of any breach of warranty, misrepresentation or
nonfulfillment or breach of any agreement of either Company in this
Agreement, the Merger Agreement or in any certificate, schedule,
instrument or document delivered to Purchaser pursuant to the
provisions of this Agreement, including, without limitation, the
Disclosure Memorandum, and no Shareholder shall have any right of
contribution against either Company on account of any event arising
prior to or as of the Closing Date.
9. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS.
9.1 Survival. The representations, warranties,
covenants, agreements and indemnifications of the parties contained
in this Agreement or in any writing delivered pursuant to the
provisions of this Agreement shall survive any investigation
heretofore or hereafter made by Purchaser and the consummation of
the Merger and the other transactions contemplated herein and,
unless a different time period is set forth elsewhere in this
Agreement with respect to the operation, effect or survival of a
specific representation, warranty, covenant, agreement or
indemnification, shall continue in full force and effect for the
period (the "Survival Period") beginning on the Closing Date and
continuing until and including the first business day after the
expiration of two years from and after (a) the Closing Date or (b)
with respect to Indemnified Losses arising out of the matters
described in Section 8.1(b)(i) above, the date on which the federal
income tax return of PST or PSHC, as the case may be, for the
period including the Closing Date shall be filed with the Internal
Revenue Service. Provided, however, that the Survival Period shall
be extended automatically to include any time period necessary to
resolve a claim for indemnification which was made before
expiration of the Survival Period but not resolved prior to its
expiration; and, provided further, that any such extension shall
apply only as to claims asserted and not so resolved within the
Survival Period. Notwithstanding any of the foregoing to the
contrary, the representations and warranties made by Shareholders
in Section 3.32 shall survive indefinitely.
10. TERMINATION.
10.1 TERMINATION FOR CERTAIN CAUSES. This
Agreement may be terminated at any time prior to or on the Closing
Date upon written notice to the other party as follows, and, upon
such termination of this Agreement, no party hereto shall have any
liability to the other:
(a) By Purchaser, if a material adverse
change in the financial condition or business of either Company
shall have occurred, or any substantial part of the assets of
either Company are destroyed due to fire or other casualty.
(b) By Purchaser, if the terms, covenants or
conditions of this Agreement to be complied with or performed by
the Shareholders at or before the Closing shall not have been
complied with or performed and such noncompliance or nonperformance
shall not have been waived by Purchaser.
(c) By Purchaser, if there is any fact or
condition with respect to the business of either Company, either
Company's assets or contracts, or any obligation of either Company
which materially and adversely affects such business, assets,
contracts or obligations or the value or continuance of such
business.
(d) By any party, if any action, suit or
proceeding shall have been instituted or threatened against any
party to this Agreement to restrain or prohibit, or to obtain
substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated herein, which, in the
good faith opinion of such party and legal counsel to such party,
would cause the consummation of the transactions herein
contemplated to subject that party to a significant risk of
material loss.
11. POWER-OF-ATTORNEY.
11.1 APPOINTMENT OF AGENT. The Shareholders and
each of them, hereby irrevocably constitute and appoint Robert S.
Weiner (the "Agent") as their agent and attorney-in-fact to modify,
amend or otherwise change this Agreement, or any of its terms or
provisions (including modifications, amendments or changes
subsequent to Closing), to take all actions and to execute all
documents (including all actions and documents required under
Section 6 hereof) necessary or desirable to consummate the
transactions contemplated by this Agreement, to tender their Shares
pursuant to the Merger Agreement and to accept Merger Consideration
in connection therewith and to take all actions and to execute all
documents which may be necessary or desirable in connection
therewith (including, without limitation, delivery of the
certificates for their Shares and execution of such powers of
attorney or other instruments as may be necessary to comply with
the Merger Agreement), to give and receive consents and all notices
hereunder, to negotiate and settle claims for indemnification under
Section 8 hereof, and to perform any other act arising under or
pertaining to this Agreement, the Merger Agreement and the
transactions contemplated hereby. The Shareholders, and each of
them, agree that service of process upon the Agent in any action or
proceeding arising under or pertaining to this Agreement shall be
deemed to be valid service of process upon the Shareholders, and
any claim by Purchaser against the Shareholders, or any of them, in
respect to this Agreement may be asserted against, and settled
with, said Agent. The Agent shall be deemed to have accepted the
appointment herein upon his execution of this Agreement.
11.2 LIABILITY OF AGENT. Nothing contained herein
shall be deemed to make the Agent personally liable to the other
Shareholders because of service in his capacity as agent and
attorney-in-fact. In performing any of his duties hereunder, the
Agent shall not incur any liability to the other Shareholders for
losses, damages, liabilities or expenses, except for his own wilful
default.
11.3 SUCCESSION. In the event of the death, dis-
ability, incompetency or resignation of the original Agent, the
successor agent shall be Randall J. Hatch. In the event of the
death, disability, incompetency or resignation of any successor
Agent, the Shareholders shall, within 30 days after notice from
Purchaser, determine by simple majority vote and designate a
successor Agent or Agents, as the case may be, who shall have all
of the rights, powers and authority conferred in this power of
attorney, and if the Shareholders fail so to designate such
successor Agent(s) within such period, Purchaser may petition a
court of appropriate jurisdiction for appointment of such successor
Agent(s).
11.4 IRREVOCABLE; BINDING ON SUCCESSORS, ETC. It
is expressly understood and agreed that this power of attorney and
the agency created hereby is coupled with an interest of the
respective parties hereto and shall be binding and enforceable on
and against the respective heirs, personal representatives,
successors and assigns of the Shareholders, and each of them, and
this power of attorney shall not be revoked or terminated by the
death, disability, bankruptcy or incompetency of the Shareholders,
or any of them, but shall continue to be binding and enforceable by
the Agent, Purchaser and their respective successors and on and
against the heirs, personal representatives, successors and assigns
of the Shareholders in the manner provided herein.
12. MISCELLANEOUS.
12.1 NOTICES.
(a) All notices, requests, demands or other
communications required or permitted to be given or made hereunder
shall be in writing and delivered personally or sent by pre-paid,
certified or registered first class mail, return receipt requested,
to the intended recipient thereof at its address set out below.
Any such notice, demand or communication shall be deemed to have
been duly given immediately if given by hand delivery to the
recipient's address, or facsimile, or three days after mailing (if
given or made by letter addressed to a location within the country
in which it is posted), and in proving same it shall be sufficient
to show that the envelope containing the same was duly addressed,
stamped and posted. The addresses of the parties for purposes of
this Agreement are:
(i) If to Purchaser: Interface, Inc.
Orchard Hill Road
P.O. Box 1503
LaGrange, Georgia 30241
Attention: Daniel T. Hendrix
With copies to: Interface, Inc.
2859 Paces Ferry
Suite 2000
Atlanta, Georgia 30339
Attention: David W. Porter
Kilpatrick & Cody
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 30309
Attention: G. Kimbrough Taylor
(ii) If to the PST/PSHC Robert S. Weiner
Shareholders: 1016 Old Powers Ferry Road
Atlanta, Georgia 30327
Jacqueline A. Colando
7609 Woodland Lane
Burr Ridge, Illinois 60525
Nancy O'Donnell
12 Weathervane Hill
Westport, Connecticut 06880
John O'Donnell
12 Weathervane Hill
Westport, Connecticut 06880
Randall J. Hatch
4702 Ageratum Court
Acworth, Georgia 30102
Traccton Corp.
c/o Robert S. Weiner
1016 Old Powers Ferry Road
Atlanta, Georgia 30327
Prince Street Holding Company
c/o Robert S. Weiner
1016 Old Powers Ferry Road
Atlanta, Georgia 30327
Robert D. Williams
1011 Housley Road
Marietta, Georgia 30066
Steven E. Andrade
78 Rockridge Court
Danville, California 94512
With a copy to: Kaufman, Chaiken & Sorensen
Suite 720
400 Perimeter Center Ter., N.E.
Atlanta, Georgia 30346-1234
Attention: Robert J. Kaufman
(b) In accordance with the provisions of Section 12
hereof, all notices, requests, demands or other communications by
Purchaser shall be deemed to have been duly given to all the
Shareholders if such notices, requests, demands or communications
are duly given in accordance with this Paragraph 12.1 to Robert S.
Weiner or such other party or parties appointed as the Agent(s) of
the Shareholders.
(c) Any party may change the address to which notices,
requests, demands or other communications to such parties shall be
delivered or mailed by giving notice thereof to the other parties
hereto in the manner provided herein.
12.2 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument.
12.3 ENTIRE AGREEMENT. This Agreement and the other Written
agreements executed and delivered by Purchaser and the Shareholders
or any of them of even date herewith supersede all prior
discussions and agreements between the parties with respect to the
subject matter hereof (including without limitation the offer
contained in the form of agreement dated November 15, 1993,
executed and delivered by Purchasers and delivered to the Agent on
behalf of the PST Shareholders, which offer shall be deemed
terminated hereby), and this Agreement and such other agreements
contain the sole and entire agreement among the parties with
respect to the matters covered hereby. This Agreement shall not be
altered or amended except by and instrument in writing signed by or
on behalf of the parties hereto.
12.4 GOVERNING LAW. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with
the laws of the State of Georgia.
12.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, successors and
assigns.
12.6 PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained herein may be exercised and shall be
applicable and binding only to the extent that they do not violate
any applicable laws and are intended to be limited to the extent
necessary to render this Agreement legal, valid and enforceable.
If any term of this Agreement, or part thereof, not essential to
the commercial purpose of this Agreement shall be held to be
illegal, invalid or unenforceable by a court of competent jurisdic-
tion, it is the intention of the parties that the remaining terms
hereof, or part thereof shall constitute their agreement with
respect to the subject matter hereof and all such remaining terms,
or parts thereof, shall remain in full force and effect. To the
extent legally permissible, any illegal, invalid or unenforceable
provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid
or unenforceable provision.
12.7 WAIVER. Any term or condition of this Agreement may be
waived at any time by the party which is entitled to the benefit
thereof, but only if such waiver is evidenced by a writing signed
by such party. No failure on the part of any party hereto to
exercise, and no delay in exercising any right, power or remedy
created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any
such party preclude any other or further exercise thereof or the
exercse of any other right, power or remedy. No waiver by any
party hereto to any breach of or default in any term or condition
of this Agreement shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or
condition hereof.
12.8 HEADINGS. The headings as to contents of particular
paragraphs of this Agreement are inserted for convenience and shall
not be construed as a part of this Agreement or as a limitation on
the scope of any terms or provisions of this Agreement.
12.9 NUMBER AND GENDER. Where the context requires, the use of
the singular form herein shall include the plural, the use of the
plural shall include the singular, and the use of any gender shall
include any and all genders.
12.10 TIME OF PERFORMANCE. Time is of the essence.
12.11 DEFINITION OF KNOWLEDGE. The words "known", "to the
knowledge of", "to the best knowledge of" or words of similar
import employed in this Agreement with reference to any person or
entity shall be conclusively presumed to mean that the person or
entity has made reasonable and diligent efforts under the cir-
cumstances to become knowledgeable.
13. INDEX TO DEFINITIONS.
The definitions for the following defined terms used in this
Agreement can be found as follows:
Defined Term Paragraph or Section
Additional PST Shares . . . . . . . . . . . 1.1(a)
Adjusted EBIT . . . . . . . . . . . . . . . 1.4
Affiliates . . . . . . . . . . . . . . . . 2.12
Agent . . . . . . . . . . . . . . . . . . . 11.1
Audited Balance Sheet . . . . . . . . . . . 3.10
Audited Financial Statements . . . . . . . 3.9
Base Monthly Amount . . . . . . . . . . . . 2.13(a)
Closing . . . . . . . . . . . . . . . . . . 1.7
Closing Date . . . . . . . . . . . . . . . 1.7
Closing Date Price . . . . . . . . . . . . 1.3
Code . . . . . . . . . . . . . . . . . . . 3.26(b)
Commission . . . . . . . . . . . . . . . . 2.11
Company . . . . . . . . . . . . . . . .Introductory Recitals
Company Contracts . . . . . . . . . . . . . 3.19
Company Plans . . . . . . . . . . . . . . . 3.26(f)
Company Territory . . . . . . . . . . . . . 2.6(c)
Converted Shares . . . . . . . . . . . . . 1.2(c)
Day's Maximum Sale Number . . . . . . . . . 2.13
Disclosure Memorandum . . . . . . . . . . . 3.1
Disposals . . . . . . . . . . . . . . . . . 3.27
Effective Time of the Merger . . . . . . . 1.1
Emissions . . . . . . . . . . . . . . . . . 3.27
EBIT . . . . . . . . . . . . . . . . . . . 1.4
EBIT Shortfall Adjustment Amount . . . . . 1.4
1993 EBIT . . . . . . . . . . . . . . . . . 1.4
ERISA . . . . . . . . . . . . . . . . . . . 3.26(b)
ERISA Plan . . . . . . . . . . . . . . . . 3.26(c)
Firm Purchase Commitments . . . . . . . . . 3.14
Foreign Plan . . . . . . . . . . . . . . . 3.26(g)
HSR Act . . . . . . . . . . . . . . . . . . 1.7
Indemnified Losses . . . . . . . . . . . . 8.1
Indemnitees . . . . . . . . . . . . . . . . 8.1
Independent Accountant . . . . . . . . . . 1.6
Leased Real Property . . . . . . . . . . . 3.17(d)
Merger . . . . . . . . . . . . . . . . . . 1.1
Merger Agreement . . . . . . . . . . . . . 1.1
Merger Consideration . . . . . . . . . . . 1.2(c)
Mohawk Letter . . . . . . . . . . . . .Introductory Recitals
Multiemployer Benefit Plan . . . . . . . . 3.26(d)
Multiemployer Pension Plan . . . . . . . . 3.26(f)
PSHC . . . . . . . . . . . . . . . . .Introductory Recitals
PSHC Shares . . . . . . . . . . . . . .Introductory Recitals
PST . . . . . . . . . . . . . . . . . .Introductory Recitals
PST Shareholders . . . . . . . . . . .Introductory Recitals
PST/PSHC Closing . . . . . . . . . . . . . 1.1(a)
PST/PSHC Merger . . . . . . . . . . . . . . 1.1(a)
PST/PSHC Merger Agreement . . . . . . . . . 1.1(a)
PST/PSHC Shareholders . . . . . . . . .Introductory Recitals
PST Shares . . . . . . . . . . . . . .Introductory Recitals
Plan . . . . . . . . . . . . . . . . . . . 3.26(a)
Post-employment Benefits . . . . . . . . . 3.26(h)
Prince Street . . . . . . . . . . . . . . . 2.6(b)
Prince Street Technologies . . . . . . . . 2.6(b)
Products . . . . . . . . . . . . . . . . . 2.6(i)
PSHC Unaudited Balance Sheet . . . . . . . 3.9
PST Unaudited Balance Sheet . . . . . . . . 3.9
Purchaser . . . . . . . . . . . . . . .Introductory Recitals
Purchaser Shares . . . . . . . . . . . . . 1.3
Real Property . . . . . . . . . . . . . . . 3.17(a)
Real Property Leases . . . . . . . . . . . 3.17(c)
Reference Date . . . . . . . . . . . . . . 3.10
Registration Statement . . . . . . . . . . 2.11
Related Parties . . . . . . . . . . . . . . 3.30
Residential Manufacturer . . . . . . . . . 2.6(c)
Restriction Period . . . . . . . . . . . . 2.13(a)
Securities Act . . . . . . . . . . . . . . 2.11
Shareholders . . . . . . . . . . . . . Introductory Recitals
Shares . . . . . . . . . . . . . . . . Introductory Recitals
Significant Customers . . . . . . . . . . . 3.21
Sub . . . . . . . . . . . . . . . . . . . . 1.1
Surviving Corporation . . . . . . . . . . . 1.2
Survival Period . . . . . . . . . . . . . . 9.1
Taxes . . . . . . . . . . . . . . . . . . . 3.23
Total Company Amount . . . . . . . . .Introductory Recitals
Traccton . . . . . . . . . . . . . . .Introductory Recitals
Unaudited Financial Statements . . . . . . 3.9
Warrant . . . . . . . . . . . . . . . .Introductory Recitals
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal or caused this Agreement to be duly executed under seal
by their duly authorized officers as of the day and year first
above written.
INTERFACE, INC.
(CORPORATE SEAL) By:________________________
Attest: Title:_____________________
______________________
Secretary
SHAREHOLDERS:
______________________(SEAL)
Robert S. Weiner
______________________(SEAL)
Randall J. Hatch
______________________(SEAL)
Nancy O'Donnell
______________________(SEAL)
John O'Donnell
______________________(SEAL)
Jacqueline A. Colando
______________________(SEAL)
Steven C. Andrade
______________________(SEAL)
Robert D. Williams
TRACCTON CORP.
By:_______________________
Name:____________________
Title:_______________
(CORPORATE SEAL)
Attest:____________________
Secretary
PRINCE STREET HOLDING COMPANY
By:_______________________
Name:___________________
Title:______________-
(CORPORATE SEAL)
Attest:______________________
Secretary
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER OF
PRINCE STREET TECHNOLOGIES, LTD.,
AND
PRINCE STREET HOLDING COMPANY
This Agreement and Plan of Merger, made and entered into as of the
____ day of _____________, 199_ (hereinafter referred to as the
"Agreement"), by and between PRINCE STREET TECHNOLOGIES, LTD., a
Georgia corporation (hereinafter sometimes referred to as "PST")
and PRINCE STREET HOLDING COMPANY, a Georgia corporation
(hereinafter sometimes referred to as "PSHC") (said corporations
being hereinafter sometimes collectively referred to as the
"Constituent Corporations"):
W I T N E S S E T H:
The Boards of Directors of each of the Constituent Corporations
deem it advisable and for the benefit of each of said corporations
and their respective shareholders that PSHC merges into PST and
that PSHC thereafter ceases its separate existence as a corporation
under Georgia law.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
ARTICLE ONE
NAMES OF MERGING CORPORATIONS
1.01 The names of the corporations proposed to be merged are
PRINCE STREET TECHNOLOGIES, LTD., a corporation organized under the
laws of the State of Georgia and PRINCE STREET HOLDING COMPANY, a
corporation organized under the laws of the State of Georgia.
ARTICLE TWO
SURVIVING CORPORATION
2.01 PSHC shall merge into PST, which shall survive the merger
(sometimes hereinafter referred to as the "Surviving Corporation"),
and thereafter the separate corporate existence of PSHC shall cease
(the "Merger").
ARTICLE THREE
EFFECTIVE TIME
3.01 EFFECTIVE TIME. This Merger shall be effective upon the
filing of Articles of Merger or a Certificate of Merger with the
Secretary of State of Georgia, pursuant to Section 14-2-1105 of the
Georgia Business Corporation Code, as amended (hereinafter referred
to as the "Effective Time").
3.01 ABANDONMENT. Notwithstanding any other provisions of
this Agreement, this Agreement may be abandoned by mutual consent
of the Boards of Directors of PST and PSHC, at any time prior
to the Effective Time.
ARTICLE FOUR
TERMS AND CONDITIONS
4.01 ARTICLES OF INCORPORATION. The Articles of Incorporation of
PST as they exist on the Effective Time shall be and remain the
Articles of Incorporation of the Surviving Corporation until the
same shall be altered, amended or repealed as therein provided.
4.02 BY-LAWS. The By-Laws of PST as they exist on the Effective
Time shall be and remain the By-Laws of the Survivin' Corporation
until the same shall be altered, amended or repealed as therein
provided.
4.03 DIRECTORS AND OFFICERS. The directors and officers of PST
duly elected and serving as of the date of this Agreement shall be
and remain the directors and officers of the Surviving Corporation
and they shall serve in office until their successors have been
duly elected or appointed and have qualified.
4.04 EFFECT OF MERGER. Upon the Effective Time, the separate
existence of PSHC shall cease and all its properties, rights,
privileges and franchises, of whatever nature and description,
including every devise or bequest that PSHC would have been capable
of taking, and including choses in action, shall be transferred to,
vested in and devolved upon the Surviving Corporation, without
further act or deed. Notwithstanding this provision, confirmatory
deeds, assignments and other like instruments, when deemed
desirable to evidence such transfer, vesting or devolution of any
property right, privilege or franchise, may at any time, or from
time to time, be made and delivered in the name of PSHC as
appropriate, by its last acting officers thereof, or by the
corresponding officers of the Surviving Corporation. The Surviving
Corporation shall be liable for all the debts and obligations,
including tax liabilities, of PSHC, and any claim existing or any
action or proceeding pending by or against PSHC may be prosecuted
to judgment or decree as if such Merger had not taken place, or the
Surviving Corporation, upon motion of such corporation or any
party, may be substituted as a party in place of either of the
corporations so merged, and such judgment or decree against either
of the corporations so merged shall be constituted a lien upon the
property of the Surviving Corporation. The Merger, however, shall
not impair in any way the rights of creditors or liens upon the
property of any corporation a party to this Merger.
4.05 FILING OF ARTICLES OR CERTIFICATE OF MERGER. The acts and
things required to be done by the Georgia Business Corporation Code
(the "Georgia Code") in order to make this Agreement effective,
including the filing of Articles of Merger or a Certificate of
Merger in the manner prescribed in the Georgia Code, shall be
attended to by the proper officers of the parties hereto as soon as
practicable.
ARTICLE FIVE
MANNER AND BASIS OF CONVERTING SHARES
5.01 Upon the Effective Time of the Merger:
(a) All of the Class A Common Stock of PST issued
and outstanding at the Effective Time shall be cancelled and
retired and no consideration shall be delivered in respect thereof.
(b) Each share of the Class B Common Stock of PST
issued and outstanding immediately prior to the Effective Time
shall continue unchanged and shall continue to evidence the same
number of shares ofClass B Common Stockof the Surviving Corporation.
(b) All of the Common Stock of PSHC issued and
outstanding at the Effective Time (the "Exchanged Shares") shall be
exchanged and be converted into solely the right to receive the
Class B Common Stock of PST as provided in Attachment A attached
hereto and incorporated herein by reference (the "Additional PST
Shares"). The former shareholders of PSHC holding Exchanged Shares
shall surrender their respective certificates representing such
shares ("Certificates) to the officers of the Surviving Corporation
for the cancellation of such Certificates on the books of PSHC and
exchange thereof for Certificates of the Surviving Corporation as
issuer. Until such surrender and exchange, each Certificate shall
represent that number of the Additional PST Shares into which the
Exchanged Shares originally represented by such Certificates have
been converted.
(d) The Additional PST Shares into which the
Exchanged Shares have been converted shall be deemed to have been
issued in full satisfaction of all rights pertaining to such
Exchanged Shares, including without limitation any obligations of
the Surviving Corporation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which
may have been declared or made by PSHC on such Exchanged Shares
prior to the date hereof and which remain unpaid at the Effective
Time, and at and after the Effective Time there shall be no further
registration or transfers on the stock transfer books of PSHC of
the Exchanged Shares which were outstanding immediately prior to
the Effective Time except as contemplated in this Agreement. If,
after the Effective Time, Certificates representing Exchanged
Shares are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged, as provided in Subsection
(b).
ARTICLE SIX
MISCELLANEOUS PROVISIONS
6.01 Approval by Directors. Each of PST and PSHC represents and
warrants to the other that this Agreement has been duly adopted,
ratified and approved by its Board of Directors in a manner
consistent with the Articles of Incorporation and By-Laws of each
of such corporation and in accordance with the Georgia Code.
6.02 APPROVAL BY SHAREHOLDERS. Each of PST and PSHC represents
and warrants to the others that this Agreement has been submitted
to and duly approved by its shareholders, in each case by a vote
not less than the minimum required for approval hereof by the
respective Articles of Incorporation and By-Laws of such
corporation and by the Georgia Code.
6.03 CONFORMITY WITH STATE LAW. The matters set forth in this
Agreement shall be considered to be modified to the extent required
by the laws of the State of Georgia, so that nothing contained
herein shall be construed to be in any way violative of such laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
PRINCE STREET TECHNOLOGIES, LTD.
By:_______________________________
Name: Robert S. Weiner
Title: Chief Executive Officer
PRINCE STREET HOLDING COMPANY
By:_____________________________
Name: _______________________
Title:_______________________
<TABLE>
<CAPTION>
Attachment "A"
to
Agreement and Plan of Merger
between
Prince Street Holding Company
and
Prince Street Technologies, Ltd.
STOCK IN STOCK IN STOCK IN STOCK IN
PRINCE STREET PRINCE STREET PRINCE STREET PRINCE STREET
HOLDING COMPANY TECHNOLOGIES LTD. TECHNOLOGIES LTD. TECHNOLOGIES LTD. PERCENTAGE
SHAREHOLDER PRE-MERGER PRE-MERGE ISSUED (CANCELLED) IN MERGER AFTER MERGER AFTER MERGER
OF PST AND PSHC OF PST AND PSHC OF PST AND PSHC OF PST AND PSHC OF PST
COMMON CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B AND PSHC
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert S. Weiner 1,085,991.5 -- 114 -- 320.7773 -- 434.7773 62.9200
John and Nancy O'Donnell 206,609 -- 40 -- 61.0276 -- 101.0276 14.6205
Randall J. Hatch 149,182.5 -- 8 -- 44.0651 -- 52.0651 7.5348
Jacqueline A. Colando 113,816 -- 22 -- 33.6187 -- 55.6187 8.0490
Steven C. Andrade 80,10 -- -- -- 23.6621 -- 23.6621 3.4243
Robert D. Williams 57,043 -- -- -- 16.8492 -- 16.8492 2.4384
Traccton Corp. -- -- 7 -- -- -- 7.0000 1.0130
Prince Street Holding
Company -- 500 -- (500) -- -- 0.0000 --
--------------------------------------------------------------------------------------------------------
1,692,750 500 191 (500) 500.0000 -- 691.0000 100.0000
</TABLE>
<PAGE>
EXHIBIT B
AGREEMENT AND PLAN OF MERGER OF
PRINCE STREET TECHNOLOGIES, LTD.,
AND
PST ACQUISITION CORP.
This Agreement and Plan of Merger, made and entered into as of the
____ day of _____________, 199_ (hereinafter referred to as the
"Agreement"), by and between Prince Street Technologies, Ltd., a
Georgia corporation (hereinafter sometimes referred to as PST")
and PST Acquisition Corp., a Georgia corporation (hereinafter
sometimes referred to as "Sub") (said corporations being
hereinafter sometimes collectively referred to as the "Constituent
Corporations"):
W I T N E S S E T H:
The Boards of Directors of each of the Constituent Corporations
deem it advisable and for the benefit of each of said corporations
and their respective shareholders that Sub merges into PST and that
Sub thereafter ceases its separate existence as a corporation under
Georgia law.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
ARTICLE ONE
***
NAMES OF MERGING CORPORATIONS
1.01 The names of the corporations proposed to be merged are
PRINCE STREET TECHNOLOGIES, LTD., a corporation organized under the
laws of the State of Georgia and PST ACQUISITION CORP., a
corporation organized under the laws of the State of Georgia.
ARTICLE TWO
SURVIVING CORPORATION
2.01 Sub shall merge into PST, which shall survive the merger
(sometimes hereinafter referred to as the "Surviving Corporation"),
and thereafter the separate corporate existence of Sub shall cease
(the "Merger").
ARTICLE THREE
EFFECTIVE TIME
3.01 EFFECTIVE TIME. This Merger shall be effective upon the
filing of Articles of Merger or a Certificate of Merger with the
Secretary of State of Georgia, pursuant to Section 14-2-1105 of the
Georgia Business Corporation Code, as amended (hereinafter referred
to as the "Effective Time").
3.01 ABANDONMENT. Notwithstanding any other provisions of this
Agreement, this Agreement may be abandoned by mutual consent of the
Boards of Directors of PST and Sub, at any time prior to the
Effective Time.
ARTICLE FOUR
TERMS AND CONDITIONS
4.01 ARTICLES OF INCORPORATION. The Articles of Incorporation of
PST as they exist on the Effective Time shall be and remain the
Articles of Incorporation of the Surviving Corporation until the
same shall be altered, amended or repealed as therein provided.
4.02 BY-LAWS. The By-Laws of Sub as they exist on the Effective
Time shall become the By-Laws of the Surviving Corporation until
the same shall be altered, amended or repealed as therein provided.
4.03 DIRECTORS AND OFFICERS. The directors and officers of Sub
duly elected and serving as of the date of this Agreement shall
become the directors and officers of the Surviving Corporation and
they shall serve in office until their successors have
been duly elected or appointed and have qualified.
4.04 EFFECT OF MERGER. Upon the Effective Time, the separate
existence of Sub shall cease and all its properties, rights,
privileges and franchises, of whatever nature and description,
including every devise or bequest that Sub would have been capable
of taking, and including choses in action, shall be transferred to,
vested in and devolved upon the Surviving Corporation, without
further act or deed. Notwithstanding this provision, confirmatory
deeds, assignments and other like instruments, when deemed
desirable to evidence such transfer, vesting or devolution of any
property right, privilege or franchise, may at any time, or from
time to time, be made and delivered in the name of Sub as
appropriate, by its last acting officers thereof, or by the
corresponding officers of the Surviving Corporation. The Surviving
Corporation shall be liable for all the debts and obligations,
including tax liabilities, of Sub, and any claim existing or any
action or proceeding pending by or against Sub may be prosecuted to
judgment or decree as if such Merger had not taken place, or the
Surviving Corporation, upon motion of such corporation or any
party, may be substituted as a party in place of either of the
corporations so merged, and such judgment or decree against either
of the corporations so merged shall be constituted a lien upon the
property of the Surviving Corporation. The Merger, however, shall
not impair in any way the rights of creditors or liens upon
property of any corporation a party to this Merger.
4.05 FILING OF ARTICLES OR CERTIFICATE OF MERGER. The acts and
things required to be done by the Georgia Business Corporation Code
(the "Georgia Code") in order to make this Agreement effective,
including the filing of Articles of Merger or a Certificate of
Merger in the manner prescribed in the Georgia Code, shall be
attended to by the proper officers of the parties hereto as soon as
practicable.
ARTICLE FIVE
MANNER AND BASIS OF CONVERTING SHARES
5.01 Upon the Effective Time of the Merger:
(a) Each share of the Common Stock of Sub issued
and outstanding immediately prior to the Effective Time shall be
converted into one share of Class B Common Stock of the Surviving
Corporation.
(b) All of the Class A Common Stock of PST issued
and outstanding, if any, at the Effective Time shall be cancelled
and retired and no consideration shall be delivered in respect thereof.
(c) All of the Class B Common Stock of PST issued
and outstanding at the Effective Time (the "Exchanged Shares")
shall be exchanged and be converted solely into the right to
receive in the aggregate [(i) _____ shares of the Class A Common
Stock of INTERFACE, INC., a Georgia corporation and holder of all
of the issued and outstanding shares of Sub., and (ii) $________
in cash]<F1> (the "Merger Consideration"). In exchange for the
Exchanged Shares, the former holders of the Exchanged Shares shall
be entitled to receive a portion of the aggregate Merger
Consideration as provided in Attachment A attached hereto and
incorporated herein by reference. The former shareholders of PST
holding Exchanged Shares shall surrender their respective
certificates representing such shares to the officers of the
- ---------------
[FN]
<F1> To be completed at Closing to reflect the amount and components of the
Merger Consideration, as provided in the Acquisition Agreement.
Surviving Corporation for the exchange thereof and the cancellation
of such certificates on the books of PST[, and reissuance of
certificates of Interface, Inc. as issuer and representing the
shares of Interface, Inc. into which the Exchanged Shares have been
converted.]<F1>
(d) All Merger Consideration payable or issuable
upon any of the Exchanged Shares shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to
such Exchanged Shares, including without limitation any obligations
of the Surviving Corporation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which
may have been declared or made by PST on such Exchanged Shares
prior to the date hereof and which remain unpaid at the Effective
Time, and at and after the Effective Time there shall be no further
registration or transfers on the stock transfer books of the
Surviving Corporation of the Exchanged Shares which were
outstanding immediately prior to the Effective Time except as
contemplated in this Agreement. If, after the Effective Time,
certificates representing Exchanged Shares are presented to the
Surviving Corporation for any reason, they shall be cancelled and
exchanged, as provided in Subsection (b).
ARTICLE SIX
MISCELLANEOUS PROVISIONS
6.01 APPROVAL BY DIRECTORS. Each of PST and Sub represents and
warrants to the other that this Agreement has been duly adopted,
ratified and approved by its Board of Directors in a manner
consistent with the Articles of Incorporation and By-Laws of each
of such corporation and in accordance with the Georgia Code.
6.02 APPROVAL BY SHAREHOLDERS. Each of PST and Sub represents
and warrants to the others that this Agreement has been submitted
to and duly approved by its shareholders, in each case by a vote
not less than the minimum required for approval hereof by the
respective Articles of Incorporation and By-Laws of such
corporation and by the Georgia Code.
6.03 CONFORMITY WITH STATE LAW. The matters set forth in this
Agreement shall be considered to be modified to the extent required
by the laws of the State of Georgia, so that nothing contained
herein shall be construed to be in any way violative of such laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
PRINCE STREET TECHNOLOGIES, LTD.
By:_______________________________
Name: Robert S. Weiner
Title: Chief Executive Officer
PST ACQUISITION CORP.
By:_____________________________
Name: __________________________
Title:_______________________
<TABLE>
<CAPTION>
EXHIBIT "C"
to
Acquisition Agreement
STOCK IN STOCK IN STOCK IN STOCK IN
PRINCE STREET PRINCE STREET PRINCE STREET PRINCE STREET
HOLDING COMPANY TECHNOLOGIES LTD. TECHNOLOGIES LTD. TECHNOLOGIES LTD. PERCENTAGE
SHAREHOLDER PRE-MERGER PRE-MERGER ISSUED (CANCELLED) IN MERGER AFTER MERGER AFTER MERGER
OF PST AND PSHC OF PST AND PSHC OF PST AND PSHC OF PST AND PSHC OF PST
COMMON CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B AND PSHC
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert S. Weiner 1,085,991.5 -- 114 -- 320.7773 -- 434.7773 62.9200
John and Nancy O'Donnell 206,609 -- 40 -- 61.0276 -- 101.0276 14.6205
Randall J. Hatch 149,182.5 -- 8 -- 44.0651 -- 52.0651 7.5348
Jacqueline A. Colando 113,816 -- 22 -- 33.6187 -- 55.6187 8.0490
Steven C. Andrade 80,10 -- -- -- 23.6621 -- 23.6621 3.4243
Robert D. Williams 57,043 -- -- -- 16.8492 -- 16.8492 2.4384
Traccton Corp. -- -- 7 -- -- -- 7.0000 1.0130
Prince Street Holding
Company -- 500 -- (500) -- -- 0.0000 --
------------------------------------------------------------------------------------------------------------
1,692,750 500 191 (500) 500.0000 -- 691.0000 100.0000
ALLOCABLE
PORTION OF
MERGER
CONSIDERATION<F1>
_____________
<C>
$6,606,601.32
1,535,151.93
791,148.87
845,146.18
359,554.16
256,029.96
106,367.58
0.00
--------------
$10,500,000.00
-----------------------------------
<FN>
<F1> Aggregate Merger Consideration is subject to adjustment
pursuant to the Acquisition Agreement
</TABLE>
<PAGE>
Exhibit D
---------
The opinion of counsel for the Companies and the PST/PSHC
Shareholders, shall be to the effect that:
(a) This Agreement has been duly and validly executed
and delivered by each of the PST/PSHC Shareholders and constitutes
the valid and legally binding obligation of each PST/PSHC
Shareholder, enforceable, subject to general equity principles, in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
the rights of creditors generally;
(b) Neither the execution and delivery of this
Agreement, nor the consummation of the mergers and other
transactions contemplated herein, resulted or will result in a
violation or breach of the articles of incorporation or bylaws of
the Companies or, to the knowledge of such counsel, result in a
violation or breach of, or constitute a default under, any term or
provision of any agreement or other instrument, order, judgment,
decree, law, rule, regulation, contract or any restriction, to
which any PST/PSHC Shareholder or the Companies are a party or by
which any of them or any of their respective properties are subject
or bound, nor, to the knowledge of such counsel, will such actions
result in (i) the creation of any lien, encumbrance or charge on
any of the PST Shares, the Additional PST Shares, or the PSHC
Shares or on any of the assets of the Companies, or (ii) the
acceleration of any obligation of the Company;
(c) PST is, and prior to the PST/PSHC Merger PSHC was, a
corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia and entitled to own or lease
the properties of the Companies and to carry on their businesses as
and in the places where such properties are now owned or leased or
such businesses are now conducted, and, to the knowledge of such
counsel, the Companies have complied in all material respects with
all federal, state and local laws, rules, regulations, and
ordinances which are applicable to their operations and the conduct
of their businesses. PST is, and prior to the PST/PSHC Merger PSHC
was, duly qualified and licensed to do business as a foreign
corporation in each jurisdiction where a failure to qualify or
acquire a license would have a material adverse effect on the
business or financial condition of the Companies;
(d) PST has an authorized share capital of 10,000,000
shares of Class A common stock, par value $.01 per share, of which
none are issued or outstanding, and 10,000,000 shares of Class B
common stock, par value of $.01, of which 691 shares of Class B
common stock are duly and validly issued and outstanding, fully
paid and non-assessable, and said shares are owned beneficially and
of record by the Shareholders as set forth in Exhibit C of this
Agreement under the column heading "Stock In Prince Street
Technologies Ltd. After Merger of PST and PSHC"; immediately prior
to the PST/PSHC Merger, PST had authorized share capital as set
forth in the preceding clause, of which 500 shares of Class A
common stock and 191 shares of Class B common stock were duly and
validly issued and outstanding, fully paid and non-assessable, and
said shares were owned beneficially and of record by the PST
Shareholders as set forth in Exhibit C of this Agreement;
immediately prior to the PST/PSHC Merger, PSHC had authorized share
capital of 10,000,000 shares of Common Stock, par value $.01 per
share, of which 1,692,749 shares were duly and validly issued and
outstanding, fully paid and non-assessable, and said shares were
owned beneficially and of record by the PSHC Shareholders as set
forth in Exhibit C of this Agreement 10,000,000 shares of Class B
common stock, with a par value of $.01 per share, of which no
shares were issued and outstanding, and 1,000,000 shares of
preferred stock, with a par value of $.01 per share, of which no
shares were issued and outstanding; the PST/PSHC Merger and the
PST/PSHC Merger Agreement were approved by the requisite action of
the Boards of Directors and shareholders of PST and PSHC, the
PST/PSHC Merger has become effective, and all of the issued and
outstanding shares of PSHC have been cancelled pursuant to the
PST/PSHC Merger Agreement; the certificates for the Shares to be
delivered pursuant to the Agreement represent 100% of all of the
issued and outstanding share capital of the Companies; and to the
knowledge of such counsel, there are no options, warrants or other
rights outstanding to acquire any share capital or securities of
the Companies;
(e) To the knowledge of such counsel, there are no
actions, suits, claims, investigations or proceedings pending or
threatened against the Companies at law or in equity or before or
by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality that would, if
decided adversely, after consideration of all defenses, have a
material adverse effect on the assets or operation of the
businesses of the Companies;
(f) To the knowledge of such counsel, (i) the Companies
have not breached any material provision of any contract or
agreement listed in the Disclosure Memorandum, and (ii) the
Companies are not and will not, with the passage of time, the
giving of notice or otherwise, be in default under the terms of any
such contract or agreement;
(g) The transactions contemplated by the Merger
Agreement have been approved by the requisite action of the Board
of Directors and shareholders of PST and when the Merger is
effected, the Shares will be converted into the right to receive
the Merger Consideration and the outstanding shares of Sub shall be
converted into all of the issued and outstanding shares of PST.
(h) All proceedings required by law or by the provisions
Companies in connection with the transactions contemplatedherein
obligation to consummate the transactions contemplated in this
Agreement have been fulfilled.
<PAGE>
EXHIBIT 1.4
Adjustments to EBIT
In calculating Adjusted EBIT, as used in the
Agreement, the EBIT shall be adjusted as follows:
1. Factoring commissions shall be treated as
an item of "Other Expense", i.e., below the Income
from Operations line.
2. Loan Discount Amortization shall be
treated as interest expense.
<PAGE>
APPENDIX B
Article 13 of the Georgia Business Corporation Code
14-2-1301. Definitions.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a nominee
as the record shareholder.
(2) "Corporate action" means the transaction or other action
by the corporation that creates dissenters' rights under Code
Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a
dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to dissent
from corporate action under Code Section 14-2-1302 and who
exercises that right when and in the manner required by Code
Sections 14-2-1320 through 14-2-1327.
(5) "Fair value," with respect to a dissenter's shares, means
the value of the shares immediately before the effectuation of the
corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate
action.
(6) "Interest" means interest from the effective date of the
corporate action until the date of payment, at a rate that is fair
and equitable under all the circumstances.
(7) "Record shareholder" means the person in whose name shares
are registered in the records of a corporation or the beneficial
owner of shares to the extent of the rights granted by a nominee
certificate on file with a corporation.
(8) "Shareholder" means the record shareholder or the
beneficial shareholder. (Code 1981, Section 14-2-1301, enacted by Ga. L.
1988, p. 1070, Section 1; Ga. L. 1993 p. 1231, Section 16.)
14-2-1302. Right to Dissent.
(a) A record shareholder of the corporation is entitled to
dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the
corporation is a party:
(A) If approval of the shareholders of the corpora-
tion is required for the merger by Code Section 14-2-1103
or the articles of incorporation and the shareholder is
entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged
with its parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, if the shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or
substantially all of the property of the corporation if a
shareholder vote is required on the sale or exchange pursuant
to Code Section 14-2-1202, but not including it sale pursuant
to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will
be distributed to the shareholders within one year after the
date of sale;
(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a
dissenter's shares because it:
(A) Alters or abolishes a preferential right of the
shares;
(B) Creates, alters, or abolishes a right in respect
of redemption, including a provision respecting a sinking
fund for the redemption or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the
holder of the shares to acquire shares or other securi-
ties;
(D) Excludes or limits the right of the shares to
vote on any matter, or to cumulate votes, other than a
limitation by dilution through issuance of shares or other
securities with similar voting rights;
(E) Reduces the number of shares owned by the
shareholder to a fraction of a share if the fractional
share so created is to be acquired for cash under Code
Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of
the shares of the class; or
(5) Any corporate action taken pursuant to a shareholder
vote to the extent that Article 9 of thus chapter, the
articles of incorporation, bylaws, or a resolution of the
board of directors provides that voting or nonvoting share-
holders are entitled to dissent and obtain payment for their
share's. (b) A shareholder entitled to dissent and obtain payment
for his shams under this article may not challenge the corporate
action creating his entitlement unless the corporate action fails to
comply with procedural requirements of this chapter or the articles
of incorporation or bylaws of the corporation or the vote required
to obtain approval of the corporate action was obtained by
fraudulent and deceptive means, regardless of whether the share-
holder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there
shall be no right of dissent in favor of the holder of shares of
any class or series which, at the record date fixed to determine
the shareholders entitled to receive notice of and to vote at a
meeting at which a plan of merger or share exchange or a sale or
exchange of property or an amendment of the articles of incorpora-
tion is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the
holders of shares of the class or series are required under
the plan of merger or share exchange to accept for their
shares anything except shares of the surviving corporation or
another publicly held corporation which at the effective date
of the merger or share exchange are either listed on a
national securities exchange or held of record by more than
2,000 shareholders, except for scrip or cash payments in lieu
of fractional shares; or
(2) The articles of incorporation or a resolution of the
board of directors approving the transaction provides other-
wise. (Code 1981, Section 14-2-1302, enacted by Ga. L. 1988, p.
1070, Section 1; Ga. L. 1989, p. 946, 58.)
14-2-1303. Dissent by Nominees and Beneficial Owners.
A record shareholder may assert dissenters' rights as to fewer
than all the shares registered in his name only if he dissents with
respect to all shares beneficially owned by any one beneficial
shareholder and notifies the corporation in writing of the name and
address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this Code section
are determined as if the shares as to which he dissents and his
other shares were registered in the names of different sharehold-
ers. (Code 1981, Section 14-2-1303, enacted by Ga. L. 1988, p. 1070,
Section 1.)
14-2-1320. Notice of Dissenters' Rights.
(a) If proposed corporate action creating dissenters'rights
under Code Section 14-2-1302 is submitted to a vote at a sharehold-
ers' meeting, the meeting notice must state that shareholders are
or may be entitled to assert dissenters' rights under this article
and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Code
Section 14-2-1302 is taken without a vote of shareholders, the
corporation shall notify in writing all shareholders entitled to
assert dissenters' rights that the action was taken and send them
the dissenters' notice described in Code Section 14-2-1322 no later
than ten days after the corporate action was taken. (Code
1981, Section 14-2-1320, enacted by Ga. L. 1988, p. 1070, Section 1;
Ga. L. 1993, p. 1231, Section 17.)
14-2-1321. Notice of Intent to Demand Payment.
(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, a record shareholder who wishes to assert
dissenters' rights:
(1) Must deliver to the corporation before the vote is
taken written notice of his intent to demand payment for his
shares if the proposed action is effected; and
(2) Must not vote his shares in favor of the proposed
action.
(b) A record shareholder who does not satisfy the requirements
of subsection (a) of this Code section is not entitled to payment
for his shares under this article. (Code 1981, Section 14-2-1321,
enacted by Ga. L. 1988, p. 1070,
14-2-1322. Dissenters' Notice.
(a) If proposed corporate action creating dissenters' rights
under Code Section 14-2-1302 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters'notice
to all shareholders who satisfied the requirements of Code Section
14-2-1321.
(b) The dissenters' notice must be sent no later than ten days
after the corporate action was taken and must:
(1) State where the payment demand must be sent and where
and when certificates for certificated shares must be
deposited;
(2) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment
demand is received;
(3) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than 30 nor more
than 60 days after the date the notice required in subsection
(a) of this Code section is delivered; and
(4) Be accompanied by a copy of this article. (Code 1981,
Section 14-2-1322, enacted by Ga. L. 1988, p. 1070, Section 1.)
14-2-1323. Duty to Demand Payment.
(a) A record shareholder sent a dissenters' notice described
in Code Section 14-2-1322 must demand payment and deposit his
certificates in accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits his
shares under subsection (a) of this Ccode Section retains all other
rights of a shareholder until these rights are cancelled or
modified by the taking of the proposed corporate action.
(c) A record shareholder who does not demand payment or
deposit his share certificates where required, each by the date set
in the dissenters' notice, is not entitled to payment for his
shares under this article. (Code 1991, Section 14-2-1323, enacted
by Ga. L. 1988, p. 1070, Section 1.)
14-2-1324. Share Restrictions.
(a) The corporation may restrict the transfer of uncertifi-
cated shares from the date the demand for their payment is received
until the proposed corporate action is taken or the restrictions
released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the
proposed corporate action. (Code 1981, Section 14-2-1324, enacted
by Ga. L. 1988, p. 1070, Section 1.)
14-2-1325. Offer of Payment.
(a) Except as provided in Code Section 14-2-1327, within ten
days of the later of the date the proposed corporate action is
taken or receipt of a payment demand, the corporation shall by
notice to each dissenter who complied with Code Section 14-2-1323
offer to pay to such dissenter the amount the corporation estimates
to be the fair value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of
changes in shareholders' equity for that year, and the latest
available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair
value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenters' rights to demand
payment under Code Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by
written notice to the corporation within 30 days after the
corporation's offer or is deemed to have accepted such offer by
failure to respond within said 30 days, payment for his or her
shares shall be made within 60 days after the making of the offer
or the taking of the proposed corporate action, whichever is later.
(Code 1981, Section 14-2-1325, enacted by Ga. L. 1988, p. 1070,
Section 1; Ga. L. 1989, p. 946, Section 59; Ga. L. 1993, p. 1231,
Section 18.)
14-2-1326. Failure to Take Action.
(a) If the corporation does not take the proposed action
within 60 days after the date set for demanding payment and
depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions
imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing
transfer restrictions, the corporation takes the proposed action,
it must send a new dissenters' notice under Code Section 14-2-1322
and repeat the payment demand procedure. (Code 1991, Section 14-2-1326,
enacted by Ga. L. 1988, p.1070, Section 1; Ga. L. 1990, p. 257,
Section 20.)
14-2-1327. Procedure if Shareholder Dissatisfied with Payment or
Offer.
(a) A dissenter may notify the corporation in writing of his
own estimate of the fair value of his shares and amount of interest
due, and demand payment of his estimate of the fair value of his
shares and interest due, if:
(1) The dissenter believes that the amount offered under
Code Section 14-2-1325 is less than the fair value of his
shares or that the interest due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed
action, does not return the deposited certificates or release
the transfer restrictions imposed on uncertificated shares
within 60 days after the date set for demanding payment.
(b) A dissenter waives his or her right to demand payment
under this Code Section and is deemed to have accepted the
corporation's offer unless he or she notifies the corporation of
his or her demand in writing under subsection (a) of this Code
Section within 30 days after the corporation offered payment for
his or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time
set forth in subsection (a) of Code Section 14-2-1325;
(1) The shareholder may demand the information required
under subsection (b) of Code Section 14-2-1325, and the
corporation shall provide the information to the shareholder
within ten days after receipt of a written demand for the
information; and
(2) The shareholder may at any time, subject to the
limitations period of Code Section 14-2-1332, notify the
corporation of his own estimate of the fair value of his
shares and the amount of interest due and demand payment of
his estimate of the fair value of his shares and interest due
(Code 1981, Section 14-2-1327, enacted by Ga. L. 1988, p. 1070,
Section 1; Ga. L. 1989, p. 946, Section 60; Ga. L. 1990, p. 257,
Section 21; Ga. L. 1993, p. 1231, Section 19.)
14-2-1330. Court Action.
(a) If a demand for payment under Code Section 14-2-1327
remains unsettled, the corporation shall commence a proceeding
within 60 days after receiving the payment demand and petition the
court to determine the fair value of the shares and accrued
interest. If the corporation does not commence the proceeding
within the 60 day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which shall
be a nonjury equitable valuation proceeding, in the superior court
of the county where a corporation's registered office is located.
If the surviving corporation is a foreign corporation without a
registered office in thus State, it shall commence the proceeding
in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unsettled parties to
the proceeding, which shall have the effect of an action quasi in
rem against their shares. The corporation shall serve a copy of
the petition in the proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the
service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail or by
publication, or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceedingis
commenced under subsection (b) of this Code section is plenary and
exclusive. The court may appoint one or more persons as appraisers
to receive evidence and recommend decision on the question of fair
value. The appraisers have the powers described in the order
appointing them or in any amendment to it. Except as otherwise
provided in this chapter, Chapter 11 of Title 9, known as the
"Georgia Civil Practice Act," applies to any proceeding with
respect to dissenters' rights under this chapter.
(e) Each dissenter made a party to the proceeding is entitled
to judgment for the amount which the court finds to be the fair
value of his shares, plus interest to the date of judgment. (Code
1981, Section 14-2-1330, enacted by Ga. L. 1988, p. 1070, Section 1;
Ga. L. 1989, p. 946, Section 61; Ga. L. 1993, p. 1231, Section 20.)
14-2-1331. Court Costs and Counsel Fees.
(a) The court in an appraisal proceeding commenced under Code
Section 14-2-1330 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers
appointed by the court, but not including fees and expenses of
attorneys and experts for the respective parties. The court shall
assess the costs against the corporation, except that the court may
assess the costs against all or some of the dissenters, in amounts
the court finds equitable, to the extent the court finds the
dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Code Section 14-2-1327.
(b) The court may also assess the fees and
expenses of attorneys and experts for the respective parties, in
amounts the court finds equitable;
(1) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not substan-
tially comply with the requirements of Code Sections 14-2-132
through 14-2-1327; or
(2) Against either the corporation or a dissenter, in
favor or any other party, if the court finds that the party
against whom the fees and expenses are acted arbitrarily,
vexatiously, or not in good faith with respect to the rights
provided by this article.
(c) If the court finds that the services of attorneys for any
dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be
assessed against the corporation, the court may award to these
attorneys reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited. (Code 1981, Section 14-2-1331,
enacted by Ga. L. 1988, p. 1070, Section 1.)
14-2-1332. Limitation of Actions.
No action by any dissenter to enforce dissenters' rights shall
be brought more than three years after the corporate action was
taken, regardless of whether notice of the corporate action and of
the right to dissent was given by the corporation in compliance
with the provisions of Code Section 14-2-1320 and Code
Section 14- 2-1322. (Code 1981, Section 14-2-1332, enacted by
Ga. L. 1988, p. 1070, Section 1.)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
As permitted under Georgia law, the Registrant's articles of
incorporation provide that a director shall not be personally
liable to the Registrant or its shareholders for monetary damages
for breach of duty of care or any other duty owed to the Registrant
as a director, except that such provision shall not eliminate or
limit the liability of a director (a) for any appropriation, in
violation of his duties, of any business opportunity of the
Registrant, (b) for acts or omissions which involve intentional
misconduct or a knowing violation of law, (c) for unlawful
corporate distributions or (d) for any transaction from which the
director received an improper benefit.
Article VII of the bylaws of the Registrant authorizes
indemnification of the Registrant's officers and directors for any
liability and expense incurred by them in connection with or
resulting from any threatened, pending or completed legal action or
other proceeding or investigation by reason of his being or having
been an officer or director. An officer or director may only be
indemnified if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the
Registrant, and, with respect to a criminal matter, he did not have
reasonable cause to believe that his conduct was unlawful. No
officer or director who has been adjudged liable to the Registrant
or adjudged liable for the improper receipt of a personal benefit
is entitled to indemnification.
Any officer or director who has been wholly successful on the
merits or otherwise in an action or proceeding in his official
capacity is entitled to indemnification as to expenses by the
Registrant as of right. All other determinations in respect of
indemnification shall be made by either: (i) a majority vote of a
quorum of disinterested directors; (ii) independent legal counsel
selected in accordance with the bylaws and at the request of the
Board; or (iii) the holders of a majority of the Registrant's stock
who at such time are entitled to vote for the election of
directors.
The provisions of the Registrant's bylaws on indemnification
are consistent in all material respects with the laws of the State
of Georgia, which authorize indemnification of corporate officers
and directors.
The Registrant's directors and officers are insured against
losses arising from any claim against them as such for wrongful acts
or omissions, subject to certain limitations.
Item 21. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed as part of this
Registration Statement:
Exhibit
Number Description of Exhibit
2.1 Acquisition Agreement dated December 3, 1993,
by and among the Registrant, Robert S. Weiner,
Randall J. Hatch, Nancy O'Donnell, John O'Donnell,
Jacqueline A. Colando, Traccton Corp., Prince Street
Holding Company, Steven C. Andrade and Robert D.
Williams.
2.2 Agreement for Purchase of Capital Stock of Bentley
Mills, Inc., dated June 8, 1993 (included as Exhibit
2.1 to the Registrant's current report on Form 8-K,
filed with the Commission on July 7, 1993 and
incorporated herein by reference).
3.1 Articles of incorporation (composite as of September
8, 1988) (included as Exhibit 3.1 to the Registrant's
annual report on Form 10-K for the year ended January
3, 1993 (the "1992 10-K") previously filed with the
Commission and incorporated herein by reference) and
Articles of Amendment (Series A Preferred Stock
Designation), dated June 17, 1993 (included as
Exhibit 4.1 to the Registrant's current report on
Form 8-K, filed with the Commission on July 7, 1993
and incorporated herein by reference).
3.2 Bylaws, as amended (included as Exhibit 3.2 to the
Registrant's quarterly report on Form 10-Q for the
quarter ended April 1, 1990, previously filed with
the Commission and incorporated herein by reference).
4.1 See Exhibits 3.1 and 3.2 for provisions in the
Registrant's articles of incorporation, as amended,
and bylaws defining the rights of holders of Common
Stock of the Registrant.
4.2 Form of Indenture between the Registrant and The
Citizens & Southern National Bank (now known as
NationsBank of Georgia, N.A.), as Trustee (including
Specimen Debenture as Exhibit A) (included as Exhibit
4(a) to the Registrant's registration statement on
Form S-3, File No. 33-23903, previously filed with
the Commission and incorporated herein by reference).
4.3 Registration Rights Agreement (holders of Series A
Preferred Stock), dated June 22, 1993 (included as
Exhibit 4.2 to the Registrant's current report on
Form 8-K, filed with the Commission on July 7, 1993
and incorporated herein by reference).
5 Opinion of Kilpatrick & Cody as to the legality of
the shares.*
10.1 Factoring Agreement, dated April 19, 1989, between
BancBoston Financial Company and Interface Flooring
Systems, Inc. (included as Exhibit 10.1 to the
Registrant's annual report on Form 10-K for the year
ended December 30, 1990, previously filed with the
Commission and incorporated herein by reference).
10.2 Promissory Note of the Registrant and Interface
Flooring Systems, Inc., dated March 15, 1989, payable
to the order of BancBoston Financial Company
(included as Exhibit 10.2 to the Registrant's annual
report on Form 10-K for the year ended January 1,
1989 (the "1989 10-K"), previously filed with the
Commission and incorporated herein by reference), and
First Amendment, dated January 4, 1990, Second
Amendment, dated June 13, 1991, and Third Amendment,
dated June 15, 1992, to Promissory Note of the
Registrant and Interface Flooring Systems, Inc.,
dated May 15, 1989, payable to BancBoston Financial
Company (included as Exhibit 10.2 to the Registrant's
quarterly report on Form 10-Q for the quarter ended
July 4, 1993 previously filed with the Commission and
incorporated herein by reference).
10.3 Plan for Reimbursement of Medical and Dental Care
Expenses, dated May 3, 1978 (included as Exhibit
10.19 to the Registrant's registration statement on
Form S-1, File No. 2-82188, previously filed with the
Commission and incorporated herein by reference).
10.4 Salary Continuation Plan, dated May 7, 1982 (included
as Exhibit 10.20 to the Registrant's registration
statement on Form S-1, File No. 2-82188, previously
filed with the Commission and incorporated herein by
reference).
10.5 Salary Continuation Agreement (included as Exhibit
10.23 to the Registrant's registration statement on
Form S-1, File No. 2-82188, previously filed with the
Commission and incorporated herein by reference).
10.6 Amendment No. 3, dated July 28, 1992, to Interface,
Inc. Key Employee Stock Option Plan dated March 1,
1983 (included as Exhibit 10.6 to the 1992 10-K,
previously filed with the Commission and incorporated
herein by reference).
10.7 Interface, Inc. Key Employee Stock Option Plan
(1993), effective as of March 1, 1993 (included as
Exhibit 10.7 to the 1992 10-K, previously filed with
the Commission and incorporated herein by reference).
10.8 Interface, Inc. Offshore Stock Option Plan (included
as Exhibit 10.15 to the Registrant's 1989 10-K,
previously filed with the Commission and incorporated
herein by reference), and Amendment No. 1 thereto
(included as Exhibit 10.11 to the Registrant's annual
report on Form 10-K for the year ended December 29,
1991, previously filed with the Commission and
incorporated herein by reference).
10.9 Interface, Inc. Retirement Plan and Trust, dated
April 14, 1986, by and between the Registrant and
Layton T. Gordy and Daniel T. Hendrix, as Trustees,
and Amendment No. 1 thereto dated October 28, 1987
(included as Exhibit 3.1 to the Registrant's
quarterly report on Form 10-Q for the quarter ended
April 3, 1988, previously filed with the Commission
and incorporated herein by reference), and Amendment
No. 2 thereto dated March 29, 1988 (included as
Exhibit 10.11 to the Registrant's 1989 10-K,
previously filed with the Commission and incorporated
herein by reference).
10.10 Interface, Inc. 401(k) Savings and Investment Plan
and Trust, effective as of October 1, 1988 (included
as Exhibit 10.12 to the Registrant's annual report on
1989 10-K, previously filed with the Commission and
incorporated herein by reference).
10.11 Voting Agreement, dated April 13, 1993, among certain
shareholders of the Registrant (included as Exhibit
10.1 to the Registrant's quarterly report on Form
10-Q for the quarter ended April 4, 1993, previously
filed with the Commission and incorporated herein by
reference).
10.12(a) Amended and Restated Credit Agreement, dated as of
June 30, 1992, among the Registrant (and certain of
its direct and indirect subsidiaries), Trust Company
Bank and The First National Bank of Chicago (included
as Exhibit 10.1 to the Registrant's quarterly report
on Form 10-Q for the quarter ended July 5,1992,
previously filed with the Commission and incorporated
herein by reference), and Second Amended and Restated
Credit Agreement, dated as of June 11, 1993, among
the Registrant (and certain of its direct and
indirect subsidiaries), Trust Company Bank and The
First National Bank of Chicago (included as Exhibit
10.1 to the Registrant's quarterly report on Form
10-Q for the quarter ended July 4, 1993, previously
filed with the Commission and incorporated herein by
reference).
(b) First Amendment to Second Amended and Restated Credit
Agreement dated as of December 1, 1993, among the
Registrant (and certain direct and indirect
subsidiaries), Trust Company Bank and The First
National Bank of Chicago.
10.1 (a) Loan Agreement, dated as of November 1, 1989,between
Interface Flooring Systems, Inc. and West Point
Development Authority (included as Exhibit 10.24(a)
to the Registrant's 1989 10-K, previously filed with
the Commission and incorporated herein by reference).
(b) Indenture of Trust, dated as of November 1,1989,
between West Point Development Authority and Trust
Company Bank, as Trustee (included as Exhibit
10.24(b) to the Registrant's 1989 10-Kpreviously
filed with the Commission and incorporated herein by
reference).
(c) Letter of Credit Agreement, dated as of November 1,
1989, among Interface Flooring Systems, Inc., the
Registrant and Trust Company Bank (included as
Exhibit 10.24(c) to the Registrant's 1989 10-K
previously filed with the Commission and incorporated
herein by reference).
(d) Irrevocable Letter of Credit, dated November 2, 1989,
established by Trust Company Bank in favor of Trust
Company Bank, as Trustee, in the initial principal
amount of $4,000,000 (included as Exhibit 10.24(d) to
the Registrant's 1989 10-K previously filed with the
Commission and incorporated herein by reference).
(e) Pledge and Security Agreement, dated as of November
1, 1989, by Interface Flooring Systems, Inc. in favor
of Trust Company Bank (included as Exhibit 10.24(e)
to the Registrant's 1989 10-K previously filed with
the Commission and incorporated herein by reference).
(f) Security Deed and Security Agreement, dated as of
November 1, 1989, between Interface Flooring Systems,
Inc. and Trust Company Bank, as Credit Bank (included
as Exhibit 10.24(f) to the Registrant's 1989 10-K
previously filed with the Commission and incorporated
herein by reference).
10.14 Revolving Credit Loan Agreement, dated as of August
5, 1991, between Interface Flooring Systems, Inc. and
Trust Company Bank (included as Exhibit 10.2 to the
Registrant's quarterly report on Form 10-Q for the
quarter ended September 29, 1991, previously filed
with the Commission and incorporated herein by
reference); Amendment No. 1 thereto dated June 30,
1992 (included as Exhibit 10.19 to the Registrant's
1992 10-K, previously filed with the Commission and
incorporated herein by reference); and Second
Amendment, dated August 5, 1993 (included as Exhibit
10.1 to the Registrant's quarterly report on Form
10-Q for the quarter ended October 3, 1993,
previously filed with the Commission and incorporated
herein by reference).
21. Subsidiaries of the Registrant.
23(a) Consent of BDO Seidman.
(b) Consent of Deloitte & Touche.
(c) Consent of Kilpatrick & Cody (included in Exhibit 5).*
24. Power of Attorney (included on the Signature Page to
this Registration Statement).
___________________________________
* To be filed by amendment.
(b) The following Financial Statement Schedules of the Registrant
are incorporated herein by reference to the Registrant's annual
report on Form 10-K for the year ended January 3, 1993:
Schedule V -- Property, Plant and Equipment
Schedule VI -- Accumulated Depreciation, Depletion
and Amortization of Property, Plant
and Equipment
Schedule VIII -- Valuation and Qualifying Accounts and
Reserves
Schedule X -- Supplementary Income Statement
Information
Item 22. Undertakings.
(a) (i) The undersigned Registrant hereby undertakes that,
for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(ii) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(b) The undersigned Registrant hereby undertakes to respond
to requests for information that is incorporated by reference into
the Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement
when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of1933, as
amended, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of LaGrange, State of Georgia, on January
12, 1994.
INTERFACE, INC.
By: s/ Ray C. Anderson
----------------------
Ray C. Anderson
Chairman of the Board,
President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Ray C.Anderson as
attorney-in-fact, with power of substitution and resubstitution for
him in any and all capacities, to sign any amendments to this
Registration Statement, and to file the same, with the exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming
all that said attorney-in-fact, or his substitute or substitutes,
may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed
following persons in the capacities indicated on the 13th day of
January, 1994.
s/ Ray C. Anderson Chairman of the Board, President and
-------------------- Chief Executive Officer
Ray C. Anderson (Principal Executive Officer)
s/ Daniel T. Hendrix Vice President-Finance, Chief
---------------------- Financial Officer and Treasurer
Daniel T. Hendrix (Principal Financial and Accounting
Officer)
s/ Donald H. Lee Director
----------------------
Donald H. Lee
s/ Donald E. Russell Director
----------------------
Donald E. Russell
s/ Grant E. Todd Director
----------------------
Grant E. Todd
s/ C. Edward Terry Director
____________________
C. Edward Terry
s/ David Milton Director
____________________
David Milton
s/ Leonard G. Saulter Director
______________________
Leonard G. Saulter
s/ Carl I. Gable Director
______________________
Carl I. Gable
s/ J. Smith Lanier, II Director
_______________________
J. Smith Lanier, II
-------------------------- Director
Clarinus C. Th. van Andel
s/ James C. Abegglen Director
_______________________
James C. Abegglen
s/ David G. Thomas Director
_______________________
David G. Thomas
s/ Arie Glimmerveen Director
____________________
Arie Glimmerveen
EXHIBIT INDEX - EXHIBIT 99
Exhibit
Number Description of Exhibit
------ ----------------------
2.1 Acquisition Agreement dated December 3,
1993, by and among the Registrant,
Robert S. Weiner, Randall J. Hatch,
Nancy O'Donnell, John O'Donnell,
Jacqueline A. Colando, Traccton
Corp., Prince Street Holding Company,
Steven C. Andrade and Robert D.
Williams
10.12 (b) First Amendment to Second Amended and
Restated Credit Agreement dated as of
December 1, 1993, among the Registrant
(and certain direct and indirect
subsidiaries), Trust Company
Bank and The First National Bank of
Chicago
11 Statement re: Computation of Per
Share Earnings
21 Subsidiaries of the Registrant
23 (a) Consent of BDO Seidman
(b) Consent of Deloitte & Touche
24. Power of Attorney (included on the
Signature Page to this Registration
Statement)
Execution
Counterpart
_________________________________________________________________
INTERFACE, INC.
_____________________________________
December 3, 1993
____________________________________
ACQUISITION
OF
PRINCE STREET TECHNOLOGIES, LTD.
AND
PRINCE STREET HOLDING COMPANY
<PAGE>
ACQUISITION AGREEMENT
PRINCE STREET TECHNOLOGIES, LTD.
PRINCE STREET HOLDING COMPANY
TABLE OF CONTENTS
Section Page
- ------- ----
1. MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Agreement to Cause Merger . . . . . . . . . . . . . 2
1.2 Conversion of Shares . . . . . . . . . . . . . . . 2
1.3 Payment of Merger Consideration . . . . . . . . . . 3
1.4 Adjustment to Merger Consideration . . . . . . . . 4
1.5 Determination of Shareholder EBIT Shortfall
Adjustment Amount . . . . . . . . . . . . . . . . 4
1.6 Resolution of Merger Consideration Dispute . . . . 5
1.7 Closing . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Transactions and Documents at Closing . . . . . . . 6
1.9 Default by One Shareholder . . . . . . . . . . . . 6
2. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . 7
2.1 Purchaser's Access and Inspection . . . . . . . . . 7
2.2 Confidentiality . . . . . . . . . . . . . . . . . . 7
2.3 Cooperation . . . . . . . . . . . . . . . . . . . . 8
2.4 Expenses . . . . . . . . . . . . . . . . . . . . . 8
2.5 Brokers . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Covenant Against Competition . . . . . . . . . . . 9
2.7 Termination of Certain Contracts . . . . . . . . . 11
2.8 Publicity . . . . . . . . . . . . . . . . . . . . . 11
2.9 Other Proceedings At Closing . . . . . . . . . . . 11
2.10 Hart-Scott-Rodino Filing . . . . . . . . . . . . . 11
2.11 Registration Statement . . . . . . . . . . . . . . 12
2.12 Affiliates of PST and PSHC . . . . . . . . . . . . 12
2.13 Restriction on Purchaser Shares . . . . . . . . . . 12
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Disclosure Memorandum . . . . . . . . . . . . . . . 13
3.2 Organization and Compliance . . . . . . . . . . . . 14
3.3 Capitalization, Ownership of Shares and Related
Matters . . . . . . . . . . . . . . . . . . . . . . 14
3.4 No Inconsistent Obligations . . . . . . . . . . . . 16
3.5 Corporate Records . . . . . . . . . . . . . . . . . 16
3.6 Consents . . . . . . . . . . . . . . . . . . . . . 16
3.7 No Default . . . . . . . . . . . . . . . . . . . . 17
3.8 Possession of Franchises, Licenses, Etc . . . . . . 17
3.9 Financial Statements . . . . . . . . . . . . . . . 17
3.10 Liabilities . . . . . . . . . . . . . . . . . . . . 17
3.11 Title to Properties . . . . . . . . . . . . . . . . 18
3.12 Bank Accounts and Safety Deposit Boxes . . . . . . 18
3.13 Receivables . . . . . . . . . . . . . . . . . . . . 18
3.14 Inventories . . . . . . . . . . . . . . . . . . . . 19
3.15 Returns and Consignments . . . . . . . . . . . . . 20
3.16 Personal Property . . . . . . . . . . . . . . . . . 20
3.17 Real Property . . . . . . . . . . . . . . . . . . . 21
3.18 Authority to Conduct Business and Intellectual
Property Rights . . . . . . . . . . . . . . . . 24
3.19 Material Contracts . . . . . . . . . . . . . . . . 24
3.20 Insurance . . . . . . . . . . . . . . . . . . . . . 25
3.21 Customers and Suppliers . . . . . . . . . . . . . . 26
3.22 Contingencies . . . . . . . . . . . . . . . . . . . 26
3.23 Taxes . . . . . . . . . . . . . . . . . . . . . . . 27
3.24 Parachute Payments . . . . . . . . . . . . . . . . 28
3.25 Employment and Labor Matters . . . . . . . . . . . 28
3.26 Employee Benefit Matters . . . . . . . . . . . . . 29
3.27 Environmental Matters . . . . . . . . . . . . . . . 32
3.28 Absence of Certain Business Practices . . . . . . . 33
3.29 Government Reports . . . . . . . . . . . . . . . . 33
3.30 Agreements and Transactions with Related Parties . 34
3.31 Absence of Changes . . . . . . . . . . . . . . . . 34
3.32 Adequacy of Purchaser's Disclosures . . . . . . . . 37
3.33 Full Disclosure . . . . . . . . . . . . . . . . . . 38
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . 38
4.1 Organization . . . . . . . . . . . . . . . . . . . 39
4.2 Authorization; No Inconsistent Agreements . . . . . 39
4.3 Full Disclosure . . . . . . . . . . . . . . . . . . 39
5. CONDUCT OF BUSINESS OF COMPANY PENDING CLOSING . . . . . 39
5.1 Business in the Ordinary Course . . . . . . . . . . 39
5.2 No Material Changes . . . . . . . . . . . . . . . . 40
5.3 Compensation . . . . . . . . . . . . . . . . . . . 41
5.4 Employee Benefit Plans . . . . . . . . . . . . . . 41
5.5 Notice of Change . . . . . . . . . . . . . . . . . 42
6. CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . 42
6.1 Proceedings and Documents Satisfactory . . . . . . 42
6.2 Representations and Warranties . . . . . . . . . . 42
6.3 Compliance with Agreements and Conditions . . . . . 42
6.4 Certificate of Shareholders . . . . . . . . . . . . 42
6.5 Certificate of Incorporation and Bylaws . . . . . . 43
6.6 Opinion of Counsel . . . . . . . . . . . . . . . . 43
6.7 Government Consents . . . . . . . . . . . . . . . . 43
6.8 Other Consents . . . . . . . . . . . . . . . . . . 43
ii
6.9 Termination of Certain Contracts . . . . . . . . . 43
6.10 Miscellaneous . . . . . . . . . . . . . . . . . . . 44
6.11 Financing . . . . . . . . . . . . . . . . . . . . 44
6.12 Registration Statement . . . . . . . . . . . . . . 44
7. CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS . . . . . . . 44
7.1 Representations and Warranties . . . . . . . . . . 44
7.2 Resolutions . . . . . . . . . . . . . . . . . . . . 44
7.3 Payment of Purchase Price . . . . . . . . . . . . . 44
8. INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . 44
8.1 Indemnification of Purchaser . . . . . . . . . . . 44
8.2 Payment . . . . . . . . . . . . . . . . . . . . . . 46
8.3 Defense of Claims . . . . . . . . . . . . . . . . . 46
8.4 Computation of Indemnified Losses . . . . . . . . . 47
8.5 Action by Company . . . . . . . . . . . . . . . . . 48
8.6 No Liability or Contribution by Companies . . . . . 48
9. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS . . . . 48
9.1 Survival . . . . . . . . . . . . . . . . . . . . . 48
10. TERMINATION . . . . . . . . . . . . . . . . . . . . . . 49
10.1 Termination for Certain Causes . . . . . . . . . . 49
11. POWER-OF-ATTORNEY . . . . . . . . . . . . . . . . . . . 49
11.1 Appointment of Agent . . . . . . . . . . . . . . . 49
11.2 Liability of Agent . . . . . . . . . . . . . . . . 50
11.3 Succession . . . . . . . . . . . . . . . . . . . . 50
11.4 Irrevocable; Binding on Successors, Etc . . . . . . 50
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 50
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . 51
12.2 Counterparts . . . . . . . . . . . . . . . . . . . 52
12.3 Entire Agreement . . . . . . . . . . . . . . . . . 52
12.4 Governing Law . . . . . . . . . . . . . . . . . . . 53
12.5 Successors and Assigns . . . . . . . . . . . . . . 53
12.6 Partial Invalidity and Severability . . . . . . . . 53
12.7 Waiver . . . . . . . . . . . . . . . . . . . . . . 53
12.8 Headings . . . . . . . . . . . . . . . . . . . . . 54
12.9 Number and Gender . . . . . . . . . . . . . . . . . 54
12.10 Time of Performance . . . . . . . . . . . . . . . 54
12.11 Definition of Knowledge . . . . . . . . . . . . . 54
13. INDEX TO DEFINITIONS . . . . . . . . . . . . . . . . . . 54
iii
<PAGE>
ACQUISITION AGREEMENT
THIS AGREEMENT is made this 3rd day of December, 1993, by
and among Interface, Inc., a Georgia corporation ("Purchaser"),
and Robert S. Weiner, Randall J. Hatch, Nancy O'Donnell, John
O'Donnell, Jacqueline A. Colando, Traccton Corp. ("Traccton"),
Prince Street Holding Company (collectively the "PST Share-
holders") and Steven C. Andrade, and Robert D. Williams
(collectively with the PST Shareholders, the "PST/PSHC
Shareholders");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the total authorized share capital of Prince Street
Technologies, Ltd., a Georgia corporation ("PST"), consists of
10,000,000 shares of Class A common stock and 10,000,000 shares
of Class B common stock, both with a par value of $.01 per share,
of which 500 and 191 shares of Class A common stock and Class B
common stock, respectively, are presently issued and outstanding
(collectively the "PST Shares", and together with the Additional
PST Shares, as hereinafter defined, the "Shares"); and
WHEREAS, the PST Shareholders are the record and beneficial
owners of all the PST Shares; and
WHEREAS, the total authorized share capital of Prince Street
Holding Company, a Georgia corporation ("PSHC", and together with
PST, individually a "Company" and collectively the "Companies,"
which terms shall include PST as the surviving corporation in the
mergers provided for herein), consists of 10,000,000 shares of
common stock, with a par value of $.01 per share, of which
1,692,749 shares are presently issued and outstanding
(collectively the "PSHC Shares"), 10,000,000 shares of Class B
common stock, with a par value of $.01 per share, of which no
shares are presently issued and outstanding, and 1,000,000 shares
of preferred stock, with a par value of $.01 per share, of which
no shares are presently issued and outstanding; and
WHEREAS, the PST/PSHC Shareholders, other than PSHC and
Traccton, are the record and beneficial owners of all of the PSHC
Shares (the PST/PSHC Shareholders other than PSHC being
hereinafter referred to as the "Shareholders"); and
WHEREAS, PST and Purchaser are parties to that certain Stock
Subscription Warrant No. W-1 dated July 20, 1990, whereby, as of
the date hereof, Purchaser is entitled to subscribe to and
purchase from PST so much of the Class A common stock and Class B
common stock of PST that after the exercise of such warrant would
entitle Purchaser to own 30% of the outstanding common stock of
PST on a fully diluted basis (the "Warrant"); and
WHEREAS, the Shareholders have provided Purchaser with a
copy of a letter of intent dated October 13, 1993, from Mohawk
Industries, Inc. (the "Mohawk Letter") providing for a total
valuation of the Companies of $15,000,000 on a fully-diluted
basis, subject to adjustment (the "Total Company Amount"); and
WHEREAS, the PST/PSHC Shareholders' collective portion of
the Total Company Amount on a fully-diluted basis is 70% of the
Total Company Amount, or $10,500,000 in the absence of any
adjustments; and
WHEREAS, in reliance on and subject to the terms,
conditions, representations, warranties, covenants and agreements
herein contained, Purchaser desires to acquire the PST/PSHC
Shareholders' interests in PST and PSHC from the PST/PSHC
Shareholders, and the PST/PSHC Shareholders desire to dispose of
such interests on a tax free basis, subject and pursuant to this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1. MERGER.
1.1 AGREEMENTS TO CAUSE MERGERS. (a) On or before the
Closing Date (as defined in Paragraph 1.3 below), and prior to
the Closing (as defined in Paragraph 1.3 below), the PST/PSHC
Shareholders shall take such actions as shall be necessary to
cause PSHC to be merged with and into PST (hereinafter referred
to as the "PST/PSHC Merger.") PST shall be the surviving
corporation in the PST/PSHC Merger, and the PST/PSHC Merger shall
be consummated in accordance with an Agreement and Plan of Merger
in the form attached hereto as Exhibit A (the "PST/PSHC Merger
Agreement"). The PST/PSHC Shareholders shall cause PST and PSHC
to execute and deliver the PST/PSHC Merger Agreement, with the
approval of their respective Boards of Directors and
shareholders, on or before the Closing Date and prior to the
consummation of the PST/PSHC Merger. The PST/PSHC Merger
Agreement shall require the filing of Articles of Merger or
Certificate of Merger with the Secretary of State of Georgia and
the effectiveness of the PST/PSHC Merger at the time of such
filing. The PST/PSHC Shareholders shall cause such filing and
effectiveness (the "PST/PSHC Closing") to be accomplished prior
to the Effective Time of the Merger (as defined in subparagraph
1.1(b) below). The PST/PSHC Merger Agreement shall provide that
upon consummation of the PST/PSHC Merger, by virtue of the
PST/PSHC Merger and without any action on the part of any record
holder of PST or PSHC:
(i) all of the PST Shares held by PSHC shall be
cancelled and retired and shall cease to exist
-2-
and no shares of PST or other consideration
shall be delivered in respect thereof;
(ii) all of the PST Shares held by shareholders of
PST other than PSHC issued and outstanding
immediately prior to the PST/PSHC Closing
shall continue unchanged and shall continue to
evidence the same number of shares of common
stock of PST as the surviving corporation in
the PST/PSHC Merger; and
(iii) all of the PSHC Shares issued and outstanding
immediately prior to the PST/PSHC Closing
shall be converted in the aggregate into 500
shares of Class B common stock of PST (the
"Additional PST Shares"). In exchange for
each such PSHC Share, each of the shareholders
of PSHC shall be entitled to receive a portion
of the Additional PST Shares in accordance
with Attachment A to the form of PST/PSHC
Merger Agreement attached to this Agreement as
Exhibit A.
(b) At the Closing, upon the terms, conditions,
representations, warranties, covenants and agreements contained
herein, Purchaser and the Shareholders shall take such actions as
shall be necessary to cause PST Acquisition Corp., a Georgia
corporation ("Sub"), which is, or will be, a wholly-owned
subsidiary of Purchaser to be merged with and into PST, as the
surviving corporation in the PST/PSHC Merger. PST shall be the
surviving corporation in such merger (hereinafter referred to as
the "Merger"), and the Merger shall be consummated in accordance
with an Agreement and Plan of Merger in the form attached hereto
as Exhibit B, which shall be completed in accordance with this
Agreement and executed and delivered at Closing (the "Merger
Agreement"), and which shall require the filing of Articles of
Merger or Certificate of Merger with the Secretary of State of
Georgia and the effectiveness of the Merger at the time of such
filing on the Closing Date (the "Effective Time of the Merger").
1.2 CONVERSION OF SHARES IN MERGER OF PST AND SUB. Upon
the consummation of the Merger at Closing, by virtue of
the Merger and without any action on the part of any record
holder of PST or Sub:
(a) each share of the common stock of Sub issued and
outstanding immediately prior to the Closing shall be converted
into the right to receive continue unchanged and shall continue
to evidence the same number of shares of the Class B common stock
of PST as the surviving corporation in the Merger (the "Surviving
Corporation"); and
-3-
(b) all of the PST Shares and the Additional PST Shares
(collectively the "Converted Shares") shall in the aggregate be
converted into the right to receive Ten Million Five Hundred
Thousand and No/100 Dollars ($10,500,000) in the aggregate (the
"Merger Consideration"), subject to adjustment as provided in
Paragraph 1.4 below, and payable as provided in Paragraph 1.3
below. In exchange for each Converted Share, former shareholders
of PST (including former shareholders of PSHC becoming
shareholders of PST in the PST/PSHC Merger) shall be entitled to
receive a portion of the aggregate Merger Consideration in
accordance with Exhibit C, attached to this Agreement.
1.3 PAYMENT OF MERGER CONSIDERATION. Subject to the
following provisions of this Paragraph 1.3, the Merger
Consideration shall be payable in shares of Class A Common Stock
of Purchaser ("Purchaser Shares"). For purposes of paying Merger
Consideration in Purchaser Shares, each Purchaser Share shall be
valued at the average of closing sale prices for Purchaser Shares
as reported on the NASDAQ National Market System for the 60
trading days immediately preceding the Closing Date (the "Closing
Date Price"). Notwithstanding the foregoing, (a) Purchaser shall
have the option to pay up to 20% of the aggregate Merger
Consideration in cash, with the balance payable in Purchaser
Shares, such option to be exercised by notice to the Shareholders
given not later than 5 days prior to Closing and specifying the
percentage of the Merger Consideration that Purchaser will pay in
cash, and (b) if the Closing Date Price is less than $12.00 per
share, Purchaser shall be entitled to pay the entire Merger
Consideration at Closing in cash. If the Merger Consideration is
paid by a combination of cash and Purchaser Shares as set forth
in clause (a) of the preceding sentence, each Converted Share
shall be converted upon consummation of the Merger into the right
to receive cash and Purchaser Shares in the same ratio as each of
the other Converted Shares, provided, however, that any
fractional shares that would otherwise be issuable based upon the
ratable portion of the Merger Consideration to be paid in
Purchaser Shares, may be paid in cash in lieu of issuing any
fractional shares of Purchaser. At or before Closing, the
PST/PSHC Shareholders shall cause PST, as the surviving
corporation in the PST/PSHC Merger, and Purchaser shall cause
Sub, to enter into, with the approval of their respective Boards
of Directors, the Merger Agreement in substantially the form of
Exhibit B hereto, duly completed in a manner consistent with this
Agreement and providing for conversion of the Converted Shares
into the right to receive Purchaser Shares, to receive a
combination of Purchaser Shares and cash, or to receive cash, as
designated by Purchaser consistent with this Paragraph 1.3, the
Shareholders and Purchaser shall duly approve the Merger in their
respective capacities as shareholders of the parties to the
Merger Agreement, and the Shareholders and Purchaser shall cause
the Merger to become effective on the Closing Date by the filing
of Articles of Merger or a Certificate of Merger with the
Secretary of State of Georgia.
-4-
1.4 ADJUSTMENT TO MERGER CONSIDERATION. If PST's Adjusted
EBIT for the fiscal year ended October 3, 1993 ("1993 EBIT") is
less than $2,060,371, the Merger Consideration shall be subject
to adjustment by reducing the Merger Consideration by the amount,
if any, of the Shareholder EBIT Shortfall Adjustment Amount. As
used herein, "Shareholder EBIT Shortfall Adjustment Amount" shall
mean an amount equal to 70% of the result of (i) 6.8, multiplied
by (ii) $2,060,371 minus 1993 EBIT. As used herein, "Adjusted
EBIT", shall mean PST's earnings before interest and taxes
("EBIT"), calculated in accordance with generally accepted
accounting principles consistently applied, with the adjustments
to EBIT set forth on Exhibit 1.4. If the total Merger
Consideration shall be reduced in accordance with the foregoing,
the allocable portion of the Merger Consideration into which each
Shareholder's Converted Shares are convertible, as set forth on
Exhibit C, shall be correspondingly reduced by such Shareholder's
ratable portion of the Shareholder EBIT Shortfall Adjustment
Amount, determined on the basis of the amount of Merger
Consideration such Shareholder would receive in the absence of an
adjustment, as compared to the total Merger Consideration in the
absence of an adjustment, as set forth on Exhibit C.
1.5 DETERMINATION OF SHAREHOLDER EBIT SHORTFALL ADJUSTMENT
AMOUNT. The Shareholder EBIT Shortfall Adjustment Amount, if
any, shall be determined as follows. Not later than December 17,
1993 (provided Purchaser timely responds to any loan confirmation
request delivered to it pursuant to PST's year-end audit), the
Shareholders shall cause PST to provide to Purchaser PST's
audited financial statements for the fiscal year ended October 3,
1993 and prepared in accordance with generally accepted
accounting principles consistently applied, together with an
unqualified audit opinion thereon of Deloitte & Touche in
standard form, and together with schedules certified by PST
showing PST's computation of 1993 EBIT. Upon receipt thereof,
Purchaser and the Shareholders shall each be entitled to review
all work papers and documents of the Shareholders, PST, PSHC,
and, as soon as practicable, Deloitte & Touche relating to the
preparation of such audited financials and computation of 1993
EBIT. Unless within 7 business days after receipt of the
financial statements, schedules and other documents referred to
above including but not limited to work papers prepared by or for
Deloitte & Touche, Purchaser (i) gives notice, with reasonable
specificity, that it disputes PST's computation of 1993 EBIT and
proposes a greater adjustment to the amount of Merger
Consideration than any shown on PST computations, or (ii) gives
notice that Purchaser has not received the schedules, work papers
and documents required to be provided, or other information that
Purchaser has reasonably requested be provided, such PST
computations shall be binding on all parties. In the event
Purchaser gives notice in accordance with (ii) above, the time
periods in Paragraph 1.6 below shall be tolled and suspended
until such information is provided to Purchaser in which case
Purchaser shall have an additional 5 business days from the
-5-
delivery of all requested information, to provide the notice in
(i) above.
1.6 RESOLUTION OF MERGER CONSIDERATION DISPUTE. If
Purchaser gives notice to the Shareholders that it disputes PST's
computation of 1993 EBIT as provided in Paragraph 1.4 and
proposes an adjustment to the amount of the Merger Consideration,
Purchaser and the Agent shall cooperate in good faith with the
purpose of reaching agreement in writing on Purchaser's proposed
adjustment. If they cannot agree on or before the fifteenth
(15th) business day after the Purchaser gives notice of its
proposed adjustment to the Merger Consideration, then either
Purchaser or the Agent may give written notice to the other that
it proposes to arbitrate Purchaser's proposed adjustment, and
either party may then submit the disputed adjustments to
arbitration by the Atlanta office of KPMG Peat Marwick, or, if
such firm is unable or unwilling to serve, such other firm of
nationally recognized certified public accountants as shall be
independent of and reasonably satisfactory to Purchaser and the
Agent (the "Independent Accountant"). All work papers and
related records of Deloitte & Touche, PST and PSHC shall be made
available to the Independent Accountant. The Independent
Accountant shall determine whether any of Purchaser's proposed
adjustments are required under the principles applicable to
computation of the amount of the Merger Consideration as provided
herein and issue its report within forty-five (45) business days
after either party notifies the other that it proposes to
arbitrate. The determination of the Independent Accountant will
be final and binding upon the parties. The Shareholders and
Purchaser shall each pay one-half of the reasonable fees of the
Independent Accountant in serving as arbitrator hereunder.
1.7 CLOSING. The closing of the transactions contemplated
in this Agreement (the "Closing") shall take place at the
principal offices of Kilpatrick & Cody in Atlanta, Georgia, or
such other place in Atlanta, Georgia, as is selected by
Purchaser, at 10:00 a.m. local time on the second business day
after the date on which (i) all conditions to closing contained
in Sections 6 and 7 have been satisfied, and (ii) any dispute
between the parties regarding any proposed adjustment to the
Merger Consideration as provided in Paragraph 1.4 shall have been
resolved, but in no event later than the date which is 120 days
after the Registration Statement has been filed, and by such date
all such conditions shall be satisfied (the "Closing Date");
provided, however, the parties hereto agree to use their best
reasonable efforts to have the Closing on or before January 31,
1994; provided further, however, that if notwithstanding the
reasonable efforts of the parties to have the Registration
Statement become effective within the period provided above, the
Registration Statement has not become effective within 120 days
-6-
after its filing, but all other conditions to Purchaser's
obligation are satisfied, Purchaser shall be required to proceed
with Closing on the date which is 120 days after the Registration
Statement is filed and pay all of the Merger Consideration at
Closing in cash.
1.8 TRANSACTIONS AND DOCUMENTS AT CLOSING.
(a) At the Closing, each PST/PSHC Shareholder shall deliver
to Purchaser certificates representing all PST Shares, Additional
PST Shares, and PSHC Shares held (or held prior to the PST/PSHC
Merger) by such party, duly endorsed for transfer, with all
required stock transfer stamps, if any, affixed, and upon such
delivery of such certificates by all PST/PSHC Shareholders, the
parties shall cause the Effective Time of the Merger to occur,
and Purchaser shall cause the Surviving Corporation to pay to the
Shareholders the Merger Consideration, (1) by wire transfer of
immediately available funds, to an Atlanta, Georgia, account to
be designated by the Agent in writing, of any portion of the
Merger Consideration payable in cash, and (2) delivery of
certificates representing all Purchaser Shares issuable in
satisfaction of all or a portion of the Merger Consideration, in
either case in accordance with Paragraphs 1.3, 2.11, 2.13 and the
other provisions of this Agreement. Purchaser Shares into which
Converted Shares shall be converted pursuant to the Merger shall
be deemed to have been issued at the Effective Time of the
Merger. All deliveries, payments and other transactions and
documents relating to the Closing shall be interdependent and
none shall be effective unless and until all are effective
(except for any of the same as to which the party entitled to the
benefit thereof has waived satisfaction or performance thereof as
a condition precedent to Closing).
(b) From time to time and at any time, at Purchaser's
request, whether on or after the Closing Date, and without
further consideration, the PST/PSHC Shareholders or their Agent
shall, at the expense of the PST/PSHC Shareholders, execute and
deliver such further documents and instruments of conveyance and
transfer and shall take such further reasonable actions as may be
necessary or convenient, in the opinion of Purchaser, to transfer
and convey to the Surviving Corporation all of their right, title
and interest in and to the Shares, free and clear of any and all
liens, claims, charges and encumbrances, or as may otherwise be
necessary or convenient to carry out the intent of this
Agreement.
1.9 Default by One Shareholder. If any PST/PSHC
Shareholder fails or refuses to deliver to Purchaser or the
Surviving Corporation, at the Closing as provided in Paragraph
1.7 hereof, any of the Shares to be converted or cancelled by
such party hereunder, then such failure or refusal shall not
relieve the other PST/PSHC Shareholders of any obligation under
this Agreement, and Purchaser, at its option and without
prejudice to its rights against such defaulting party, may either
proceed with the Merger, or refuse to proceed and thereby
terminate all of its obligations hereunder, without any liability
to any of the PST/PSHC Shareholders as a result of such
termination.
-7-
2. ADDITIONAL AGREEMENTS.
2.1 PURCHASER'S ACCESS AND INSPECTION. The PST/PSHC
Shareholders shall provide Purchaser and its authorized
representatives full access during normal business hours from and
after the date hereof until the Closing to all of the Companies'
assets, properties, contracts, commitments, books and records for
the purpose of making such investigation as Purchaser may desire,
including, without limitation, having surveys made of the
Companies' Real Property (as defined in Paragraph 3.17(a) below),
and the Shareholders shall furnish Purchaser such information
concerning the Companies' affairs as Purchaser may request. The
PST/PSHC Shareholders shall cause the personnel of each Company
to assist Purchaser in making such investigation and shall cause
the counsel, accountants, engineers, consultants and other
non-employee representatives of each Company to be reasonably
available to Purchaser for such purposes. Purchaser agrees that
it will not require access to or assistance from any personnel of
the Companies or any of their counsel, accountants, engineers,
consultants and other non-employee representatives other than as
reasonably necessary and customary in performing due diligence in
connection with a business combination. No investigation made
heretofore or hereafter by Purchaser shall limit or affect the
representations or warranties of the Shareholders hereunder, each
of which shall survive any such investigation.
2.2 CONFIDENTIALITY. If the transactions contemplated
herein are not consummated, then Purchaser shall return to the
Shareholders all documents and other written information
furnished by the Shareholders or any Company to Purchaser
pursuant to this Agreement, and Purchaser shall not reveal to any
third party any of the Companies' trade secrets or confidential
business information learned as a result of disclosures made
pursuant to this Agreement, provided that the obligations of
Purchaser hereunder shall not apply to:
-7-
(a) any information which was known to Purchaser
prior to its disclosure by the Shareholders or a Company;
(b) any information which was in the public
domain (it being agreed that information disclosed by
Companies to Mohawk Industries, Inc., subject to a
confidentiality agreement is not, merely because of such
disclosure, in the public domain) prior to the disclosure
thereof by the Shareholders or a Company to Purchaser;
(c) any information which comes into the public
domain through no fault of Purchaser; or
(d) any information which is disclosed to Purchaser
by a third party (which term shall not include the
-8-
counsel, accountants, employees and other non-employee
representatives of a Company or the Shareholders) having a
legal right to make such disclosure.
Nothing herein relieves any party hereto of any duties
pursuant to any other agreement.
2.3 COOPERATION. The parties shall cooperate fully with
each other and with their respective counsel and accountants in
connection with any steps required to be taken as part of their
respective obligations under this Agreement, and all parties
shall use their best efforts to consummate the transactions
contemplated herein and to fulfill their obligations hereunder,
including, without limitation, causing to be fulfilled at the
earliest practical date the conditions precedent to the
obligations of the parties to consummate the transactions
contemplated hereby. Without the prior written consent of the
other parties, no party hereto shall take any intentional action
that would cause the conditions precedent to the obligations of
the parties hereto to effect the transactions contemplated hereby
not to be fulfilled, including, without limitation, taking or
causing to be taken any action which would cause the
representations and warranties made by such party herein not to
be true, correct and complete as of the Closing.
2.4 EXPENSES. Except as noted below, the expenses incurred
by Purchaser in connection with the authorization, preparation,
execution and performance of this Agreement, including, without
limitation, all fees and expenses of agents, representatives,
counsel and accountants for Purchaser, shall be paid by
Purchaser. PST may pay up to $500,000 of valid and verifiable
bona fide expenses (including brokerage commissions, if any to
Bollinger, Wells, Lett & Co., Inc., but not any such brokerage
commissions based on any consideration to the PST/PSHC
Shareholders in excess of $12,000,000) associated with the
negotiation and closing of this Agreement, whether incurred by
the Shareholders or either Company. Such $500,000 of expenses
may also include attorney fees and accounting fees associated
with negotiation of the Mohawk Letter. All other expenses
incurred by the Shareholders or the Companies in connection with
the negotiation, authorization, preparation, execution and
performance of this Agreement or the negotiation of the Mohawk
Letter shall be paid by the Shareholders. Notwithstanding any of
the foregoing to the contrary, Purchaser and Shareholders shall
each pay fifty percent (50%) of all costs and out-of-pocket
expenses (including, but not limited to, fees and expenses of
Purchaser's attorneys, accountants and other professionals, and
filing fees paid to the Commission or otherwise), incurred by
Purchaser with respect to the preparation and filing of the
Registration Statement and any other costs and expenses related
to the registration of the Purchaser Shares pursuant to Paragraph
2.11.
-9-
2.5 BROKERS. Each party hereto represents and warrants
that, with the exception of Bollinger, Wells, Lett & Co., Inc.,
which has acted for the Shareholders and PST, no broker or finder
has acted on its behalf in connection with this Agreement or the
transactions contemplated herein. Each party shall indemnify the
other parties and hold them harmless from and against any and all
claims or demands for commissions or other compensation by any
broker, finder or similar agent claiming to have been employed by
or on behalf of such party; provided that the Shareholders shall
indemnify Purchaser, Sub, PST, PSHC and the Surviving Corporation
and hold them harmless for any such commissions or compensation
to Bollinger, Wells, Lett & Co., Inc. in excess of that permitted
to be paid pursuant to Paragraph 2.4.
2.6 COVENANT AGAINST COMPETITION.
(a) In order to induce Purchaser to enter into
this Agreement and acquire the Shares as provided herein, and in
partial consideration thereof, Robert S. Weiner ("Weiner") agrees
that, for a period beginning on the Closing Date and ending on
the fourth (4th) anniversary date thereof, he will not, without
the prior written consent of Purchaser, for his own account or
jointly with another, directly or indirectly, for or on behalf of
any individual, partnership, corporation or other legal entity,
as principal, agent or otherwise:
(i) engage in, consult with, or own,
control, manage or otherwise participate in
the ownership, control or management of a
business engaged in the manufacture, purchase for
resale, sale, or distribution within any part of
the Company Territory (as defined in subparagraph
(c) below) of broadloom carpet (including
without limitation tufted carpet in any roll
width, including but not limited to 6 foot
widths) or carpet tile ("Products"), except as
an employee and on behalf of PST, Purchaser,
Sub or any affiliated entities of Purchaser, and
except that this provision shall not prohibit
Weiner from engaging in, consulting with, or
owning, controlling, managing or otherwise
participating in the ownership, control or
management of a Residential Manufacturer
(as defined in subparagraph (c) below); or
(ii) solicit, call upon, or attempt to
solicit the patronage of any individual,
partnership, corporation or other legal entity
having an office or place of business within the
Company Territory and to whom PST sold any
Products during the 12 month period
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immediately preceding the Closing Date, for
the purpose of obtaining the patronage of any
such individual, partnership, corporation or
other legal entity for the purchase of any
Products from anyone other than PST, except as an
employee and on behalf of PST, Purchaser, Sub or
any affiliated entities of Purchaser; or
(iii) solicit or induce, or in any
manner attempt to solicit or induce, any
person employed by either Company to leave
such employment, whether or not such
employment is pursuant to a written contract
with either Company or otherwise.
(b) Each Shareholder agrees that he will not, without
the prior written consent of Purchaser, for his own account or
jointly with another, directly or indirectly, for or on behalf of
any individual, partnership, corporation or other legal entity,
as principal, agent or otherwise, use or authorize any other
person to use the name "Prince Street" or "Prince Street
Technologies", or any name similar thereto, in connection with
the manufacture, assembly, purchase for resale, sale, or
distribution of any Products.
(c) For the purposes of this Paragraph 2.6, the term
"Company Territory" means the continental United States and
Canada, which is the territory within which PST has offices and
conducts its business and within which PST's customers and
accounts are located and PST solicits substantially all of its
patronage. For the purposes of this Paragraph 2.6, the term
"Residential Manufacturer" shall mean an individual, partnership,
corporation or other legal entity which manufactures, sells or
distributes broadloom carpet solely and exclusively for use in
the residential end user market (the "Residential Market") and
which neither manufactures, sells or distributes any Products for
use in any market other than the Residential Market, nor
controls, is controlled by, or is under common control with, any
individual, partnership, corporation or other legal entity which
manufactures, sells or distributes any Products for use in any
market other than the Residential Market.
(d) Notwithstanding anything herein to the contrary
(i) it shall not be a breach of the covenants contained in
Paragraph 2.6(a) for any Shareholder to own not more than two
percent (2%) of the capital stock of any corporation whose shares
are publicly traded, and (ii) the covenants described in this
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Paragraph 2.6 shall apply only if the transactions contemplated
by this Agreement are consummated at the Closing.
(e) If .58 of the aggregate Merger Consideration,
after any adjustment as provided in Paragraph 1.4, is less than
$5 million, then Purchaser may, at its option, elect to enter
into an employment agreement with Weiner, which guarantees a
minimum annual compensation of $150,000 for a four year period
commencing the Closing Date and provides for Weiner to perform
such duties as are defined by PST's Board of Directors and Weiner
agrees to enter into such employment as a condition to the
Closing. Purchaser agrees to negotiate in good faith in order to
cause Weiner to be paid a salary pursuant to such employment
agreement that is commensurate with the duties he provides to PST
and generally comparable to similarly situated executives of
Purchaser. If Purchaser elects to enter into such employment
agreement, the provisions of this Section 2.6 shall cease to
apply at such time as the employment agreement is terminated by
PST without cause and not before. The provisions of this Section
2.6 shall not apply if Purchaser elects not to enter into such
employment agreement with Weiner.
2.7 TERMINATION OF CERTAIN CONTRACTS. If the transactions
contemplated herein are consummated at the Closing, then the
Companies shall terminate on or prior to Closing, without further
liability of the Companies to any Shareholder or to any other
party (except to the extent such liability was accrued prior to
or relates to a period prior to such termination), all contracts
presently in force between the Companies and any Shareholder or
any relative or affiliate of any Shareholder.
2.8 Publicity. All press releases and other public
announcements respecting the subject matter hereof shall be made
only with the mutual agreement of the parties hereto; provided,
however, that Purchaser is a publicly held company and may make
such announcements and disclosures as may be necessary or
convenient to comply with the rules and regulations of the
National Association of Securities Dealers, Inc. and any and all
applicable federal and state securities laws; provided, further,
with respect to any public announcement of the subject matter
hereof, Purchaser agrees to use its best efforts consistent with
such rules, regulations and laws to discuss the contents of such
announcement with the Agent to obtain his comments prior to
making such announcement.
2.9 OTHER PROCEEDINGS AT CLOSING. At the Closing,
Purchaser shall cancel the Warrant without exercise.
2.10 HART-SCOTT-RODINO FILING. Within 15 days after the
execution and delivery of this Agreement, each party that is
required to file a notification report under the rules and
regulations promulgated under the Hart-Scott-Rodino Antitrust
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Improvements Act shall file such notification report in all
places and with all parties as so required thereunder.
2.11 REGISTRATION STATEMENT.
(a) As promptly as practicable following the
execution and delivery of this Agreement, Purchaser shall
file with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration
Statement") on Form S-4 for the purpose of registering under
the Securities Act of 1933, as amended (the "Securities
Act") the issuance of Purchaser Shares pursuant to the
Merger. Purchaser and the PST/PSHC Shareholders shall, and
the PST/PSHC Shareholders shall cause PST to, (i) use all
reasonable efforts to have the Registration Statement
declared effective under the Securities Act at the earliest
practicable time; and (ii) prepare and file any other
filings required under the Securities Act, the Securities
Exchange Act of 1934, as amended, or any other federal or
state securities or blue sky laws relating to the Merger and
the other transactions contemplated hereby at the earliest
practicable time.
(b) The information to be provided by PST, PSHC,
and the Shareholders for use in the Registration Statement
shall not contain any untrue statement of any 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, not misleading at
the time the Registration Statement or other documents are
filed with the Commission, and at the time the Registration
Statement is declared effective by the Commission.
2.12 AFFILIATES OF PST AND PSHC. Prior to the time the
Registration Statement is declared effective by the Commission,
PST, PSHC and the Shareholders shall deliver to Purchaser a
letter identifying all persons whom they believe are "affiliates"
of PST or PSHC as that term is used in Rule 145 under the
Securities Act (the "Affiliates").
2.13 RESTRICTION ON PURCHASER SHARES.
(a) Each Shareholder agrees that, on any single
day during the period commencing on the Closing Date and
continuing through the third anniversary date thereof (the
"Restriction Period"), the Shareholder shall not sell or
otherwise dispose of any Purchaser Shares in excess of the Day's
Maximum Sale Number in effect for that particular day. As used
herein, "Day's Maximum Sale Number" shall mean a number of
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Purchaser Shares that changes daily and is determined separately
for each day in the Restriction Period on which any Shareholder
proposes to sell or dispose of Purchaser Shares as the number
equal to (i) 100,000 shares (the "Base Monthly Number"), minus
(ii) the aggregate number of Purchaser Shares sold or disposed of
by all of the Shareholders during the 30 calendar day period
ending on the day before the day for which the Day's Maximum Sale
Number is being computed; provided, however, that in computing
the Day's Maximum Sale Number for any day during the period
commencing with the Closing Date and continuing through the 30th
calendar day after the Closing Date, the Base Monthly Number
shall be deemed to be 250,000 shares, instead of 100,000 shares.
The Day's Maximum Sale Number for any day during the Restriction
Period shall constitute a maximum limit on the aggregate sales of
Purchaser Shares by all of the Shareholders on that day. If more
than one Shareholder proposes to sell or dispose of Purchaser
Shares on the same day during the Restriction Period, Purchaser
shall be entitled to accept aggregate requests for transfers up
to the Day's Maximum Sale Number for that day on a "first come -
first served" basis or any other reasonable basis. The foregoing
restriction shall apply whether or not Rule 145 under the
Securities Act or any other restriction on transfer applies to
such Shareholder or any other Shareholder, whether or not such
Shareholder or any other Shareholders are "affiliates" of
Purchaser as defined in Rule 144 under the Securities Act, and
notwithstanding that the Purchaser Shares may not be restricted
securities within the meaning of Rule 144. Anything in this
Agreement to the contrary notwithstanding, it is acknowledged and
agreed that this Paragraph 2.13 shall not be interpreted or
construed as being in lieu of any volume limitations or other
restrictions provided in Rule 145 or any successor provision
thereto; and each Shareholder acknowledges and understands that
Rule 145, as the same may now be in effect or hereafter amended,
may impose on such Shareholder and the Purchaser Shares
additional or different volume limitations on sales of Purchaser
Shares. Each Shareholder agrees to comply with any applicable
restrictions of Rule 145, and further agrees that he, she or it
will not offer to sell, sell or otherwise dispose of any of the
Purchaser Shares issued to such Shareholder except pursuant to an
effective registration statement or another exemption from
registration requirements of the Securities Act, and in
compliance with all applicable requirements of Rule 145.
(b) With respect to any such sale or disposition any
Shareholder shall make in accordance with the preceding
subparagraph (a) (and, if applicable, Rule 145), such Shareholder
will furnish to Purchaser upon request such information as its
counsel may deem necessary to assure that such sale or
disposition is made in full compliance with this Agreement and
such rule.
(c) There shall be placed on all certificates
representing Purchaser Shares issued to the Shareholders pursuant
to this Agreement appropriate restrictive legends referencing the
restrictions of this Agreement and of applicable securities laws.
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS.
To induce Purchaser to enter into this Agreement, the
transactions contemplated herein, and to issue the Purchaser
Shares, the Shareholders jointly and severally represent, warrant
and covenant to Purchaser as follows:
3.1 DISCLOSURE MEMORANDUM. The Shareholders have
heretofore caused the Companies to deliver to Purchaser a
memorandum (the "Disclosure Memorandum") containing certain
information regarding the Companies, the PST Shares, and the PSHC
Shares as indicated at various places in this Agreement; in each
case all disclosures in the Disclosure Memorandum relate solely
to PST or the PST Shares, except where the Disclosure Memorandum
expressly states that a disclosure relates to PSHC or the PSHC
Shares. All information set forth in the Disclosure Memorandum
is true, correct, complete and set forth in a manner that is not
misleading as of the date of this Agreement. Unless otherwise
indicated, all capitalized terms used in the Disclosure
Memorandum shall have the same meanings as in this Agreement.
All documents and other writings furnished to Purchaser pursuant
to this Agreement or the Disclosure Memorandum are true, correct
and complete as of the date furnished and any and all
modifications or amendments of the same have been delivered to
Purchaser. At all times prior to and including the Closing Date,
the Shareholders shall promptly provide Purchaser with written
notification of any event, occurrence or other information of any
kind whatsoever which affects, or may affect, the continued
truth, correctness or completeness of any representation,
warranty or covenant made in this Agreement, the Disclosure
Memorandum or any other document or writing furnished to
Purchaser pursuant to this Agreement.
3.2 ORGANIZATION AND COMPLIANCE. Each Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia with its principal office
and place of business at the location specified in Schedule 3.2
of the Disclosure Memorandum. Neither Company has any interest,
direct or indirect, and has no commitment to purchase or
otherwise acquire any interest, direct or indirect, in any other
corporation, partnership, joint venture or other business
enterprise, except that PSHC is at the date of this Agreement and
will be until consummation of the PST/PSHC Merger a shareholder
of PST. Each Company has all requisite corporate power and
authority and is entitled to own or lease its properties and to
carry on its business as and in the places where such business is
now conducted and such properties are owned or leased. Each
Company has complied in all material respects with all federal,
state and local laws, rules, regulations and ordinances with
respect to its operations and the conduct of its business. Each
Company is duly licensed, qualified or domesticated as a foreign
corporation in the jurisdictions listed as to it in Schedule 3.2
of the Disclosure Memorandum, which are all jurisdictions where
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the character of the property owned by it or the nature of the
business transacted by it makes such license, qualification or
domestication necessary. Schedule 3.2 of the Disclosure
Memorandum lists (a) all locations where each Company owns
property, has an office or place of business or maintains any
inventory, (b) all names under which each Company has operated
during the past five years, if different from its present
corporate name, and (c) all former subsidiaries, if any, of each
Company existing within a five year period prior to the date
hereof.
3.3 CAPITALIZATION, OWNERSHIP OF SHARES AND RELATED
MATTERS.
(a) PST has an authorized share capital
consisting solely of 10,000,000 shares of Class A common stock,
par value $.01 per share, and 10,000,000 shares of Class B common
stock, par value $.01 per share, of which 500 and 191 shares of
Class A and Class B common stock, respectively, are issued and
outstanding at the date of this Agreement, and are owned of
record and beneficially by the PST Shareholders as set forth in
Exhibit C attached hereto. Immediately prior to the Effective
Time of the Merger, PST will have issued and outstanding no
shares of its Class A common stock and 691 shares of its Class B
common stock, as set forth in Exhibit C attached hereto. PSHC
has an authorized share capital consisting solely of 10,000,000
shares of Common Stock, par value $.01 per share, of which
1,692,749 shares are issued and outstanding at the date and are
owned of record and beneficially by the Shareholders as set forth
on Exhibit C attached hereto, 10,000,000 shares of Class B common
stock, with a par value of $.01 per share, of which no shares are
issued and outstanding as of the date hereof, and 1,000,000
shares of preferred stock, with a par value of $.01 per share, of
which no shares are issued and outstanding as of the date hereof.
All the foregoing issued shares of PST and PSHC are duly and
validly issued, fully paid and nonassessable and were authorized,
offered, issued and sold in accordance with all applicable
federal and state securities laws. None of such shares were
issued in violation of the preemptive rights of any past or
present shareholder of either Company. Prior to the Effective
Time of the Merger, the PST/PSHC Merger will have been
consummated, and the foregoing issued shares of PSHC shall have
been converted to the Additional PST Shares, as provided in
Paragraph 1.1. After issuance pursuant to the PST/PSHC Merger,
the Additional PST Shares shall have been duly and validly
issued, fully paid and nonassessable and authorized, offered,
issued and sold in accordance with all applicable federal and
state securities laws. None of the Additional PST Shares will be
issued in violation of preemptive rights of any past or present
shareholder of either Company.
(b) Except as set forth on Schedule 3.3(b),
neither Company has any outstanding securities convertible into
its share capital or rights to subscribe for or to purchase, or
any options for the purchase of, or any agreements or
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arrangements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating
to, its share capital. Neither Company is subject to any
obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its share capital except pursuant to
this Agreement, that certain Shareholders Agreement dated
December 30, 1988 with respect to PST and that certain
Shareholders Agreement dated September 18, 1987 with respect to
PSHC. Neither Company has any liability for dividends declared
or accrued, but unpaid, with respect to any of its share capital.
(c) Each PST/PSHC Shareholder is the sole owner
(or joint owner with another Shareholder) of the number of shares
of the Companies shown in Exhibit C attached hereto in each case
free and clear of any and all claims, liens, charges,
encumbrances and restrictions of any kind whatsoever, and has the
full right, power and capacity on his own behalf to enter into
and perform this Agreement in accordance with its terms. There
are no outstanding contracts, demands, commitments, or other
agreements or arrangements under which any PST/PSHC Shareholder
is or may become obligated to sell, transfer or assign any of the
Shares or any of the PSHC Shares, other than the Shareholders
Agreement. Each PST/PSHC Shareholder has the full power and
authority to enter into this Agreement and to carry out the
transactions contemplated hereby.
(d) All shares of either Company which have been purchased
or redeemed by such Company have been repurchased or redeemed in
accordance with all applicable federal, state and local laws,
rules, regulations, and ordinances, including, without
limitation, all federal and state securities laws. The
repurchase or redemption by either Company of its shares has not
and will not with the giving of notice or the lapse of time, or
both, result in a default or acceleration of the maturity of, or
otherwise modify, any agreement, note, mortgage, bond, security
agreement, loan agreement or other contract or commitment of such
Company.
3.4 NO INCONSISTENT OBLIGATIONS. Except as disclosed in
Schedule 3.4 of the Disclosure Memorandum, neither the execution
and delivery of this Agreement, nor the consummation of the
transactions contemplated herein will result in a violation or
breach of, or constitute a default under (a) any term or
provision of any material indenture, note, mortgage, bond,
security agreement, loan agreement, guaranty, pledge, or other
instrument, contract, agreement or commitment, (b) any applicable
writ, order, judgment, decree, law, rule, regulation, or
ordinance, (c) any applicable ruling or order of any
administrative or governmental body, or (d) any other commitment
or restriction to which either Company or any Shareholder is a
party or by which any of them or any of their respective assets
or properties is subject or bound; nor will such actions result
in (i) the creation of any claim, lien, charge or encumbrance on
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any of the Shares or the PSHC Shares or on any of the Companies'
assets or properties, or (ii) the acceleration of any obligation
of either Company, or (iii) the forfeiture of any material right
or privilege of either Company.
3.5 CORPORATE RECORDS. The share records and minute books
of each Company heretofore furnished to Purchaser by the
Shareholders reflect fully all issuances, transfers and redemp-
tions of its share capital, correctly show the total number of
shares issued and outstanding on the date hereof, correctly show
all corporate action taken by the directors and shareholders of
the Company (including actions taken by consent without a
meeting), and contain copies or originals of its articles of
incorporation and all amendments thereto, its bylaws as amended
and currently in force, and the minutes of all meetings or
consent actions of its directors and shareholders.
3.6 CONSENTS. The execution and delivery of this
Agreement by the PST/PSHC Shareholders and the consummation of
the transactions contemplated by this Agreement (a) do not
require the consent, approval or action of, or any filing with or
notice to, any person, firm or other entity, or any public,
governmental or judicial authority, except as specified in
Schedule 3.6 of the Disclosure Memorandum, (b) do not require the
consent or approval of any of the Companies' other shareholders
or members of either Company's board of directors pursuant to any
business combination, takeover or other similar law, rule,
regulation or ordinance, and (c) do not impose any other term,
condition or restriction on the Purchaser or the Shares pursuant
to any business combination, takeover or other similar statute,
rule or regulation.
3.7 NO DEFAULT. Neither Company is in material default
under or in violation of (a) its articles of incorporation or
bylaws, or (b) any writ, order, judgment, decree, law, rule,
regulation, or ordinance, or (c) any applicable ruling or order
of any administrative or governmental body.
3.8 POSSESSION OF FRANCHISES, LICENSES, ETC. The
Companies possesses all material franchises, certificates,
licenses, permits and other authorizations from public,
governmental, regulatory or judicial authorities, free from
burdensome restrictions, that are necessary for the ownership,
maintenance and operation of its properties and assets, and the
Companies are not in violation in any material respect of any
thereof.
3.9 FINANCIAL STATEMENTS. Prior to the date hereof, the
PST Shareholders have caused PST to deliver to Purchaser copies
of the PST's Balance Sheet as at September 27, 1992, September
29, 1991 and September 30, 1990, and Statements of Income,
Retained Earnings and Cash Flows for the fiscal years then ended,
together with the report thereon of Deloitte & Touche, indepen-
dent certified public accountants. All of such financial state-
ments (including any related notes and schedules thereto) (the
"Audited Financial Statements") are true and correct and have
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been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior years and
present fairly the financial condition of PST as at the
respective dates thereof and the results of its operations and
its cash flows for the periods then ended. The PST/PSHC
Shareholders have also caused PST to deliver to Purchaser copies
of PST's unaudited Balance Sheet as at October 3, 1993 (the "PST
Unaudited Balance Sheet"), and unaudited Statements of Income,
Retained Earnings and Cash Flows for the twelve-month period then
ended, and PSHC to deliver to Purchaser a copy of PSHC's
unaudited Balance Sheet as at November 30, 1993 (the "PSHC
Unaudited Balance Sheet") (such unaudited Statements of Income,
Retained Earnings and Cash Flows, together with the PST Unaudited
Balance Sheet, and the PSHC Unaudited Balance Sheet, collectively
the "Unaudited Financial Statements"). Except as disclosed in
Schedule 3.9 of the Disclosure Memorandum, the Unaudited
Financial Statements (including any related notes and schedules
thereto) are true and correct, have been prepared from the books
and records of PST and PSHC in accordance with generally accepted
accounting principles applied on a basis consistent with prior
years, and present fairly the financial conditions of PST and
PSHC as at the date thereof and the results of PST's operations
for the twelve-month period then ended.
3.10 LIABILITIES. Neither Company has any debt, liability
or obligation of any kind, whether accrued, absolute, known or
unknown, contingent or otherwise (including, without limitation,
(a) liability for any foreign, federal, state or local taxes up
to but not including the Closing, (b) product or warranty
liability arising from or by virtue of the production, manufac-
ture, sale, lease, distribution, delivery or other transfer or
disposition of personal property of any type, kind or variety, or
(c) unfunded liabilities with respect to any pension, profit-
sharing or employee stock ownership plan, whether operated by
either Company or any other entity, covering employees of either
Company), except (i) those of PST reflected on the Balance Sheet
as at September 27, 1992 referred to in Paragraph 3.9 above (the
"Audited Balance Sheet") or reflected on the PST Unaudited
Balance Sheet as at October 3, 1993, or the PSHC Unaudited
Balance Sheet as of November 30, 1993, (ii) liabilities incurred
by PST in the ordinary course of business since October 3, 1993
(the "Reference Date"), or PSHC since the date of preparation of
the PSHC Unaudited Balance Sheet, and (iii) as specifically
disclosed in Schedule 3.10 of the Disclosure Memorandum.
3.11 TITLE TO PROPERTIES. PST owns or leases all assets
necessary to conduct its business as conducted during the periods
covered by the Audited Financial Statements. PST has good and
marketable title to all of its owned properties and assets, real
and personal, moveable and immovable, tangible and intangible,
including, without limitation, those reflected in the Audited
Balance Sheet, free and clear of any and all claims, liens,
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charges, restrictions and encumbrances of any kind or character
except (a) as since sold or otherwise disposed of in the ordinary
course of business, (b) as expressly set forth in the Audited
Financial Statements as securing specific liabilities (with
respect to which no default exists), (c) as disclosed in Schedule
3.11 of the Disclosure Memorandum, (d) liens for real estate
taxes which are not past due, and (e) minor imperfections of
title and encumbrances, if any, which are not substantial in
amount, do not detract from the value of the property subject
thereto or impair the operations of PST and have arisen only in
the ordinary course of business. Without limiting or being
limited by any specific representation regarding PSHC, except as
disclosed on Schedule 3.11 of the Disclosure Memorandum, PSHC
does not now, nor has it ever, owned, controlled or managed any
assets except its PST Shares, and does not now, nor has it ever,
conducted any business operations since its organization except
providing certain management services.
3.12 BANK ACCOUNTS AND SAFETY DEPOSIT BOXES. Schedule 3.12
of the Disclosure Memorandum contains a list of each and every
bank in which either Company maintains an account or safety
deposit box, the account numbers, and the names of all persons
who are presently authorized to draw thereon or have access
thereto.
3.13 RECEIVABLES. If PST has factored substantially all of
its accounts receivable which may be factored under customary
commercial terms during the preceding two fiscal years, then all
notes receivable and accounts receivable shown on the Audited
Balance Sheet and all such receivables held by PST on the date
hereof were and are valid obligations that arose in the ordinary
course of business and to the best knowledge of the Shareholders
are valid and collectible obligations of the respective makers
thereof and were not and are not subject to any offset or
counterclaim. Otherwise, all notes receivable and accounts
receivable shown on the Audited Balance Sheet and all such
receivables held by PST on the date hereof were and are valid and
collectible obligations of the respective makers thereof and were
not and are not subject to any offset or counterclaim. In either
case, except for amounts reserved against on the Audited Balance
Sheet and, with respect to notes and accounts arising after the
date of the Audited Balance Sheet and outstanding on the date
hereof, except for a percentage thereof equal to the percentage
which said reserved amounts on the Audited Balance Sheet
constituted of the aggregate of notes and accounts receivable at
the date of the Audited Balance Sheet. Schedule 3.13 of the
Disclosure Memorandum contains an accurate and complete aging
schedule, as of a date no earlier than the Reference Date, of all
of PST's receivables (including accounts receivable, loans
receivable and any advances), together with detailed information
as to each such listed receivable which has been outstanding for
more than 30 days.
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3.14 INVENTORIES. The inventories of PST (including all
raw materials, component parts, work-in-process and finished
goods) shown on the Audited Balance Sheet, and the inventories
produced or acquired by PST subsequent to the date thereof, (a)
if finished goods, are merchantable and conform in all material
respects to customary trade standards for merchantable goods,
except to the extent reserves are taken and (b) if not finished
goods, are of a quality and quantity suitable and usable for the
production or completion of finished goods, for sale in the
ordinary course of PST's business as first quality goods, except
to the extent reserves are taken. Except as reflected in the
Audited Balance Sheet or disclosed in Schedule 3.14 of the
Disclosure Memorandum, none of such items of inventory is
obsolete or below standard quality, and each such item of
inventory reflected on the Audited Balance Sheet is so reflected
on the basis of a complete physical count. Each item of
inventory reflected on the Audited Balance Sheet, the Unaudited
Balance Sheet, and the books and records of PST is valued at the
lower of cost or market in accordance with generally accepted
accounting principles consistently applied, PST has recognized
all loss resulting from the obsolescence, physical deterioration,
changes in prices, discontinuation of product lines or any other
change resulting in the valuation of any item of inventory below
cost. Except as disclosed in Schedule 3.14 of the Disclosure
Memorandum, (i) all firm, noncancelable purchase commitments of
PST for inventory goods ("Firm Purchase Commitments") have been
reflected in the Audited Balance Sheet and the Unaudited Balance
Sheet to the extent required in accordance with generally
accepted accounting principles, (ii) PST has not entered into any
Firm Purchase Commitments in excess of $50,000 since the date of
the PST Unaudited Balance Sheet, and (iii) no inventory has been
acquired by PST for a specific customer contract. All products
manufactured or purchased by either Company for sale to its
customers, including all finished goods in its inventories, meet
in all material respects the standards of (A) all applicable
federal, state and local laws, rules, regulations and ordinances
pertaining to the legality of the manufacture and sale of such
products, and (B) all representations and warranties made by such
Company to its customers. Except as disclosed on Schedule 3.14,
none of the goods sold or otherwise distributed by either Company
or their respective predecessors prior to the date of Closing
shall be, nor has the Company or its predecessors received any
notice claiming the same to be, hazardous or unsafe in design,
specification, material, content, function or otherwise. Except
as disclosed in Schedule 3.14 of the Disclosure Memorandum,
neither Company has given nor shall it give any express warranty
with respect to any goods or products sold or services performed
prior to the Closing Date.
3.15 RETURNS AND CONSIGNMENTS. Except as set forth in
Schedule 3.15 of the Disclosure Memorandum, no customer of either
Company has any right to return any goods for credit or refund
pursuant to any agreement, understanding or practice that the
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Company will take back goods which are unsold. Without limiting
the generality of the foregoing, neither Company presently has
any goods in the possession of its customers on consignment or on
a similar basis.
3.16 PERSONAL PROPERTY.
(a) Except as set forth in Schedule 3.16(a) of
the Disclosure Memorandum, all of the machinery, equipment,
vehicles, vessels and all other tangible personal property owned
or leased by either Company and used or useable in its business
are in good condition and repair, subject to normal wear and
tear, suited for the use intended and operated in conformity in
all material respects with all applicable laws, rules,
regulations and ordinances, including, without limitation, all
applicable building and zoning laws, ordinances, and regulations.
All leases pursuant to which either Company is lessee or lessor
of any personal property are valid and effective as to such
Company in accordance with their terms. There is not under any
of such leases (i) any default or, to the knowledge of the
Shareholders, any claimed default by any Company or event of
default or event which with notice or lapse of time, or both,
would constitute a default by any Company and in respect of which
any Company has not taken adequate steps to prevent a default on
its part from occurring, or (ii) to the knowledge of the
Shareholders any existing default by any lessee of either Company
or any event of default or event which with notice or lapse of
time, or both, would constitute a default by any lessee. Except
as disclosed on Schedule 3.16(a), neither the Companies nor the
Shareholders have any knowledge of any defects or conditions
which would cause such tangible personal property to be or become
inoperable or unsafe.
(b) Except as disclosed in Schedule 3.16(b) of
the Disclosure Memorandum, to the knowledge of the Shareholders,
all lessors of any machinery, equipment or other tangible
personal property leased by either Company have fully and
completely performed and satisfied their respective duties and
obligations under such leases, and neither Company has any
claims, actions or causes of action against any such lessor for
failure to fully and completely perform and satisfy its duties
and obligations thereunder.
3.17 REAL PROPERTY.
(a) PST owns or has the right to occupy and use
all real property which is used or useable in its business (the
"Real Property"). Schedule 3.17(a) of the Disclosure Memorandum
identifies each parcel or tract of the Real Property by location,
size and improvements (if any) and describes the nature of PST's
interest therein and use thereof.
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(b) Except as disclosed in Schedule 3.17(b), PST
has good and marketable fee simple title to all Real Property
owned by it, and all buildings, structures and other improvements
thereon and all fixtures thereto which are used or useable in its
business, including, without limitation, all such property
reflected on the Audited Balance Sheet.
(c) All agreements with respect to leases, ease-
ments, rights of way, licenses, usufructs and other non-ownership
interests granted to or by either Company in any Real Property
(collectively the "Real Property Leases") are valid and in full
force and effect in accordance with their terms. The Companies
have furnished Purchaser with copies of all written Real Property
Leases, all of which are identified on Schedule 3.17(c) of the
Disclosure Memorandum, and Schedule 3.17(c) of the Disclosure
Memorandum summarizes the terms of all verbal Real Property
Leases. All copies of the Real Property Leases furnished to
Purchaser are true, correct and complete and have not been
modified in any respect. There is not under any Real Property
Lease (i) any default or, to the knowledge of the Companies or
any of the Shareholders, any claimed default by either Company or
event of default or, to the best knowledge of the Shareholders,
event which with notice or lapse of time, or both, would
constitute a default by such Company and in respect of which such
Company has not taken adequate steps to prevent a default on its
part from occurring, or (ii) to the knowledge of either Company
or any of the Shareholders, any existing default by any other
party to the Real Property Lease, or any event of default or
event which with notice or lapse of time, or both, would
constitute a default by any other party to the Real Property
Lease. The interest of each Company in and under each Real
Property Lease is unencumbered and subject to no present claim,
contest, dispute, action or, to the best knowledge of the
Shareholders, threatened action at law or in equity or otherwise.
(d) Each Company is lawfully in possession of all
Real Property which is the subject of a Real Property Lease and
with respect to which such Company is a lessee or has been
granted an interest in such Property ("Leased Real Property");
and all conditions precedent to the obligation of such Company to
take possession and continue to occupy all Leased Real Property
has been fulfilled. Such Company is presently occupying the
entirety of each parcel of the Leased Real Property for the
purposes set forth in the Real Property Lease with respect
thereto.
(e) All of the Real Property is free from any use
or occupancy restrictions, except those disclosed in Schedule
3.17(e) and those imposed by applicable zoning laws, ordinances
and regulations, and from all special taxes or assessments,
except those generally applicable to other properties in the tax
districts in which the Real Property is located. No options have
been granted to others to purchase, lease or otherwise acquire
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any interest in the Real Property, or any part thereof owned by
either Company. PST has the exclusive right of possession of
each tract comprising the Real Property. There is lawfully
available to all of the Real Property water, gas, sewers,
electricity, and telephone service sufficient to allow the
Companies' business to continue to be conducted as heretofore
conducted by the Companies, and all of which are now being
utilized by the Companies. All of the Real Property has
reasonably suitable ingress and egress and each parcel of Real
Property has reasonably suitable access to existing paved roads
and other public rights of way. All of the Real Property is free
and clear of any liens, charges, claims, security interests,
encumbrances or other restrictions, whether existing of record or
otherwise, except the following (as to which no event of default
has occurred by either Company): (i) liens for ad valorem taxes
which are not past due, (ii) easements for the erection and
maintenance of public utilities serving the Real Property, and
(iii) the items specifically set forth in Schedule 3.17(e) of the
Disclosure Memorandum.
(f) The present use of and improvements on the
Real Property are in substantial conformity with all applicable
laws, rules, regulations and ordinances, including, without
limitation, all applicable zoning laws, ordinances and
regulations and with all deed restrictions of record, and the
Shareholders have no knowledge of any proposed change therein
that would affect any of the Real Property or its use. There
exists no conflict or dispute to the best knowledge of
Shareholders with any regulatory authority or other person
relating to any Real Property or the activities thereon. All
improvements on the Real Property are located within the lot
lines (and within the mandatory set-backs from such lot lines
established by zoning ordinance or otherwise) and not over areas
subject to easements or rights of way to the best knowledge of
Shareholders.
(g) All buildings and improvements on the Real
Property are in good condition and repair, suited for the
operation of the Companies' business and are in substantial
compliance with all applicable material laws, rules, regulations,
and ordinances, including, without limitation, all applicable
material building, electrical, plumbing, gas, fire, environmental
and other regulatory laws, rules, regulations, and ordinances,
and neither Company has received any notice of any violation or
alleged violation of any thereof. To the best knowledge of the
Shareholders, no toxic or hazardous materials were used in the
construction or improvements of any building located on the Real
Property.
(h) Neither PST, PSHC nor any other person has
caused any work or improvements to be performed upon or made to
any of the Real Property for which there remains outstanding any
material payment obligation, that would or might serve as the
basis for any claim, lien, charge or encumbrance in favor of the
person or entity which performed the work.
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(i) All requisite certificates of occupancy and
other material permits or approvals required with respect to the
improvements on any of the Real Property and the occupancy and
use thereof have been obtained and are currently in effect.
(j) Except as set forth in Schedule 3.17(j) of
the Disclosure Memorandum, PST owns unencumbered title in and to
the improvements, if any, on the Leased Real Property.
(k) Except as set forth in Schedule 3.17(k) of
the Disclosure Memorandum, no rent or use fee has been paid in
advance, no security deposit has been paid and no brokerage
commission is payable by either Company with respect to any Real
Property Lease.
(l) Neither Company has received any notice that
the owner of any Leased Real Property has made any assignment,
pledge or hypothecation of such Real Property Lease or the rents
or use fees due thereunder, except as set forth in Schedule
3.17(l) of the Disclosure Memorandum.
(m) Prior to the date hereof, the PST/PSHC
Shareholders have caused the Companies to deliver to Purchaser
true and correct copies of all deeds, easements, servitudes,
mortgages, title insurance policies and other documents relating
to or affecting the title to the Real Property, and all of the
same are identified on Schedule 3.17(m) of the Disclosure
Memorandum.
3.18 AUTHORITY TO CONDUCT BUSINESS AND INTELLECTUAL
PROPERTY RIGHTS. To the knowledge of the Companies and the
Shareholders, each Company has the means, rights and information
required to manufacture, process, sell, offer for sale and use
the items and perform the services as presently being
manufactured, processed, offered for sale, sold, used or
performed by such Company, including, without limitation, the
means, rights and information required to manufacture, process,
offer for sale, sell and use all such items and perform all such
services without incurring any liability for license fees or
royalties or any claims of infringement of patents, trade
secrets, copyrights, trademark, service mark, or other
proprietary rights. Schedule 3.18 of the Disclosure Memorandum
describes all proprietary inventions, designs, ideas, processes,
methods and other know-how of each Company which are valuable in
the operation of such Company's business and, with respect to
each such item, indicates whether such Company holds any patent
or patent application therefor (in each such case, identifying
the date(s) and jurisdiction(s) in which the patent was granted
or applied for and the number of such patent or application) or
has sought any advice as to the patentability of the same (in
each such case, summarizing such advice) or believes it has trade
secret protection therefor (in each such case, providing a
description of the measures which have been taken to protect the
secrecy of the item). Neither Company is a party to, either as
licensor or licensee, or is bound by or subject to, any license
-25-
agreement for any patent, process, trademark, service mark, trade
name or copyright, except as described in Schedule 3.18 of the
Disclosure Memorandum. All patents, copyrights, trademarks,
service marks, trade names, and applications therefor or
registrations thereof, owned or used by either Company are listed
in Schedule 3.18 of the Disclosure Memorandum, and, to the extent
indicated thereon, have been duly registered in, filed in or
issued by the U.S. Patent and Trademark Office or the
corresponding agency or office of the states of the United States
or foreign countries indicated. There are no rights of third
parties with respect to any trademark, service mark, trade
secrets, trade name, patent, patent application, invention or
device which would have a material adverse effect on the
operations or prospects of either Company. Each Company has
complied with all applicable laws, rules, regulations and
ordinances relating to the filing or registration of "fictitious
names" or trade names.
3.19 MATERIAL CONTRACTS. Schedule 3.19 of the Disclosure
Memorandum contains a list of all existing written or oral
material contracts and commitments of each Company ("Company
Contracts"), including, without limitation, all employment and
consulting contracts, union contracts, distributorship
agreements, leases, lease purchase agreements, licenses, stock
options, employee benefit plans, deferred compensation
agreements, group life, health and accident insurance, any other
type of insurance, indentures, notes, bonds, mortgages, security
agreements, loan agreements, guarantees, franchise agreements,
agreements in respect of the issuance, sale or transfer of each
Company's share capital, bonds or other securities, and any
contract which involves a payment of more than $25,000 or has a
term or requires performance over a period of more than one year,
except purchase or sales orders arising in the ordinary course of
business. The PST/PSHC Shareholders have heretofore caused each
Company to deliver to Purchaser a true, correct and complete copy
of each of the written Company Contracts and a complete and
accurate summary of each oral Company Contract on the aforesaid
list to the extent requested. None of the Company Contracts
constitute a restraint of trade under any applicable state or
federal law. Each Company has performed all material obligations
to be performed by it as of the date of this Agreement under all
Company Contracts to which it is a party or by which it is bound.
Neither Company is in default or in arrears under any of the
terms thereof. No condition exists or has occurred which, with
the giving of notice or the lapse of time, or both, would
constitute a default or accelerate the maturity of, or otherwise
modify, any Company Contract, and all Company Contracts are in
full force and effect as to the Company shown as a party thereto.
To the best knowledge and belief of the Shareholders, no default
by any other party to any Company Contract is known or claimed by
the Company to exist, and neither Company is a party to any
contract, agreement or commitment which will likely result in a
loss to such Company upon completion of performance or which
cannot readily be fulfilled or performed by such Company in
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accordance with its terms without undue or unusual expenditures
of money or effort.
3.20 INSURANCE. Schedule 3.20 of the Disclosure Memorandum
contains a complete list and description of all fire, theft,
casualty, life, title, automobile, liability and other policies
of insurance maintained by either Company, all of which are, and
will be maintained through the Closing Date, in full force and
effect. All premiums due thereon have been paid and neither
Company has received any notice of cancellation with respect
thereto. All such policies taken together to the best knowledge
of Shareholders provide adequate coverage to insure the
properties and business of the Companies against such risks and
in such amounts as are prudent and customary; and without
limiting the foregoing, subject to any specified deductibles as
set forth in Schedule 3.20 of the Disclosure Memorandum, the
Companies' insurance coverage as in effect as of the Closing and
for periods prior thereto will insure the Companies from and
against any and all losses, damages, costs and expenses which
Purchaser may suffer or incur as a result of any claim (as to
which the applicable statute of limitations permits an action)
that products manufactured or sold by either Company (or any of
its predecessors for whose acts and omissions either Company is
legally responsible) in connection with such Company's business
were defective in any respect which resulted in an injury to a
third party. Neither Company will as of the Closing have any
liability for premiums or for retrospective premium adjustments
for any period prior to the Closing, except as set forth in
Schedule 3.20 of the Disclosure Memorandum. The Shareholders
have heretofore caused each Company to deliver to Purchaser a
true, correct and complete copy of each such insurance policy
requested by Purchaser. Schedule 3.20 of the Disclosure
Memorandum also lists and describes all occurrences to the best
knowledge of the PST/PSHC Shareholders which may form the basis
for a claim by or on behalf of either Company under any such
policy; and such Company has timely given notice of all such
occurrences to the appropriate insurer and has not waived (either
intentionally or inadvertently) its right to make the related
claim under any such policy.
3.21 CUSTOMERS AND SUPPLIERS. Schedule 3.21 of the
Disclosure Memorandum sets forth the names and addresses of any
sole source suppliers of significant goods, equipment or services
to either Company (other than public utilities) with respect to
which practical alternative sources of supply are not available,
and the names and addresses of each customer of either Company
that purchased $100,000 in goods or services from such Company in
any of the five prior years or that accounted for 5% or more of
such Company's gross revenues in any such year ("Significant
Customers"). The Shareholders are not aware, except as disclosed
in Schedule 3.21 of the Disclosure Memorandum: (a) that any
supplier (including, without limitation, suppliers of energy) or
Significant Customers of either Company intends to discontinue or
substantially diminish or change its relationship with either
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Company or the terms thereof, or (b) that any supplier of either
Company (including, without limitation, suppliers of energy)
intends to increase prices or charges for goods or services
presently supplied.
3.22 CONTINGENCIES. Except as set forth in Schedule 3.22
of the Disclosure Memorandum, there are no actions, suits,
claims, demands or proceedings pending or, to the best knowledge
of the Shareholders, threatened against, by or affecting either
Company in any court or before any arbitrator, private
alternative dispute resolution system or governmental agency, nor
do there exist any other "loss contingencies" (as such term is
defined in Statement of Financial Standards No. 5 of the
Financial Accounting Standards Board), the eventual outcome of
which might have a material adverse effect on either Company or
on the operation of its business or on its assets or which would
prevent or impede the transactions contemplated by this
Agreement. Except as set forth in Schedule 3.22 of the
Disclosure Memorandum, neither Company has been charged with,
nor, to the best knowledge of the Shareholders, is it under
investigation with respect to any charge concerning, any
violation of any provision of any federal, state or other
applicable law, rule, regulation, or ordinance, or order, decree
or governmental restriction with respect to its business. Except
as disclosed in Schedule 3.22, there are no unsatisfied judgments
against either Company or any consent decrees, writs, restraining
orders, or preliminary or permanent injunctions to which either
Company is subject.
3.23 TAXES. Except as disclosed in Schedule 3.23 of the
Disclosure Memorandum, all taxes (including, without limitation,
all income, property, sales, use, customs, franchise, value
added, ad valorem, withholding, employees' income withholding,
and social security taxes, and all other taxes imposed on either
Company or its income, properties, sales, franchises, operations
or Employee Benefit Plans or trusts), and all deposits in
connection therewith required by applicable law, imposed by any
federal, state, local or foreign jurisdiction, or by any other
governmental unit or taxing authority, and all interest and
penalties thereon (all of the foregoing hereafter collectively
referred to as "Taxes"), which are due and payable by both
Companies for all periods through the date hereof have been paid
in full, and adequate reserves for all other Taxes, whether or
not due and payable, and whether or not disputed, have been set
up on the books of PST. From the date of this Agreement to but
not including the Closing, the Companies shall pay all Taxes as
and when the same become due and payable except those that are
being disputed in good faith, and shall set up reserves on PST's
books in amounts adequate to cover all liabilities for Taxes
arising out of the operation of the Companies prior to but not
including the Closing. Except as disclosed in Schedule 3.23,
there is not now to the knowledge of the Shareholders any
proposed assessment against either Company of additional Taxes of
any kind. Each Company has duly filed all federal, state, local
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and foreign tax returns and reports (including, without
limitation, returns for estimated tax), and all returns and
reports of all other governmental units or taxing authorities
having jurisdiction, with respect to all Taxes, all such returns
and reports show the correct and proper amount due, and all Taxes
shown on such returns or reports and all assessments received by
either Company have been paid to the extent that such Taxes, or
any estimates thereon, have become due. There are no waivers or
agreements by either Company for the extension of time for the
assessment of any Taxes. The federal income tax returns of each
Company have been examined by the Internal Revenue Service
through the date set forth in Schedule 3.23 of the Disclosure
Memorandum, and, except as set forth therein, all the
deficiencies proposed and indicated as a result of the
examination of such tax returns have been paid and settled.
Schedule 3.23 of the Disclosure Memorandum sets forth any
position taken by either Company on its federal income tax
returns for unexamined years which is substantially at variance
with the published position of the Internal Revenue Service.
PSHC has been duly qualified and operating as an S Corporation
pursuant to the Code at all times from October 1, 1989, and shall
continue to be an S Corporation until its existence is terminated
by its merger into PST. PST is and at all times has been a C
Corporation pursuant to the Code. Neither Company is a "United
States real property holding corporation" within the meaning of
the Internal Revenue Code of 1986, as amended.
3.24 PARACHUTE PAYMENTS. Neither of the Companies nor the
Shareholders have taken any actions or entered into any
agreements providing compensation to employees or officers, the
effect of which will continue after the Closing Date, or any
other agreement of a similar nature. Except as set forth on
Schedule 3.24, neither of the Companies nor any subsidiary or
affiliate of either of them has made any payment which
constitutes an "excess parachute payment" within the meaning of
Section 280(G) of the Code, and no payment by either Company or
any subsidiary or affiliate of either of them required to be made
under any contract or other agreement will, if made, constitute
an "excess parachute payment" within the meaning of Section
280(G) of the Internal Revenue Code. The consummation of the
transactions contemplated by this Agreement will not entitle any
employee of either Company to severance pay nor will it
accelerate the time of payment, vesting or increase the amount of
any compensation or benefits due to any employee of either
Company.
3.25 EMPLOYMENT AND LABOR MATTERS.
(a) Schedule 3.25(a) of the Disclosure Memorandum
lists all employees and agents who on the date hereof perform
services on a regular basis in the business operations of or for
either Company and whose annualized rate of compensation exceeds
$50,000 per year. Except as described on Schedule 3.25(a), no
such employee or agent has terminated his employment, nor, to the
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best knowledge and belief of the Shareholders, plans not to
continue his employment with the Company with which he or she is
employed after the date hereof or after the Closing Date. To the
best knowledge of the Shareholders, except as shown on Schedule
3.25(a) of the Disclosure Memorandum, no employee or agent shown
on such list has suffered any major illness or hospitalization
within the past three years.
(b) Except as set forth in Schedule 3.25(b) of
the Disclosure Memorandum, (i) neither Company is a party to any
collective bargaining agreement or agreement of any kind with any
union or labor organization, (ii) no union or other collective
bargaining unit has been certified or recognized by either
Company as representing any employee nor, to the knowledge of the
Shareholders, is a union or other collective bargaining unit
seeking recognition for such purpose, (iii) there are no
controversies pending, or to the knowledge of the Shareholders
threatened, between either Company and any labor union or
collective bargaining unit representing, or seeking to represent,
any of its employees, and (iv) there has been no attempt by any
union or other labor organization to organize any of the
employees of either Company at any time in the past five years to
the knowledge of the Shareholders. Each Company has
substantially complied with all obligations under the National
Labor Relations Act, as amended, Title VII of the Civil Rights
Act of 1964, as amended, the Age Discrimination in Employment
Act, as amended, and all other federal, state and local labor or
labor related laws applicable to persons employed in connection
with such Company's business, including, without limitation,
those laws, rules and regulations relating to wages, hours,
health and safety, payment of social security withholding and
other taxes, maintenance of workers' compensation insurance,
labor and employment relations and employment discrimination.
(c) Except as set forth in Schedule 3.25(c) of
the Disclosure Memorandum, each Company has substantially
complied with all federal, state and local laws, rules,
regulations and ordinances respecting health, safety and working
conditions of its employees noncompliance with which could
reasonably be expected to subject such Company to risk of
material adverse consequences, including, without limitation, the
Occupational Safety and Health Act of 1970, Pub. L. 91-596, as
amended, and all similar federal, state and local laws, rules,
regulations and ordinances, and has provided Purchaser with
copies of all reports filed and notices provided under any such
laws, rules, regulations and ordinances during the last five
years to the extent requested. Neither Company's operations
involve any risk unusual for the carpet industry to the health or
safety of its employees (including, but not by way of limitation,
any risk associated with hazardous airborne contaminants or
hazardous chemicals or waste materials) and, except as disclosed
in Schedule 3.25(c) of the Disclosure Memorandum, to the best
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knowledge of the Shareholders no employee of either Company has
suffered any adverse health consequence or personal injury as a
result of his or her working conditions or employment by either
Company within the past five years.
3.26 EMPLOYEE BENEFIT MATTERS.
(a) Schedule 3.26(a) lists all plans, programs, and similar
agreements, commitments or arrangements maintained by or on
behalf of either Company or any other party that provide benefits
or compensation to, or for the benefit of, current or former
employees of either Company ("Plan" or "Plans"). Except as set
forth on Schedule 3.26(a), only current and former employees of
PST participate in the Plans. To the extent requested, copies of
all Plans and, to the extent applicable, all related trust agree-
ments, actuarial reports, summary plan descriptions,
prospectuses, Annual Report Form 5500s and Internal Revenue
Service determination letters, and any related documents
requested by Purchaser, have been delivered to Purchaser, and all
of the same are true and correct and have not been amended,
modified or supplemented.
(b) With respect to each Plan, except as set forth on
Schedule 3.26(b): (i) no litigation or administrative or other
proceeding is pending or, to the best knowledge of the
Shareholders, threatened involving such Plan; (ii) such Plan has
been administered and operated in substantial compliance with,
and has been amended to comply with all applicable laws, rules,
and regulations, including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the
Internal Revenue Code of 1986, as amended ("Code"), and the
regulations issued under ERISA and the Code; (iii) each Company
and its predecessors, if any, have made and as of the Closing
Date will have made or accrued, all payments and contributions
required, or reasonably expected to be required, to be made under
the provisions of the Plans or required to be made under
applicable laws, rules and regulations, with respect to any
period prior to the Closing Date, such amounts to be determined
using the ongoing actuarial and funding assumptions of the Plan;
(iv) such Plan is fully funded in an amount sufficient to pay all
liabilities accrued (including liabilities and obligations for
health care, life insurance and other benefits after termination
of employment) and claims incurred to the date hereof, or the
Unaudited Balance Sheet contains adequate reserves or paid-up
insurance has been provided, therefor; (v) on the Closing Date
such Plan will be fully funded in an amount sufficient to pay all
liabilities accrued (including liabilities and obligations for
health care, life insurance and other benefits after termination
of employment) and claims incurred to the Closing Date, or
adequate reserves will be set up on PST's books and records, or
paid-up insurance will be provided, therefor; and (vi) such Plan
has been administered and operated only in the ordinary and usual
course and substantially in accordance with its terms, and there
has not been in the four years prior hereto any material increase
in the liabilities of such Plan.
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(c) Schedule 3.26(c) lists each Plan which is an "employee
benefit plan" as defined in Section 3(3) of ERISA, including any
terminated pension plans and Multiemployer Benefit Plans, which
covers or covered any employee of either Company ("ERISA Plan").
(d) None of the ERISA Plans is a "multiemployer plan"
within the meaning of Section 3(37) of ERISA ("Multiemployer
Benefit Plan"), which is contributed to by an employer other than
PST or an entity under common control with PST. Neither Company
is or has ever been a party to or obligated in any manner to
contribute to, or otherwise participate in, any Multiemployer
Benefit Plan.
(e) With respect to each ERISA Plan, except as set forth
on Schedule 3.26(c), neither such Plan, nor any trustee,
administrator, fiduciary, agent or employee thereof, has at any
time been involved in a transaction which would constitute a
"prohibited transaction" within the meaning of Section 406 of
ERISA or Section 4975 of the Code, nor has any such person been
involved in or caused such Plan to be involved in a breach of
fiduciary duty under Section 404 of ERISA.
(f) Of the ERISA Plans, only the Prince Street
Technologies, LTD 401(K) Retirement Plan (collectively the
"Company Plans") are "employee pension benefit plans" within the
meaning of Section 3(2) of ERISA. With respect to each Company
Plan, except as set forth on Schedule 3.26(f): (i) such Company
Plan constitutes a qualified plan within the meaning of Section
401(a) of the Code and the trust thereunder is exempt from
federal income tax under Section 501(a) of the Code; (ii) all
minimum funding standards required by law with respect to the
funding of benefits payable or to be payable under such Company
Plan have been met; (iii) there is no "accumulated funding
deficiency" within the meaning of Code Section 412 under such
Company Plan; (iv) no reportable event as described in Section
4043 of ERISA has occurred, or is continuing, with respect to
such Company Plan, and neither Company has incurred any liability
to the Pension Benefit Guaranty Corporation; (v) if such Company
Plan is a defined benefit plan, the fair market value of the
assets of the Company Plan trust are not less than the actuarial
present value of benefits (both vested and nonvested) accrued
under such Company Plan with respect to participants and
beneficiaries, determined on a termination basis and as though
all such accrued benefits were fully vested and nonforfeitable as
of the Closing Date, taking into consideration the subsidies
required under the Code and the regulations and rulings
thereunder and using the ongoing actuarial methods and
assumptions of such Company Plan, which methods and assumptions
are reasonable both individually and in the aggregate; and (vi)
if the Company Plan is a defined contribution plan, it is funded
in an amount equal to the participants' account balances, whether
or not vested.
(g) Each Plan which covers, or is intended primarily to
cover, only employees who are located in a country other than the
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United States ("Foreign Plan") is listed on Schedule 3.26(g) and,
except as set forth on Schedule 3.26(g): (i) each Foreign Plan
covers only employees of PST or an employer which is a part of
the same controlled group of corporations as PST; (ii) each
Foreign Plan has been funded, administered and operated in
compliance with the laws of the jurisdiction(s) to which it is
subject; and (iii) with respect to each Foreign Plan, adequate
reserves have been provided on the Unaudited Balance Sheet with
respect to the liabilities for such Plans, and from the date
thereof to the Closing Date PST has and shall continue to provide
for adequate reserves therefor on PST's books and records.
(h) Except as set forth on Schedule 3.26(h), neither of
the Companies nor any of the Plans, has any obligation to
provide, or liability for, health care, life insurance or other
benefits after termination of employment ("Post-employment
Benefits"), except for retirement benefits under the Company
Plans or except as required by Section 601 of ERISA and Section
4980B of the Code. With respect to (i) all persons terminated or
retired on the Closing Date, and (ii) active employees and other
participants and beneficiaries, to the extent Post-employment
Benefits (other than qualified retirement plan benefits under the
Company Plans) have been, or are reasonably expected to be,
earned by service to the Closing Date, paid-up insurance or plan
funding will be provided, or the books and records of PST will
contain adequate reserves in an amount not less than the present
value of all such benefits, determined as though all such Post-
employment Benefits were fully vested and nonforfeitable and
assuming the continuation of all such Plans, using actuarial
methods and assumptions which are reasonable individually and in
the aggregate. As of the Closing Date, notice of the
unavailability of continuation coverage (as defined in Section
602 of ERISA and Section 4980B of the Code) will have been
provided to all persons entitled thereto and all persons electing
such coverage have been or will be provided such coverage.
(i) Except as set forth on Schedule 3.26(i), neither of
the Companies nor any member of the controlled group of
corporations or businesses of which it is a part has taken, or
intends to take, any action and no event has occurred which has
resulted or could reasonably be expected to result in withdrawal
liability under Title IV of ERISA with respect to any
Multiemployer Pension Plan.
(j) To the extent either Company or Purchaser is adopting
or continuing any Plan, nothing contained in this Agreement shall
limit or restrict Purchaser's right from and after the Closing
Date to amend or to modify any of the Plans in such manner as the
Purchaser deems appropriate or to terminate any of the Plans.
3.27 ENVIRONMENTAL MATTERS. Each Company (including its
predecessors for whose acts and omissions it is responsible) have
complied in all material respects with all applicable laws,
rules, regulations and ordinances relating to pollution and
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environmental control. All hazardous or toxic waste, materials
and substances on, in, under or off-site from the Real Property,
have been properly removed and disposed of, and no past or
present disposal, spill or other release of, or treatment,
transportation or other handling of, hazardous waste, materials
or substances on, in, under or off-site from any Real Property,
or adjacent property, will subject such Company to corrective or
compliance action or any other liability. Adequate reserves have
been established on the Audited Balance Sheet to cover all costs
of environmental compliance of the Companies and such reserves
will be adequate on the Closing Date. Schedule 3.27 of the
Disclosure Memorandum contains a true, accurate and complete
description of (a) all permits, regulatory plans and compliance
schedules with respect to either Company or its properties and
assets, and (b) all litigation, investigations, inquiries, and
other proceedings, rulings, orders or citations pending, or to
the knowledge of the Shareholders, threatened or contemplated by
government officials with respect to either Company or its
properties and assets, in each case relating to emissions or
potential emissions into the environment of solids, liquids,
gases, heat, light, noise, radiation and other forms of matter or
energy ("Emissions") or the proper disposal of materials,
including solid waste materials ("Disposals"). The Shareholders
have delivered to Purchaser true, accurate and complete copies of
the permits, regulatory plans and compliance schedules, if any,
described in Schedule 3.27 of the Disclosure Memorandum to the
extent requested. The terms of such permits, regulatory plans
and schedules have not been modified from those set forth in the
copies delivered to Purchaser. Neither Company is in violation
of any of the permits, plans or compliance schedules described in
or required to be described in the Disclosure Memorandum or of
any law, rule, regulation, ordinance, order or decree regulating
Emissions and Disposals. Each Company has received all permits
and approvals with respect to Emissions and Disposals required
for the operation of its business. Each Company has kept all
records and made all filings required by applicable laws, rules,
regulations and ordinances with respect to Emissions and
Disposals.
3.28 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither of the
Companies, nor any officer, employee or agent of either Company,
nor any other person acting on behalf of either Company, has,
directly or indirectly, within the past five years given or
agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be
in a position to help or hinder the business of either Company
(or assist either Company in connection with any actual or
proposed transaction) which (a) might subject either Company to
any material damage or penalty in any civil, criminal or
governmental litigation or proceeding, (b) if not given in the
past, might have had a material adverse effect on the assets,
business or operations of both Companies as reflected in the
Audited or Unaudited Financial Statements or (c) if not continued
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in the future, might adversely affect in a material manner either
Company's assets, business, operations, cash flows or prospects
or which might subject either Company to suit or material penalty
in any private or governmental litigation or proceeding.
3.29 GOVERNMENT REPORTS. Schedule 3.29 of the Disclosure
Memorandum contains a full, accurate and complete list, and the
Shareholders have heretofore furnished Purchaser to the extent
requested with complete copies of, all reports, if any, filed
during the past five years, by either Company with (a) the Equal
Employment Opportunity Commission, Federal Trade Commission,
Department of Justice, Occupational Safety and Health
Administration, Internal Revenue Service (other than tax returns
and standard forms relating to compensation or remuneration of
employees), Environmental Protection Agency and Securities and
Exchange Commission or (b) any state or local agency which
performs equivalent functions.
3.30 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES.
Except as set forth in Schedule 3.30 of the Disclosure Memoran-
dum, neither Company is directly or indirectly a party to any
contract, agreement, or lease with, or any other commitment to,
(i) any party owning, or formerly owning, beneficially or of
record, directly or indirectly, any of the Shares, (ii) any
person related by blood, adoption or marriage to any such party,
(iii) any director or officer of either Company, (iv) any
corporation or other entity in which any of the foregoing parties
has, directly or indirectly, at least a five percent (5.0%)
beneficial interest in the share capital or other type of equity
interest in such corporation, or (v) any partnership in which any
such party is a general partner (any or all of the foregoing
being herein referred to as "Related Parties"). Without limiting
the generality of the foregoing, except as disclosed in Schedule
3.30 of the Disclosure Memorandum, (A) no Related Party, directly
or indirectly, owns or controls any assets or properties which
are or have been used in the business of either Company, and (B)
no Related Party, directly or indirectly, engages in or has any
significant interest in or connection with any business (X) which
is or which within the last three years has been a competitor,
customer or supplier of either Company or has done business with
either Company, or (Y) which as of the date hereof sells or
distributes products or services which are similar or related to
either Company's products or services.
3.31 ABSENCE OF CHANGES. Except as expressly provided for
in this Agreement or as may be set forth in Schedule 3.31 of the
Disclosure Memorandum, since the Reference Date:
(a) there has been no change in the business,
assets, liabilities, results of operations, financial condition
or prospects of either Company or in its relationships with
suppliers, customers, employees, lessors or others, other than
changes in the ordinary course of business, none of which have
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been or will be, in the aggregate, materially adverse to the
business or condition (financial or otherwise) of either Company;
(b) there has been no damage, destruction or loss
to the properties or business of either Company, whether or not
covered by insurance, which has or will have a material adverse
effect on such properties or business, or the operations, or
prospects of the Company;
(c) the business of each Company has been
operated in the ordinary course and consistent with its prior
practices, and not otherwise;
(d) the properties and assets of each Company
used or useable in its business have been maintained in good
order, repair and condition, ordinary wear and tear excepted;
(e) the books, accounts and records of each
Company have been maintained in the usual, regular and ordinary
manner on a basis consistent with prior years;
(f) there has been no declaration, setting aside
or payment of any dividend or other distribution on or in respect
of the share capital of either Company, nor has there been any
direct or indirect redemption, retirement, purchase or other
acquisition of any of the share capital or other securities of
either Company;
(g) there has been no (i) increase in the
compensation or in the rate of compensation or commissions
payable or to become payable by either Company to any director,
officer, manager, or to any other employee or agent of either
Company earning $50,000 or more per annum, (ii) general increase
in the compensation or in the rate of compensation payable or to
become payable to hourly or salaried employees earning less than
$50,000 per annum ("general increase" for the purpose hereof
shall mean any increase generally applicable to a class or group
of employees and shall not include increases granted to
individual employees for merit, length of service, change in
position or responsibility or other reasons applicable to
specific employees and not generally applicable to a class or
group thereof), (iii) employee hired at a salary in excess of
$50,000 per annum, or (iv) payment of or commitment to pay any
bonus, profit share or other extraordinary compensation to any
employee;
(h) there has been no change in the articles of
incorporation or bylaws of either Company;
(i) there has been no labor dispute,
organizational effort by any union or unfair labor practice
charge involving either Company;
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(j) there has been no issuance or sale by either
Company of any of its authorized share capital, bonds, notes,
debentures or other corporate securities, or any options,
warrants or other rights with respect thereto, nor any
modification or amendment of the rights of the holders of any
outstanding share capital, bonds, notes, debentures or other
corporate securities of, either Company, or any options, warrants
or other rights with respect thereto;
(k) there has been no mortgage, charge, lien,
claim or other encumbrance or security interest (other than liens
for current taxes which are not past due) created on or in any
asset or assets of either Company or assumed by either Company
with respect to any asset;
(l) there has been no indebtedness or other
liability or obligation (whether absolute, accrued, contingent or
otherwise) incurred by either Company, except current liabilities
incurred in connection with the purchase of goods or services in
the ordinary course of business and consistent with its prior
practice, none of which individually or in the aggregate
adversely affects the business or financial condition of either
Company;
(m) no indebtedness, liability or obligation
(whether absolute, accrued, contingent or otherwise) has been
discharged or satisfied, other than current liabilities reflected
in the Audited Balance Sheet of PST, and current liabilities of
PST incurred since the date thereof in the ordinary course of
business and consistent with its prior practice;
(n) there has been no sale, transfer, lease or
other disposition of any asset or assets of either Company,
except sales of inventory by PST in the ordinary course of
business, and no debt to, or claim or right of, either Company
has been cancelled, compromised, waived or released;
(o) there has been no amendment, termination or
waiver of, or any notice of any amendment, termination or waiver
of, any material right of either Company under any contract,
agreement or lease, or governmental license, permit or
permission;
(p) neither Company has not made any loans which
remain outstanding on the date hereof to a Related Party or
guaranteed or entered into any agreement in the nature of a
guarantee for the benefit of any Related Party;
(q) there have been no amendments or other cor-
porate actions having the effect of an amendment increasing past
or future contributions of any kind whatsoever to any Employee
Benefit Plan of either Company;
(r) neither Company has paid for or agreed to pay
for, or otherwise incurred, any expenses with respect to any
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products or services which were delivered or rendered to, or for
the benefit of, or guaranteed the indebtedness or any other
obligation of, any person, firm or corporation, including,
without limitation, the Shareholders or any Related Party, other
than PST;
(s) neither Company has (i) paid any judgment
resulting from any suit, proceeding, arbitration, claim or
counterclaim or (ii) made any payment to any party of more than
$10,000 in settlement of any suit, proceeding, arbitration, claim
or counterclaim;
(t) PST has not discontinued or determined to
discontinue the production or sale of any products previously
produced or sold by such Company, representing more than one
percent (1.0%) of such Company's annual sales during the period
covered by the Audited Financial Statements;
(u) neither Company has transferred or granted
any rights under, or entered into any settlement regarding the
breach or infringement of, any United States or foreign license,
patent, copyright, trademark, trade name, trade secret, invention
or similar rights, or modified any existing rights with respect
thereto;
(v) neither Company has acquired any capital
shares or other securities of any corporation or any interest in
any business enterprise, or otherwise made any loan or advance to
or investment in any person, firm, or corporation; and
(w) PST has not failed to replenish its
inventories and supplies in a normal and customary manner con-
sistent with its prior practice and prudent business practices
prevailing in the industry, or made any purchase commitment in
excess of the normal, ordinary and usual requirements of its
business or at any price in excess of the then-current market
price or upon terms and conditions more onerous than those
normal, customary and consistent with its prior practices (which
are prudent business practices prevailing in the industry), or
made any change in its selling, pricing, advertising or personnel
practices inconsistent with its prior practice and prudent
business practices prevailing in the industry.
3.32 ADEQUACY OF PURCHASER'S DISCLOSURES.
(a) Each Shareholder individually hereby
acknowledges the receipt of a copy of the following documents or
information: (i) an executed copy of this Agreement; (ii)
Purchaser's 1992 Annual Report to Shareholders; (iii) Purchaser's
Definitive Proxy Statement Relating to its 1993 Annual
Shareholders Meeting; (iv) Purchaser's Annual Report on Form 10-K
for its Fiscal Year Ended January 3, 1993; (v) Purchaser's
Quarterly Report on Form 10-Q for the First, Second and Third
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Quarters of its 1993 Fiscal Year; (vi) Purchaser's Report on Form
8-K dated July 6, 1993; and (vii) Purchaser's Report on Form 8-
K/A dated September 1, 1993.
(b) Each Shareholder has had an opportunity to
ask questions of and receive answers from Purchaser concerning
the terms and conditions of the transactions outlined in this
Agreement, and to obtain additional information necessary to
verify the accuracy of the information concerning Purchaser
furnished in the other documents listed in subparagraph (a)
above.
(c) Without limiting the foregoing, each
Shareholder has had the opportunity to become familiar with the
business, financial condition, management, prospects and
operations of Purchaser (and of PST and PSHC); such documents as
each Shareholder has requested pertaining to Purchaser's business
have been made available for inspection and review (to the extent
they exist or reasonably could be made available; and each
Shareholder has (or their representatives) have had a reasonable
opportunity to ask questions of, receive answers from, and obtain
information regarding Purchaser and its business. Each
Shareholder has knowledge and experience in financial and
business matters sufficient to enable such Shareholder to utilize
the information made available to such Shareholder in connection
with the Merger, and each Shareholder's investment in the
Purchaser's Class A Common Stock, to evaluate the merits and
risks associated therewith (including without limitation the
potential tax effects of the transactions contemplated herein as
to the Shareholder or whether the transactions contemplated
herein qualify as a tax free exchange of such Shareholders'
stock, all as to which Purchaser makes no representation or
warranty whatsoever) and to make an informed decision with
respect thereto.
3.33 FULL DISCLOSURE. No representation, warranty or
covenant contained in this Agreement, the Merger Agreement or in
the Disclosure Memorandum or any other written statement
delivered pursuant hereto or in connection with the transactions
contemplated hereby contains or shall contain any untrue material
statement nor shall such representations, warranties and
covenants taken as a whole omit any statement necessary in order
to make any material statement not misleading. There is no fact
known to the Shareholders which adversely affects, or in the
future may adversely affect, the business, operations, cash
flows, affairs, prospects, properties or assets or the condition,
financial or otherwise, of either Company which has not been
disclosed in this Agreement, the Disclosure Memorandum or in the
documents, certificates and written statements furnished to
Purchaser for use in connection with the transactions
contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
As an inducement to the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby,
Purchaser represents, warrants and covenants as follows:
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4.1 ORGANIZATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Georgia.
4.2 AUTHORIZATION; NO INCONSISTENT AGREEMENTS. Purchaser
has full corporate power and authority to make, execute and
perform this Agreement, and the transactions contemplated hereby.
This Agreement and all transactions required hereunder to be
performed by Purchaser have been duly and validly authorized and
approved by all necessary corporate action on the part of Pur-
chaser. This Agreement has been duly and validly executed and
delivered on behalf of Purchaser by its duly authorized officers,
and this Agreement constitutes the valid and legally binding
obligation of Purchaser enforceable, subject to general equity
principles, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally. Neither the execution and delivery of this Agreement
nor the consummation of the transactions hereby contemplated will
constitute a violation or breach of the articles of incorporation
or the bylaws of Purchaser or any provision of any contract or
other instrument to which Purchaser is a party or by which any of
the assets of Purchaser may be affected or secured, or any order,
writ, injunction, decree, statute, rule or regulation to which
Purchaser is subject, or will result in the creation of any lien,
charge, or encumbrance on any of the assets of Purchaser or
acceleration of any debt.
4.3 FULL DISCLOSURE. No representation or warranty of
Purchaser in this Agreement, nor any statement or certificate
furnished or to be furnished by Purchaser pursuant hereto or in
connection with the transactions contemplated herein, contains or
will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
5. CONDUCT OF BUSINESS OF COMPANY PENDING CLOSING.
The PST/PSHC Shareholders covenant and agree that, except as
may otherwise be provided herein, without the prior written
consent of Purchaser, between the date hereof and the Closing
Date:
5.1 BUSINESS IN THE ORDINARY COURSE. The business of each
Company shall be conducted only in the ordinary and usual course
and consistent with prior practices, without the creation of any
additional indebtedness for borrowed money. Without limiting the
generality of the foregoing:
(a) Neither Company will enter into any contract
of the kind described in Paragraph 3.19 hereof and, except as
otherwise expressly provided herein, neither Company will enter
into any contract nor effect any transaction with any Related
Party;
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(b) Neither Company shall enter into any
contracts, agreements or other arrangements to sell, distribute
or supply goods or services to any customer or any third party
except PST in the ordinary course of its business at prices and
on terms consistent with the prior operating practices of PST;
(c) Except for sales by PST of inventory and
normal disposal of used motor vehicles and equipment in the
ordinary course of its business, neither Company shall sell,
assign, transfer, convey, pledge, mortgage, encumber or otherwise
dispose of, or cause the sale, assignment, transfer, conveyance,
pledge, mortgage, encumbrance or other disposition of any of the
assets or properties of such Company or any interest therein;
(d) All contracts on commitments of either
Company for the purchase of raw materials, products, services and
supplies shall be entered into only by PST in the ordinary course
of business as is necessary to enable PST to conduct its normal
business operations and to maintain its normal inventory of raw
materials and finished goods, at prices and on terms consistent
with the prior operating practices of PST;
(e) Each Company shall maintain, preserve and
protect all of its assets and properties, whether real or
personal, tangible or intangible, in good condition, except for
ordinary wear and tear and damage by fire or other casualty; and
each Company shall maintain in full force and effect all
insurance policies referred to in Paragraph 3.20 hereof or other
insurance equivalent thereto;
(f) The books, records and accounts of each
Company shall be maintained in the usual, regular and ordinary
course of business on a basis consistent with prior practices and
in accordance with generally accepted accounting principles; and
(g) The PST/PSHC Shareholders shall use their
best efforts, and shall cause each Company to use its best
efforts, to preserve each Company's business organization, to
keep available the services of each Company's present employees,
to preserve the good will of each Company's suppliers, customers
and others having business relations with such Company, and to
assist each Company in retaining the services of key employees
and agents of each Company after the Closing Date on terms
satisfactory to Purchaser.
5.2 NO MATERIAL CHANGES. No action shall be taken by the
Shareholders or either Company which shall materially alter the
organization, capitalization, or financial structure, practices
or operations of either Company. Without limiting the generality
of the foregoing:
(a) No change shall be made in the articles of
incorporation or bylaws of either Company;
-41-
(b) No change shall be made in the authorized or
issued share capital of either Company, nor shall any of the
shares be transferred beneficially or of record;
(c) Neither Company shall issue or grant any
right or option to purchase or otherwise acquire any share
capital or other security of either Company;
(d) No dividend and other distribution or payment
shall be declared or made with respect to any share capital of
either Company, and neither Company shall, directly or
indirectly, redeem, purchase or otherwise acquire any of its
share capital;
(e) No change shall be made affecting the banking
arrangements of either Company; and
(f) Neither Company shall liquidate or
voluntarily declare bankruptcy or seek the appointment of a
receiver, trustee or custodian.
5.3 COMPENSATION. No increase shall be made in the
compensation payable or to become payable to any director,
officer, employee or agent of either Company, and no bonus or
profit-share payment or other arrangement (whether current or
deferred) shall be made to or with any such director, officer,
employee or agent, except the payment of bonuses as set forth in
Schedule 3.31 of the Disclosure Memorandum.
5.4 EMPLOYEE BENEFIT PLANS.
(a) Neither Company shall cause or permit any
ERISA Plan to be involved in any transaction which constitutes a
"prohibited transaction" within the meaning of Section 406 of
ERISA or Section 4975 of the Code; and each Company shall timely
make all filings, returns and reports, and timely give all
notices which are required under ERISA or the Code.
(b) With respect to the Company Plans, each
Company shall take such actions, and refrain from such actions,
as are necessary to maintain the qualification of each such Plan
under Section 404(a) of ERISA, and the exemption of each such
Plan under Code Section 501(a).
(c) Each Company shall timely make all
contributions and other payments to its Plans which it is
obligated to make as of the date hereof. Other than contribu-
tions or payments declared or obligated to be paid to the Plans
as of the date hereof, no contribution shall be declared for or
paid to any Plan including, without limitation, Company Plans.
-42-
(d) No amendment or change to the provisions of
any Company Plan of either Company shall be made or adopted prior
to the Closing Date.
5.5 NOTICE OF CHANGE. The Shareholders shall give
Purchaser prompt written notice of any change of any of the
information contained in the representations and warranties made
in Section 3 or elsewhere in this Agreement, or in the Disclosure
Memorandum, which occur prior to the Closing.
6. CONDITIONS TO OBLIGATIONS OF PURCHASER.
All obligations of Purchaser under this Agreement are
subject to the fulfillment and satisfaction of each and every of
the following conditions on or prior to the Closing, any or all
of which may be waived in whole or in part by Purchaser:
6.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All
proceedings taken in connection with the consummation of the
transactions contemplated herein and all documents and papers
relating thereto shall be reasonably satisfactory to Purchaser
and its counsel, and Purchaser and its counsel shall have timely
received copies of such documents and papers, all in form and
substance satisfactory to Purchaser and its counsel, as reason-
ably requested by Purchaser or its counsel in connection
therewith.
6.2 REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Section 3 of this Agreement, the
Merger Agreement, the Disclosure Memorandum and in any
certificate, instrument, schedule, agreement or other writing
delivered by or on behalf of either Company or the Shareholders
in connection with the transactions contemplated by this
Agreement shall be true and correct as of the date when made and
shall be deemed to be made again at and as of the Closing Date
and shall be true at and as of such time.
6.3 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. The
Shareholders and each Company shall have performed and complied
with all agreements and conditions required by this Agreement and
each other agreement or instrument to which they or any of them
is a party relating to the transactions contemplated by this
Agreement to be performed or complied with by each such party
prior to or on the Closing Date.
6.4 CERTIFICATE OF SHAREHOLDERS. The Shareholders shall
have delivered to Purchaser a certificate, executed by each of
the Shareholders, or on behalf of each of the Shareholders by
their Agent, dated the Closing Date, certifying in such detail as
Purchaser may reasonably request as to (a) the fulfillment and
satisfaction of the conditions specified in Paragraphs 6.2 and
6.3 above, and (b) the absence of any material adverse change in
the business of either Company prior to the Closing Date.
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6.5 CERTIFICATE OF INCORPORATION AND BYLAWS. There shall
be delivered to Purchaser a copy of each Company's articles of
incorporation, certified by the Secretary of State of such
Company's state of incorporation not more than 15 days prior to
the Closing Date, and a copy of its bylaws certified by the
Secretary or an Assistant Secretary of such Company on the
Closing Date. The articles of incorporation and bylaws shall be
in the form attached to the Disclosure Memorandum. The Share-
holders shall have delivered to Purchaser certificates, dated not
more than five days prior to the Closing Date, from the Secretary
of State of the state of each Company's incorporation and of each
other state where either Company is qualified to transact
business as to the good standing of such Company under the laws
of such states.
6.6 OPINION OF COUNSEL. Purchaser shall have received
from Kaufman, Chaiken & Sorensen, counsel for the Companies and
the Shareholders, an opinion, dated as of the Closing Date, in
form and substance reasonably satisfactory to Purchaser and
addressing those matters as shown on Exhibit D attached hereto
and such other matters customarily covered in opinions of
sellers' counsel in the sale of business context.
6.7 GOVERNMENT CONSENTS. Purchaser shall have received
from any and all persons, firms and other legal entities, or any
public or governmental authorities, bodies or agencies or
judicial authority having jurisdiction over the transactions
contemplated by this Agreement, or any part hereof, such
consents, authorizations and approvals as are necessary for the
consummation thereof, and all notices required to be given to
government authorities shall have been given and all applicable
waiting periods shall have expired.
6.8 OTHER CONSENTS. The Shareholders shall have delivered
to Purchaser such consents and approvals from each Company's
lessors, lenders and other persons, firms and other entities
having business relations with either Company as are necessary in
Purchaser's reasonable opinion for the continuation in full force
and effect after the Closing (a) of each Company's leases, loan
arrangements, and other contracts and agreements and (b) of each
Company's business in the same manner as conducted prior to the
Closing.
6.9 TERMINATION OF CERTAIN CONTRACTS. Each Company shall
have terminated, without further liability of such Company to the
Shareholders or any other party, any agreements with the
Shareholders or their affiliates or relatives described in
Paragraph 2.7 hereof.
6.10 MISCELLANEOUS. Purchaser and its counsel shall have
received such other opinions, certifications and documents from
each Company or the Shareholders as Purchaser and its counsel may
reasonably request.
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6.11 FINANCING. Purchaser shall have secured adequate
financing for the payment of any cash portion of the Merger
Consideration.
6.12 REGISTRATION STATEMENT. The Registration Statement
shall have been declared effective by the Commission under the
Securities Act; no stop order shall have been issued with respect
thereto and all necessary approvals under state securities or
blue sky laws with respect thereto shall have been received.
7. CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS.
All of the obligations of the Shareholders under this
Agreement are subject to the fulfillment and satisfaction of each
and every of the following conditions on or prior to the Closing
Date, any or all of which may be waived in whole or in part by
the Shareholders:
7.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Section 4 of this Agreement and in
the Merger Agreement shall be true and correct as of the date
when made and shall be deemed to be made again at and as of the
Closing Date and shall be true at and as of such date.
7.2 RESOLUTIONS. Purchaser shall have delivered to the
Shareholders duly adopted resolutions of the Board of Directors
of Purchaser, certified by the Secretary or an Assistant
Secretary of Purchaser, dated the Closing Date, authorizing and
approving the execution of this Agreement by Purchaser and all
other action necessary to enable Purchaser to comply with the
terms of this Agreement.
7.3 PAYMENT OF PURCHASE PRICE. Purchaser shall have
caused the Merger Consideration due at Closing to be paid as
provided in Section 1.
8. INDEMNITIES.
8.1 INDEMNIFICATION OF PURCHASER. The Shareholders shall,
jointly and severally, indemnify and hold harmless Purchaser, its
affiliates, their officers and directors and each Company
(hereinafter collectively called "Indemnitees"), from and against
and in respect of any and all loss, damage, liability, cost and
expense, including reasonable attorneys' fees and amounts paid in
settlement pursuant to Paragraph 8.3(c) (all of the foregoing
being hereinafter called "Indemnified Losses"), suffered or
incurred by any Indemnitee by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or
breach or nonfulfillment of any agreement of the Shareholders or
the Companies or any of them contained in this Agreement or in
any certificate, schedule, instrument or document delivered to
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Purchaser by or on behalf of the Shareholders pursuant to the
provisions of this Agreement, including, without limitation, the
Disclosure Memorandum and the Merger Agreement;
(b) all liabilities and obligations of, or
claims, demands or actions against, either Company of any nature
whatsoever, whether known or unknown, accrued, absolute,
contingent or otherwise, existing as of the Reference Date, to
the extent not a liability of PST reflected or reserved against
in full in the Audited Balance Sheet, which are not disclosed in
this Agreement or the Disclosure Memorandum, including, without
limitation: (i) any tax liabilities of PST (to the extent not so
reflected or reserved against) accrued in respect of, or measured
by PST's income for any period or portion of a period prior to
the Reference Date or arising out of transactions entered into or
any state of facts existing prior to such date; and (ii) any
claims or liabilities arising out of any act or omission of
either Company or any of its agents or employees or any claims or
liabilities with respect to defective, or allegedly defective,
goods or services; and
(c) all liabilities and obligations of, or
claims, demands or actions against, either Company of any nature
whatsoever, whether known or unknown, accrued, absolute,
contingent or otherwise, arising out of the conduct of its
business between the Reference Date and the Closing Date other
than in the ordinary course, including, without limitation, any
presently existing contract or commitments of the character
described in Paragraph 3.19 hereof and not listed in the
Disclosure Memorandum, or any contract or commitment entered into
or made by either Company between the date hereof and the Closing
Date which contravenes the provisions of Section 5 hereof, any
act or omission of either Company or any of its agents or
employees, or any claims or liabilities with respect to defective
goods or allegedly defective goods, which are not disclosed in
this Agreement or the Disclosure Memorandum.
The total amount of Indemnified Losses paid hereunder shall
be limited to fifty percent (50%) of the Merger Consideration,
provided that any Indemnified Losses attributable to a knowing
misrepresentation or knowing nondisclosure will not be so limited
so long as the total amount of Indemnified Losses paid hereunder
do not exceed the full amount of the Merger Consideration.
Provided, that Indemnified Losses shall not include any losses
arising out of any situation or circumstances that was disclosed
in writing prior to the Closing Date by the Companies or the
Shareholders, whether in the Disclosure Memorandum or otherwise,
to any executive officer of Purchaser. Provided, further,
however, that the limitations contained in this paragraph shall
not apply to any Indemnified Losses suffered or incurred by any
Indemnitee by reason of, or arising out of, any liabilities and
obligations of, or claims, demands or actions against PSHC,
including without limitation any tax liabilities of PSHC.
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8.2 PAYMENT. The Shareholders shall, subject to the
provisions of Paragraphs 8.3 and 8.4 hereof, reimburse the Indem-
nitees, within 20 days after written demand on the Shareholders,
for any Indemnified Loss; provided, however, that payment shall
be required to be made hereunder only to the extent that the
aggregate Indemnified Losses exceed one-half percent (1/2%) of
the Merger Consideration.
8.3 DEFENSE OF CLAIMS.
(a) Should any claim or action by a third party
arise after the Closing Date for which the Shareholders are
liable under the terms of this Agreement, the Indemnitees shall
notify the Shareholders promptly after such claim or action
arises and is known to Indemnitees, and shall give the
Shareholders a reasonable opportunity:
(i) to take part in any examination
of the books and records of the Companies;
(ii) to conduct any proceedings or
negotiations in connection therewith and necessary or
appropriate to defend the Indemnitees;
(iii) to take all other required steps
or proceedings to settle or defend any such claim or
action; and
(iv) to employ counsel to contest any
such claim or action in the name of the Indemnitees or
otherwise.
The expenses of all proceedings, contests or lawsuits with
respect to such claims or actions shall be borne by the Share-
holders. If the Shareholders wish to assume the defense of such
claim or action, they shall give written notice to the Indem-
nitees within 30 days after notice from the Indemnitees of such
claim or action (unless the claim or action reasonably requires a
response in less than 30 days after the notice is given to the
Shareholders, in which event they shall notify Indemnitees at
least 10 days prior to such reasonably required response date),
and the Shareholders shall thereafter assume the defense of any
such claim or liability, through counsel reasonably satisfactory
to the Indemnitees; provided that Indemnitees may participate in
such defense at their own expense and shall, in any event, have
the right to control the defense of the claim or action.
(b) If the Shareholders shall not
assume the defense of, or if after so assuming they shall fail to
defend, any such claim or action, the Indemnitees may defend
against any such claim or action in such manner as they may deem
appropriate (provided that the Shareholders may participate in
such defense at their own expense) and the Indemnitees may settle
such claim or litigation on such terms as they may deem
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appropriate, and the Shareholders jointly and severally shall
promptly reimburse the Indemnitees for the amount of all
expenses, legal and otherwise, reasonably and necessarily
incurred by the Indemnitees in connection with the defense
against and settlement of such claim or action. If no settlement
of such claim or litigation is made, the Shareholders jointly and
severally shall satisfy any judgment rendered with respect to
such claim or in such action, before Indemnitees are required to
do so, and pay all expenses, legal or otherwise, reasonably and
necessarily incurred by the Indemnitees in the defense of such
claim or litigation.
(c) If a judgment is rendered against
any of the Indemnitees in any action covered by the
indemnification hereunder, or any lien in respect of such
judgment attaches to any of the assets of any of the Indemnitees,
the Shareholders shall immediately upon such entry or attachment
pay such judgment in full or discharge such lien unless, at the
Shareholders' expense and direction, an appeal is taken under
which the execution of the judgment or satisfaction of the lien
is stayed. If and when a final judgment is rendered in any such
action, the Shareholders shall forthwith pay such judgment or
discharge such lien before any of the Indemnitees is compelled to
do so.
8.4 COMPUTATION OF INDEMNIFIED LOSSES. The
amount of any Indemnified Loss otherwise payable to Indemnitees
hereunder shall be reduced: (a) by the amount of any insurance
proceeds received by the Companies as compensation for the damage
or loss caused by the act, omission, fact or circumstances giving
rise to the Indemnified Loss; (b) if the payment of any
Indemnified Loss will provide the Companies with income tax
deductions or credits, by the amount of the tax savings realized
by the Companies as a result of such deductions or credits, which
amount shall be discounted to its present value as of the date of
the payment of the Indemnified Loss by the Companies at the rate
of interest charged on such date by the Internal Revenue Service
on underpayment of taxes; and (c) by the net amount recovered by
PST during the Survival Period (as defined in Section 9 below) in
respect of accounts receivable and other amounts owing to PST
which were charged against PST's reserve for doubtful accounts in
periods prior to the Reference Date, or which were written off by
PST prior to such date, after deducting all costs of collection,
including, without limitation, all court costs, attorneys' fees
and similar expenses. Notwithstanding any provision to the
contrary in this Agreement, the Shareholders shall have no
responsibility after the Closing for any income tax liabilities
of PSHC, PST or the Surviving Corporation for any period, except
that the Shareholders shall be responsible for any such income
tax liabilities solely to the extent such liabilities are
inconsistent with the representations and warranties contained in
Paragraph 3.23, and any such inconsistent liabilities shall
constitute Indemnified Losses hereunder until the expiration of
the applicable statute of limitations for such taxes.
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8.5 ACTION BY COMPANY. The failure of
either Company to give any notice or to take any action hereunder
shall not be deemed a waiver of any of the rights of such Company
or any of the other Indemnitees hereunder. Waivers of any rights
of either Company must be in writing and signed by Purchaser as
well as such Company. Any compromise, settlement or other
resolution of a claim of either Company hereunder shall be
binding on such Company only if approved in advance and in
writing by Purchaser.
8.6 NO LIABILITY OR CONTRIBUTION BY
COMPANIES. Neither Company shall have any liability to any
Shareholder as a result of any breach of warranty,
misrepresentation or nonfulfillment or breach of any agreement of
either Company in this Agreement, the Merger Agreement or in any
certificate, schedule, instrument or document delivered to Pur-
chaser pursuant to the provisions of this Agreement, including,
without limitation, the Disclosure Memorandum, and no Shareholder
shall have any right of contribution against either Company on
account of any event arising prior to or as of the Closing Date.
9. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS.
9.1 Survival. The representations,
warranties, covenants, agreements and indemnifications of the
parties contained in this Agreement or in any writing delivered
pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by Purchaser and the
consummation of the Merger and the other transactions
contemplated herein and, unless a different time period is set
forth elsewhere in this Agreement with respect to the operation,
effect or survival of a specific representation, warranty,
covenant, agreement or indemnification, shall continue in full
force and effect for the period (the "Survival Period") beginning
on the Closing Date and continuing until and including the first
business day after the expiration of two years from and after (a)
the Closing Date or (b) with respect to Indemnified Losses
arising out of the matters described in Section 8.1(b)(i) above,
the date on which the federal income tax return of PST or PSHC,
as the case may be, for the period including the Closing Date
shall be filed with the Internal Revenue Service. Provided,
however, that the Survival Period shall be extended automatically
to include any time period necessary to resolve a claim for
indemnification which was made before expiration of the Survival
Period but not resolved prior to its expiration; and, provided
further, that any such extension shall apply only as to claims
asserted and not so resolved within the Survival Period.
Notwithstanding any of the foregoing to the contrary, the
representations and warranties made by Shareholders in Section
3.32 shall survive indefinitely.
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10. TERMINATION.
10.1 TERMINATION FOR CERTAIN CAUSES. This
Agreement may be terminated at any time prior to or on the
Closing Date upon written notice to the other party as follows,
and, upon such termination of this Agreement, no party hereto
shall have any liability to the other:
(a) By Purchaser, if a material adverse
change in the financial condition or business of either Company
shall have occurred, or any substantial part of the assets of
either Company are destroyed due to fire or other casualty.
(b) By Purchaser, if the terms,
covenants or conditions of this Agreement to be complied with or
performed by the Shareholders at or before the Closing shall not
have been complied with or performed and such noncompliance or
nonperformance shall not have been waived by Purchaser.
(c) By Purchaser, if there is any fact
or condition with respect to the business of either Company,
either Company's assets or contracts, or any obligation of either
Company which materially and adversely affects such business,
assets, contracts or obligations or the value or continuance of
such business.
(d) By any party, if any action, suit
or proceeding shall have been instituted or threatened against
any party to this Agreement to restrain or prohibit, or to obtain
substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated herein, which, in
the good faith opinion of such party and legal counsel to such
party, would cause the consummation of the transactions herein
contemplated to subject that party to a significant risk of
material loss.
11. POWER-OF-ATTORNEY.
11.1 APPOINTMENT OF AGENT. The Shareholders
and each of them, hereby irrevocably constitute and appoint
Robert S. Weiner (the "Agent") as their agent and attorney-in--
fact to modify, amend or otherwise change this Agreement, or any
of its terms or provisions (including modifications, amendments
or changes subsequent to Closing), to take all actions and to
execute all documents (including all actions and documents
required under Section 6 hereof) necessary or desirable to
consummate the transactions contemplated by this Agreement, to
tender their Shares pursuant to the Merger Agreement and to
accept Merger Consideration in connection therewith and to take
all actions and to execute all documents which may be necessary
or desirable in connection therewith (including, without
limitation, delivery of the certificates for their Shares and
execution of such powers of attorney or other instruments as may
be necessary to comply with the Merger Agreement), to give and
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receive consents and all notices hereunder, to negotiate and
settle claims for indemnification under Section 8 hereof, and to
perform any other act arising under or pertaining to this
Agreement, the Merger Agreement and the transactions contemplated
hereby. The Shareholders, and each of them, agree that service
of process upon the Agent in any action or proceeding arising
under or pertaining to this Agreement shall be deemed to be valid
service of process upon the Shareholders, and any claim by
Purchaser against the Shareholders, or any of them, in respect to
this Agreement may be asserted against, and settled with, said
Agent. The Agent shall be deemed to have accepted the
appointment herein upon his execution of this Agreement.
11.2 LIABILITY OF AGENT. Nothing contained
herein shall be deemed to make the Agent personally liable to the
other Shareholders because of service in his capacity as agent
and attorney-in-fact. In performing any of his duties hereunder,
the Agent shall not incur any liability to the other Shareholders
for losses, damages, liabilities or expenses, except for his own
wilful default.
11.3 SUCCESSION. In the event of the death,
disability, incompetency or resignation of the original Agent,
the successor agent shall be Randall J. Hatch. In the event of
the death, disability, incompetency or resignation of any
successor Agent, the Shareholders shall, within 30 days after
notice from Purchaser, determine by simple majority vote and
designate a successor Agent or Agents, as the case may be, who
shall have all of the rights, powers and authority conferred in
this power of attorney, and if the Shareholders fail so to
designate such successor Agent(s) within such period, Purchaser
may petition a court of appropriate jurisdiction for appointment
of such successor Agent(s).
11.4 IRREVOCABLE; BINDING ON SUCCESSORS,
ETC. It is expressly understood and agreed that this power of
attorney and the agency created hereby is coupled with an
interest of the respective parties hereto and shall be binding
and enforceable on and against the respective heirs, personal
representatives, successors and assigns of the Shareholders, and
each of them, and this power of attorney shall not be revoked or
terminated by the death, disability, bankruptcy or incompetency
of the Shareholders, or any of them, but shall continue to be
binding and enforceable by the Agent, Purchaser and their
respective successors and on and against the heirs, personal
representatives, successors and assigns of the Shareholders in
the manner provided herein.
12. MISCELLANEOUS.
12.1 NOTICES.
(a) All notices, requests, demands or
other communications required or permitted to be given or made
hereunder shall be in writing and delivered personally or sent by
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pre-paid, certified or registered first class mail, return
receipt requested, to the intended recipient thereof at its
address set out below. Any such notice, demand or communication
shall be deemed to have been duly given immediately if given by
hand delivery to the recipient's address, or facsimile, or three
days after mailing (if given or made by letter addressed to a
location within the country in which it is posted), and in
proving same it shall be sufficient to show that the envelope
containing the same was duly addressed, stamped and posted. The
addresses of the parties for purposes of this Agreement are:
(i) If to Purchaser: Interface, Inc.
Orchard Hill Road
P.O. Box 1503
LaGrange, Georgia 30241
Attention: Daniel T. Hendrix
With copies to: Interface, Inc.
2859 Paces Ferry
Suite 2000
Atlanta, Georgia 30339
Attention: David W. Porter
Kilpatrick & Cody
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 30309
Attention: G. Kimbrough
Taylor
(ii) If to the PST/PSHC Robert S. Weiner
Shareholders: 1016 Old Powers Ferry Road
Atlanta, Georgia 30327
Jacqueline A. Colando
7609 Woodland Lane
Burr Ridge, Illinois 60525
Nancy O'Donnell
12 Weathervane Hill
Westport, Connecticut 06880
John O'Donnell
12 Weathervane Hill
Westport, Connecticut 06880
Randall J. Hatch
4702 Ageratum Court
Acworth, Georgia 30102
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Traccton Corp.
c/o Robert S. Weiner
1016 Old Powers Ferry Road
Atlanta, Georgia 30327
Prince Street Holding Company
c/o Robert S. Weiner
1016 Old Powers Ferry Road
Atlanta, Georgia 30327
Robert D. Williams
1011 Housley Road
Marietta, Georgia 30066
Steven E. Andrade
78 Rockridge Court
Danville, California 94512
With a copy to: Kaufman, Chaiken & Sorensen
Suite 720
400 Perimeter Center Ter.,
N.E.
Atlanta, Georgia 30346-1234
Attention: Robert J. Kaufman
(b) In accordance with the provisions of Section
12 hereof, all notices, requests, demands or other communications
by Purchaser shall be deemed to have been duly given to all the
Shareholders if such notices, requests, demands or communications
are duly given in accordance with this Paragraph 12.1 to Robert
S. Weiner or such other party or parties appointed as the
Agent(s) of the Shareholders.
(c) Any party may change the address to which
notices, requests, demands or other communications to such
parties shall be delivered or mailed by giving notice thereof to
the other parties hereto in the manner provided herein.
12.2 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same
instrument.
12.3 ENTIRE AGREEMENT. This Agreement and the other
written agreements executed and delivered by Purchaser and the
Shareholders or any of them of even date herewith supersede all
prior discussions and agreements between the parties with respect
to the subject matter hereof (including without limitation the
offer contained in the form of agreement dated November 15, 1993,
executed and delivered by Purchasers and delivered to the Agent
on behalf of the PST Shareholders, which offer shall be deemed
terminated hereby), and this Agreement and such other agreements
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contain the sole and entire agreement among the parties with
respect to the matters covered hereby. This Agreement shall not
be altered or amended except by an instrument in writing signed
by or on behalf of the parties hereto.
12.4 GOVERNING LAW. The validity and effect of this
Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia.
12.5 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective heirs, executors, legal representatives,
successors and assigns.
12.6 PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained herein may be exercised and shall be
applicable and binding only to the extent that they do not
violate any applicable laws and are intended to be limited to the
extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not
essential to the commercial purpose of this Agreement shall be
held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, it is the intention of the parties that
the remaining terms hereof, or part thereof shall constitute
their agreement with respect to the subject matter hereof and all
such remaining terms, or parts thereof, shall remain in full
force and effect. To the extent legally permissible, any
illegal, invalid or unenforceable provision of this Agreement
shall be replaced by a valid provision which will implement the
commercial purpose of the illegal, invalid or unenforceable
provision.
12.7 WAIVER. Any term or condition of this Agreement may
be waived at any time by the party which is entitled to the
benefit thereof, but only if such waiver is evidenced by a
writing signed by such party. No failure on the part of any
party hereto to exercise, and no delay in exercising any right,
power or remedy created hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
power or remedy by any such party preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. No waiver by any party hereto to any breach of or
default in any term or condition of this Agreement shall
constitute a waiver of or assent to any succeeding breach of or
default in the same or any other term or condition hereof.
12.8 HEADINGS. The headings as to contents of particular
paragraphs of this Agreement are inserted for convenience and
shall not be construed as a part of this Agreement or as a
limitation on the scope of any terms or provisions of this
Agreement.
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12.9 NUMBER AND GENDER. Where the context requires, the
use of the singular form herein shall include the plural, the use
of the plural shall include the singular, and the use of any
gender shall include any and all genders.
12.10 TIME OF PERFORMANCE. Time is of the essence.
12.11 DEFINITION OF KNOWLEDGE. The words "known", "to the
knowledge of", "to the best knowledge of" or words of similar
import employed in this Agreement with reference to any person or
entity shall be conclusively presumed to mean that the person or
entity has made reasonable and diligent efforts under the cir-
cumstances to become knowledgeable.
13. INDEX TO DEFINITIONS.
The definitions for the following defined terms used in this
Agreement can be found as follows:
Defined Term Paragraph or Section
- ------------ --------------------
Additional PST Shares . . . . . . . . . . . . . 1.1(a)
Adjusted EBIT . . . . . . . . . . . . . . . . . 1.4
Affiliates . . . . . . . . . . . . . . . . . . 2.12
Agent . . . . . . . . . . . . . . . . . . . . . 11.1
Audited Balance Sheet . . . . . . . . . . . . . 3.10
Audited Financial Statements . . . . . . . . . 3.9
Base Monthly Amount . . . . . . . . . . . . . . 2.13(a)
Closing . . . . . . . . . . . . . . . . . . . . 1.7
Closing Date . . . . . . . . . . . . . . . . . 1.7
Closing Date Price . . . . . . . . . . . . . . 1.3
Code . . . . . . . . . . . . . . . . . . . . . 3.26(b)
Commission . . . . . . . . . . . . . . . . . . 2.11
Company . . . . . . . . . . . . . . . . . . Introductory Recitals
Company Contracts . . . . . . . . . . . . . . . 3.19
Company Plans . . . . . . . . . . . . . . . . . 3.26(f)
Company Territory . . . . . . . . . . . . . . . 2.6(c)
Converted Shares . . . . . . . . . . . . . . . 1.2(c)
Day's Maximum Sale Number . . . . . . . . . . . 2.13
Disclosure Memorandum . . . . . . . . . . . . . 3.1
Disposals . . . . . . . . . . . . . . . . . . . 3.27
Effective Time of the Merger . . . . . . . . . 1.1
Emissions . . . . . . . . . . . . . . . . . . . 3.27
EBIT . . . . . . . . . . . . . . . . . . . . . 1.4
EBIT Shortfall Adjustment Amount . . . . . . . 1.4
1993 EBIT . . . . . . . . . . . . . . . . . . . 1.4
ERISA . . . . . . . . . . . . . . . . . . . . . 3.26(b)
ERISA Plan . . . . . . . . . . . . . . . . . . 3.26(c)
Firm Purchase Commitments . . . . . . . . . . . 3.14
Foreign Plan . . . . . . . . . . . . . . . . . 3.26(g)
HSR Act . . . . . . . . . . . . . . . . . . . . 1.7
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Indemnified Losses . . . . . . . . . . . . . . 8.1
Indemnitees . . . . . . . . . . . . . . . . . . 8.1
Independent Accountant . . . . . . . . . . . . 1.6
Leased Real Property . . . . . . . . . . . . . 3.17(d)
Merger . . . . . . . . . . . . . . . . . . . . 1.1
Merger Agreement . . . . . . . . . . . . . . . 1.1
Merger Consideration . . . . . . . . . . . . . 1.2(c)
Mohawk Letter . . . . . . . . . . . . . . . Introductory Recitals
Multiemployer Benefit Plan . . . . . . . . . . 3.26(d)
Multiemployer Pension Plan . . . . . . . . . . 3.26(f)
PSHC . . . . . . . . . . . . . . . . . . . Introductory Recitals
PSHC Shares . . . . . . . . . . . . . . . . Introductory Recitals
PST . . . . . . . . . . . . . . . . . . . . Introductory Recitals
PST Shareholders . . . . . . . . . . . . . Introductory Recitals
PST/PSHC Closing . . . . . . . . . . . . . . . 1.1(a)
PST/PSHC Merger . . . . . . . . . . . . . . . . 1.1(a)
PST/PSHC Merger Agreement . . . . . . . . . . . 1.1(a)
PST/PSHC Shareholders . . . . . . . . . . . Introductory Recitals
PST Shares . . . . . . . . . . . . . . . . Introductory Recitals
Plan . . . . . . . . . . . . . . . . . . . . . 3.26(a)
Post-employment Benefits . . . . . . . . . . . 3.26(h)
Prince Street . . . . . . . . . . . . . . . . . 2.6(b)
Prince Street Technologies . . . . . . . . . . 2.6(b)
Products . . . . . . . . . . . . . . . . . . . 2.6(i)
PSHC Unaudited Balance Sheet . . . . . . . . . 3.9
PST Unaudited Balance Sheet . . . . . . . . . . 3.9
Purchaser . . . . . . . . . . . . . . . . . Introductory Recitals
Purchaser Shares . . . . . . . . . . . . . . . 1.3
Real Property . . . . . . . . . . . . . . . . . 3.17(a)
Real Property Leases . . . . . . . . . . . . . 3.17(c)
Reference Date . . . . . . . . . . . . . . . . 3.10
Registration Statement . . . . . . . . . . . . 2.11
Related Parties . . . . . . . . . . . . . . . . 3.30
Residential Manufacturer . . . . . . . . . . . 2.6(c)
Restriction Period . . . . . . . . . . . . . . 2.13(a)
Securities Act . . . . . . . . . . . . . . . . 2.11
Shareholders . . . . . . . . . . . . . . . .Introductory Recitals
Shares . . . . . . . . . . . . . . . . . . .Introductory Recitals
Significant Customers . . . . . . . . . . . . . 3.21
Sub . . . . . . . . . . . . . . . . . . . . . . 1.1
Surviving Corporation . . . . . . . . . . . . . 1.2
Survival Period . . . . . . . . . . . . . . . . 9.1
Taxes . . . . . . . . . . . . . . . . . . . . . 3.23
Total Company Amount . . . . . . . . . . . Introductory Recitals
Traccton . . . . . . . . . . . . . . . . . Introductory Recitals
Unaudited Financial Statements . . . . . . . . 3.9
Warrant . . . . . . . . . . . . . . . . . . Introductory Recitals
IN WITNESS WHEREOF, the parties have executed this
Agreement under seal or caused this Agreement to be duly executed
-56-
under seal by their duly authorized officers as of the day and
year first above written.
INTERFACE, INC.
(CORPORATE SEAL) By: s/Ray C. Anderson
-----------------
Attest: Title: Chairman and
Chief Executive
Officer
s/ David W. Porter
- ------------------
Secretary
SHAREHOLDERS:
s/Robert S. Weiner (SEAL)
____________________
Robert S. Weiner
s/Randall J. Hatch (SEAL)
--------------------
Randall J. Hatch
s/Nancy O. Donnell (SEAL)
____________________
Nancy O'Donnell
s/John O'Donnell (SEAL)
--------------------
John O'Donnell
s/Jacqueline A. Colando (SEAL)
________________________
Jacqueline A. Colando
s/Steven C. Andrade (SEAL)
______________________
Steven C. Andrade
s/ Robert D. Williams (SEAL)
---------------------
Robert D. Williams
TRACCTON CORP.
By: s/ Robert S. Weiner
________________________
Name: Robert S. Weiner
Title: CEO
(CORPORATE SEAL)
Attest:
s/ Randall J. Hatch
____________________
President
PRINCE STREET HOLDING COMPANY
By: s/ Robert S. Weiner
______________________
Name: Robert S. Weiner
Title: CEO
(CORPORATE SEAL)
Attest:
s/Randall J. Hatch
__________________________
President
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER OF
PRINCE STREET TECHNOLOGIES, LTD.,
AND
PRINCE STREET HOLDING COMPANY
This Agreement and Plan of Merger, made and entered into as
of the ____ day of _____________, 199_ (hereinafter referred to
as the "Agreement"), by and between PRINCE STREET TECHNOLOGIES,
LTD., a Georgia corporation (hereinafter sometimes referred to as
"PST") and PRINCE STREET HOLDING COMPANY, a Georgia corporation
(hereinafter sometimes referred to as "PSHC") (said corporations
being hereinafter sometimes collectively referred to as the
"Constituent Corporations"):
W I T N E S S E T H:
The Boards of Directors of each of the Constituent
Corporations deem it advisable and for the benefit of each of
said corporations and their respective shareholders that PSHC
merges into PST and that PSHC thereafter ceases its separate
existence as a corporation under Georgia law.
NOW, THEREFORE, the parties hereto do hereby agree as
follows:
ARTICLE ONE
NAMES OF MERGING CORPORATIONS
1.01 The names of the corporations proposed to be merged
are PRINCE STREET TECHNOLOGIES, LTD., a corporation organized
under the laws of the State of Georgia and PRINCE STREET HOLDING
COMPANY, a corporation organized under the laws of the State of
Georgia.
ARTICLE TWO
SURVIVING CORPORATION
2.01 PSHC shall merge into PST, which shall survive the
merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and thereafter the separate corporate existence of
PSHC shall cease (the "Merger").
ARTICLE THREE
EFFECTIVE TIME
3.01 EFFECTIVE TIME. This Merger shall be effective upon
the filing of Articles of Merger or a Certificate of Merger with
the Secretary of State of Georgia, pursuant to Section 14-2-1105
of the Georgia Business Corporation Code, as amended (hereinafter
referred to as the "Effective Time").
3.01 ABANDONMENT. Notwithstanding any other provisions of
this Agreement, this Agreement may be abandoned by mutual consent
of the Boards of Directors of PST and PSHC, at any time prior to
the Effective Time.
ARTICLE FOUR
TERMS AND CONDITIONS
4.01 ARTICLES OF INCORPORATION. The Articles of
Incorporation of PST as they exist on the Effective Time shall be
and remain the Articles of Incorporation of the Surviving
Corporation until the same shall be altered, amended or repealed
as therein provided.
-2-
4.02 BY-LAWS. The By-Laws of PST as they exist on the
Effective Time shall be and remain the By-Laws of the Surviving
Corporation until the same shall be altered, amended or repealed
as therein provided.
4.03 DIRECTORS AND OFFICERS. The directors and officers of
PST duly elected and serving as of the date of this Agreement
shall be and remain the directors and officers of the Surviving
Corporation and they shall serve in office until their successors
have been duly elected or appointed and have qualified.
4.04 EFFECT OF MERGER. Upon the Effective Time, the
separate existence of PSHC shall cease and all its properties,
rights, privileges and franchises, of whatever nature and
description, including every devise or bequest that PSHC would
have been capable of taking, and including choses in action,
shall be transferred to, vested in and devolved upon the
Surviving Corporation, without further act or deed.
Notwithstanding this provision, confirmatory deeds, assignments
and other like instruments, when deemed desirable to evidence
such transfer, vesting or devolution of any property right,
privilege or franchise, may at any time, or from time to time, be
made and delivered in the name of PSHC as appropriate, by its
last acting officers thereof, or by the corresponding officers of
the Surviving Corporation. The Surviving Corporation shall be
liable for all the debts and obligations, including tax
liabilities, of PSHC, and any claim existing or any action or
proceeding pending by or against PSHC may be prosecuted to
judgment or decree as if such Merger had not taken place, or the
-3-
Surviving Corporation, upon motion of such corporation or any
party, may be substituted as a party in place of either of the
corporations so merged, and such judgment or decree against
either of the corporations so merged shall be constituted a lien
upon the property of the Surviving Corporation. The Merger,
however, shall not impair in any way the rights of creditors or
liens upon the property of any corporation a party to this
Merger.
4.05 FILING OF ARTICLES OR CERTIFICATE OF MERGER. The acts
and things required to be done by the Georgia Business
Corporation Code (the "Georgia Code") in order to make this
Agreement effective, including the filing of Articles of Merger
or a Certificate of Merger in the manner prescribed in the
Georgia Code, shall be attended to by the proper officers of the
parties hereto as soon as practicable.
ARTICLE FIVE
MANNER AND BASIS OF CONVERTING SHARES
5.01 Upon the Effective Time of the Merger:
(a) All of the Class A Common Stock of PST
issued and outstanding at the Effective Time shall be cancelled
and retired and no consideration shall be delivered in respect
thereof.
(b) Each share of the Class B Common Stock
of PST issued and outstanding immediately prior to the Effective
Time shall continue unchanged and shall continue to evidence the
same number of shares of Class B Common Stock of the Surviving
Corporation.
(b) All of the Common Stock of PSHC issued
and outstanding at the Effective Time (the "Exchanged Shares")
shall be exchanged and be converted into solely the right to
-4-
receive the Class B Common Stock of PST as provided in Attachment
A attached hereto and incorporated herein by reference (the
"Additional PST Shares"). The former shareholders of PSHC
holding Exchanged Shares shall surrender their respective
certificates representing such shares ("Certificates) to the
officers of the Surviving Corporation for the cancellation of
such Certificates on the books of PSHC and exchange thereof for
Certificates of the Surviving Corporation as issuer. Until such
surrender and exchange, each Certificate shall represent that
number of the Additional PST Shares into which the Exchanged
Shares originally represented by such Certificates have been
converted.
(d) The Additional PST Shares into which the
Exchanged Shares have been converted shall be deemed to have been
issued in full satisfaction of all rights pertaining to such
Exchanged Shares, including without limitation any obligations of
the Surviving Corporation to pay any dividends or make any other
distributions with a record date prior to the Effective Time
which may have been declared or made by PSHC on such Exchanged
Shares prior to the date hereof and which remain unpaid at the
Effective Time, and at and after the Effective Time there shall
be no further registration or transfers on the stock transfer
books of PSHC of the Exchanged Shares which were outstanding
immediately prior to the Effective Time except as contemplated in
this Agreement. If, after the Effective Time, Certificates
representing Exchanged Shares are presented to the Surviving
Corporation for any reason, they shall be cancelled and
-5-
exchanged, as provided in Subsection (b).
ARTICLE SIX
MISCELLANEOUS PROVISIONS
6.01 Approval by Directors. Each of PST and PSHC
represents and warrants to the other that this Agreement has been
duly adopted, ratified and approved by its Board of Directors in
a manner consistent with the Articles of Incorporation and By-
Laws of each of such corporation and in accordance with the
Georgia Code.
6.02 APPROVAL BY SHAREHOLDERS. Each of PST and PSHC
represents and warrants to the others that this Agreement has
been submitted to and duly approved by its shareholders, in each
case by a vote not less than the minimum required for approval
hereof by the respective Articles of Incorporation and By-Laws of
such corporation and by the Georgia Code.
6.03 CONFORMITY WITH STATE LAW. The matters set forth in
this Agreement shall be considered to be modified to the extent
required by the laws of the State of Georgia, so that nothing
contained herein shall be construed to be in any way violative of
such laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
-6-
PRINCE STREET TECHNOLOGIES, LTD.
By:_______________________________
Name: Robert S. Weiner
Title: Chief Executive Officer
PRINCE STREET HOLDING COMPANY
By:_____________________________
Name: _______________________
Title:_______________________
-7-
<PAGE>
<TABLE>
Attachment "A"
to
Agreement and Plan of Merger
between
Prince Street Holding Company
and
Prince Street Technologies, Ltd.
<CAPTION>
STOCK IN STOCK IN STOCK IN STOCK IN
PRINCE STREET PRINCE STREET PRINCE STREET PRINCE STREET
HOLDING COMPANY TECHNOLOGIES LTD. TECHNOLOGIES LTD. TECHNOLOGIESLTD. PERCENTAGE
SHAREHOLDER PRE-MERGER PRE-MERGE ISSUED (CANCELLED) IN MERGER AFTER MERGER AFTER MERGER
OF PST AND PSHC OF PST AND PSHC OF PST AND PSHC OF PST AND PSHC OF PST
COMMON CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B AND PSHC
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert S. Weiner 1,085,991.5 -- 114 -- 320.7773 -- 434.7773 62.9200
John and Nancy O'Donnell 206,609 -- 40 -- 61.0276 -- 101.0276 14.6205
Randall J. Hatch 149,182.5 -- 8 -- 44.0651 -- 52.0651 7.5348
Jacqueline A. Colando 113,816 -- 22 -- 33.6187 -- 55.6187 8.0490
Steven C. Andrade 80,10 -- -- -- 23.6621 -- 23.6621 3.4243
Robert D. Williams 57,043 -- -- -- 16.8492 -- 16.8492 2.4384
Traccton Corp. -- -- 7 -- -- -- 7.0000 1.0130
Prince Street Holding
Company -- 500 -- (500) -- -- 0.0000 --
- ----------------------------------------------------------------------------------------------------------------------------------
- - 1,692,750 500 191 (500) 500.0000 -- 691.0000 100.0000
</TABLE>
<PAGE>
EXHIBIT B
AGREEMENT AND PLAN OF MERGER OF
PRINCE STREET TECHNOLOGIES, LTD.,
AND
PST ACQUISITION CORP.
This Agreement and Plan of Merger, made and entered into as
of the ____ day of _____________, 199_ (hereinafter referred to
as the "Agreement"), by and between Prince Street Technologies,
Ltd., a Georgia corporation (hereinafter sometimes referred to as
"PST") and PST Acquisition Corp., a Georgia corporation
(hereinafter sometimes referred to as "Sub") (said corporations
being hereinafter sometimes collectively referred to as the
"Constituent Corporations"):
W I T N E S S E T H:
The Boards of Directors of each of the Constituent
Corporations deem it advisable and for the benefit of each of
said corporations and their respective shareholders that Sub
merges into PST and that Sub thereafter ceases its separate
existence as a corporation under Georgia law.
NOW, THEREFORE, the parties hereto do hereby agree as
follows:
ARTICLE ONE
NAMES OF MERGING CORPORATIONS
1.01 The names of the corporations proposed to be merged
are PRINCE STREET TECHNOLOGIES, LTD., a corporation organized
under the laws of the State of Georgia and PST ACQUISITION CORP.,
a corporation organized under the laws of the State of Georgia.
ARTICLE TWO
SURVIVING CORPORATION
2.01 Sub shall merge into PST, which shall survive the
merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and thereafter the separate corporate existence of
Sub shall cease (the "Merger").
ARTICLE THREE
EFFECTIVE TIME
3.01 EFFECTIVE TIME. This Merger shall be effective upon
the filing of Articles of Merger or a Certificate of Merger with
the Secretary of State of Georgia, pursuant to Section 14-2-1105
of the Georgia Business Corporation Code, as amended (hereinafter
referred to as the "Effective Time").
3.01 ABANDONMENT. Notwithstanding any other provisions of
this Agreement, this Agreement may be abandoned by mutual consent
of the Boards of Directors of PST and Sub, at any time prior to
the Effective Time.
ARTICLE FOUR
TERMS AND CONDITIONS
4.01 ARTICLES OF INCORPORATION. The Articles of
Incorporation of PST as they exist on the Effective Time shall be
and remain the Articles of Incorporation of the Surviving
-2-
Corporation until the same shall be altered, amended or repealed
as therein provided.
4.02 BY-LAWS. The By-Laws of Sub as they exist on the
Effective Time shall become the By-Laws of the Surviving
Corporation until the same shall be altered, amended or repealed
as therein provided.
4.03 DIRECTORS AND OFFICERS. The directors and officers of
Sub duly elected and serving as of the date of this Agreement
shall become the directors and officers of the Surviving
Corporation and they shall serve in office until their successors
have been duly elected or appointed and have qualified.
4.04 EFFECT OF MERGER. Upon the Effective Time, the
separate existence of Sub shall cease and all its properties,
rights, privileges and franchises, of whatever nature and
description, including every devise or bequest that Sub would
have been capable of taking, and including choses in action,
shall be transferred to, vested in and devolved upon the
Surviving Corporation, without further act or deed.
Notwithstanding this provision, confirmatory deeds, assignments
and other like instruments, when deemed desirable to evidence
such transfer, vesting or devolution of any property right,
privilege or franchise, may at any time, or from time to time, be
made and delivered in the name of Sub as appropriate, by its last
acting officers thereof, or by the corresponding officers of the
Surviving Corporation. The Surviving Corporation shall be liable
for all the debts and obligations, including tax liabilities, of
Sub, and any claim existing or any action or proceeding pending
-3-
by or against Sub may be prosecuted to judgment or decree as if
such Merger had not taken place, or the Surviving Corporation,
upon motion of such corporation or any party, may be substituted
as a party in place of either of the corporations so merged, and
such judgment or decree against either of the corporations so
merged shall be constituted a lien upon the property of the
Surviving Corporation. The Merger, however, shall not impair in
any way the rights of creditors or liens upon the property of any
corporation a party to this Merger.
4.05 FILING OF ARTICLES OR CERTIFICATE OF MERGER. The acts
and things required to be done by the Georgia Business
Corporation Code (the "Georgia Code") in order to make this
Agreement effective, including the filing of Articles of Merger
or a Certificate of Merger in the manner prescribed in the
Georgia Code, shall be attended to by the proper officers of the
parties hereto as soon as practicable.
ARTICLE FIVE
MANNER AND BASIS OF CONVERTING SHARES
5.01 Upon the Effective Time of the Merger:
(a) Each share of the Common Stock of Sub
issued and outstanding immediately prior to the Effective Time
shall be converted into one share of Class B Common Stock of the
Surviving Corporation.
(b) All of the Class A Common Stock of PST
issued and outstanding, if any, at the Effective Time shall be
cancelled and retired and no consideration shall be delivered in
respect thereof.
-4-
(c) All of the Class B Common Stock of PST
issued and outstanding at the Effective Time (the "Exchanged
Shares") shall be exchanged and be converted solely into the
right to receive in the aggregate [(i) _____ shares of the Class
A Common Stock of INTERFACE, INC., a Georgia corporation and
holder of all of the issued and outstanding shares of Sub., and
(ii) $ ________ in cash] <F1> (the "Merger Consideration").
In
exchange for the Exchanged Shares, the former holders of the
Exchanged Shares shall be entitled to receive a portion of the
aggregate Merger Consideration as provided in Attachment A
attached hereto and incorporated herein by reference. The former
shareholders of PST holding Exchanged Shares shall surrender
their respective certificates representing such shares to the
officers of the Surviving Corporation for the exchange thereof
and the cancellation of such certificates on the books of PST[,
and reissuance of certificates of Interface, Inc. as issuer and
representing the shares of Interface, Inc. into which the
Exchanged Shares have been converted.]<F1>
(d) All Merger Consideration payable or
issuable upon any of the Exchanged Shares shall be deemed to have
been issued or paid in full satisfaction of all rights pertaining
to such Exchanged Shares, including without limitation any
obligations of the Surviving Corporation to pay any dividends or
make any other distributions with a record date prior to the
Effective Time which may have been declared or made by PST on
such Exchanged Shares prior to the date hereof and which remain
______________________________
<F1> To be completed at Closing to reflect the amount
and components of the Merger Consideration, as provided in
the Acquisition Agreement.
-5-
unpaid at the Effective Time, and at and after the Effective Time
there shall be no further registration or transfers on the stock
transfer books of the Surviving Corporation of the Exchanged
Shares which were outstanding immediately prior to the Effective
Time except as contemplated in this Agreement. If, after the
Effective Time, certificates representing Exchanged Shares are
presented to the Surviving Corporation for any reason, they shall
be cancelled and exchanged, as provided in Subsection (b).
ARTICLE SIX
MISCELLANEOUS PROVISIONS
6.01 APPROVAL BY DIRECTORS. Each of PST and Sub represents
and warrants to the other that this Agreement has been duly
adopted, ratified and approved by its Board of Directors in a
manner consistent with the Articles of Incorporation and By-Laws
of each of such corporation and in accordance with the Georgia
Code.
6.02 APPROVAL BY SHAREHOLDERS. Each of PST and Sub
represents and warrants to the others that this Agreement has
been submitted to and duly approved by its shareholders, in each
case by a vote not less than the minimum required for approval
hereof by the respective Articles of Incorporation and By-Laws of
such corporation and by the Georgia Code.
6.03 CONFORMITY WITH STATE LAW. The matters set forth in
this Agreement shall be considered to be modified to the extent
-6-
required by the laws of the State of Georgia, so that nothing
contained herein shall be construed to be in any way violative of
such laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
PRINCE STREET TECHNOLOGIES, LTD.
By:_______________________________
Name: Robert S. Weiner
Title: Chief Executive Officer
PST ACQUISITION CORP.
By:_____________________________
Name: _______________________
Title:_______________________
-7-
<PAGE>
ATTACHMENT A TO AGREEMENT AND PLAN OF MERGER
[To be completed at Closing in accordance with
Exhibit C to the Acquidition Agreement, and
reflecting the amount and form of Merger
Consideration as determined pursuant to the
Acquisition Agreement.]
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT "C"
to
Acquisition Agreement
STOCK IN STOCK IN STOCK IN STOCK IN
PRINCE STREET PRINCE STREET PRINCE STREET PRINCE STREET
HOLDING COMPANY TECHNOLOGIES LTD. TECHNOLOGIES LTD. TECHNOLOGIES LTD. PERCENTAGE
SHAREHOLDER PRE-MERGER PRE-MERGER ISSUED (CANCELLED) IN MERGER AFTER MERGER AFTER MERGER
OF PST AND PSHC OF PST AND PSHC OF PST AND PSHC OF PST AND PSHC OF PST
COMMON CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B AND PSHC
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert S. Weiner 1,085,991.5 -- 114 -- 320.7773 -- 434.7773 62.9200
John and Nancy O'Donnell 206,609 -- 40 -- 61.0276 -- 101.0276 14.6205
Randall J. Hatch 149,182.5 -- 8 -- 44.0651 -- 52.0651 7.5348
Jacqueline A. Colando 113,816 -- 22 -- 33.6187 -- 55.6187 8.0490
Steven C. Andrade 80,10 -- -- -- 23.6621 -- 23.6621 3.4243
Robert D. Williams 57,043 -- -- -- 16.8492 -- 16.8492 2.4384
Traccton Corp. -- -- 7 -- -- -- 7.0000 1.0130
Prince Street Holding
Company -- 500 -- (500) -- -- 0.0000 --
--------------------------------------------------------------------------------------------------------
1,692,750 500 191 (500) 500.0000 -- 691.0000 100.0000
ALLOCABLE
PORTION OF
MERGER
CONSIDERATION<F1>
_____________
<C>
$6,606,601.32
1,535,151.93
791,148.87
845,146.18
359,554.16
256,029.96
106,367.58
0.00
--------------
$10,500,000.00
-----------------------------------
<FN>
<F1> Aggregate Merger Consideration is subject to adjustment
pursuant to the Acquisition Agreement
</TABLE>
<PAGE>
Exhibit D
---------
The opinion of counsel for the Companies and the PST/PSHC
Shareholders, shall be to the effect that:
(a) This Agreement has been duly and validly executed
and delivered by each of the PST/PSHC Shareholders and
constitutes the valid and legally binding obligation of each
PST/PSHC Shareholder, enforceable, subject to general equity
principles, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally;
(b) Neither the execution and delivery of this
Agreement, nor the consummation of the mergers and other
transactions contemplated herein, resulted or will result in a
violation or breach of the articles of incorporation or bylaws of
the Companies or, to the knowledge of such counsel, result in a
violation or breach of, or constitute a default under, any term
or provision of any agreement or other instrument, order,
judgment, decree, law, rule, regulation, contract or any
restriction, to which any PST/PSHC Shareholder or the Companies
are a party or by which any of them or any of their respective
properties are subject or bound, nor, to the knowledge of such
counsel, will such actions result in (i) the creation of any
lien, encumbrance or charge on any of the PST Shares, the
Additional PST Shares, or the PSHC Shares or on any of the assets
of the Companies, or (ii) the acceleration of any obligation of
the Company;
(c) PST is, and prior to the PST/PSHC Merger PSHC was,
a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and entitled to
own or lease the properties of the Companies and to carry on
their businesses as and in the places where such properties are
now owned or leased or such businesses are now conducted, and, to
the knowledge of such counsel, the Companies have complied in all
material respects with all federal, state and local laws, rules,
regulations, and ordinances which are applicable to their
operations and the conduct of their businesses. PST is, and
prior to the PST/PSHC Merger PSHC was, duly qualified and
licensed to do business as a foreign corporation in each
jurisdiction where a failure to qualify or acquire a license
would have a material adverse effect on the business or financial
condition of the Companies;
(d) PST has an authorized share capital of 10,000,000
shares of Class A common stock, par value $.01 per share, of
which none are issued or outstanding, and 10,000,000 shares of
Class B common stock, par value of $.01, of which 691 shares of
Class B common stock are duly and validly issued and outstanding,
fully paid and non-assessable, and said shares are owned
beneficially and of record by the Shareholders as set forth in
-2-
Exhibit C of this Agreement under the column heading "Stock In
Prince Street Technologies Ltd. After Merger of PST and PSHC";
immediately prior to the PST/PSHC Merger, PST had authorized
share capital as set forth in the preceding clause, of which 500
shares of Class A common stock and 191 shares of Class B common
stock were duly and validly issued and outstanding, fully paid
and non-assessable, and said shares were owned beneficially and
of record by the PST Shareholders as set forth in Exhibit C of
this Agreement; immediately prior to the PST/PSHC Merger, PSHC
had authorized share capital of 10,000,000 shares of Common
Stock, par value $.01 per share, of which 1,692,749 shares were
duly and validly issued and outstanding, fully paid and non-
assessable, and said shares were owned beneficially and of record
by the PSHC Shareholders as set forth in Exhibit C of this
Agreement 10,000,000 shares of Class B common stock, with a par
value of $.01 per share, of which no shares were issued and
outstanding, and 1,000,000 shares of preferred stock, with a par
value of $.01 per share, of which no shares were issued and
outstanding; the PST/PSHC Merger and the PST/PSHC Merger
Agreement were approved by the requisite action of the Boards of
Directors and shareholders of PST and PSHC, the PST/PSHC Merger
has become effective, and all of the issued and outstanding
shares of PSHC have been cancelled pursuant to the PST/PSHC
Merger Agreement; the certificates for the Shares to be
delivered pursuant to the Agreement represent 100% of all of the
issued and outstanding share capital of the Companies; and to the
knowledge of such counsel, there are no options, warrants or
-3-
other rights outstanding to acquire any share capital or
securities of the Companies;
(e) To the knowledge of such counsel, there are no
actions, suits, claims, investigations or proceedings pending or
threatened against the Companies at law or in equity or before or
by any federal, state, municipal or other governmental depart-
ment, commission, board, bureau, agency or instrumentality that
would, if decided adversely, after consideration of all defenses,
have a material adverse effect on the assets or operation of the
businesses of the Companies;
(f) To the knowledge of such counsel, (i) the
Companies have not breached any material provision of any
contract or agreement listed in the Disclosure Memorandum, and
(ii) the Companies are not and will not, with the passage of
time, the giving of notice or otherwise, be in default under the
terms of any such contract or agreement;
(g) The transactions contemplated by the Merger
Agreement have been approved by the requisite action of the Board
of Directors and shareholders of PST and when the Merger is
effected, the Shares will be converted into the right to receive
the Merger Consideration and the outstanding shares of Sub shall
be converted into all of the issued and outstanding shares of
PST.
(h) All proceedings required by law or by the
provisions of this Agreement to be taken by the PST/PSHC
Shareholders or the Companies in connection with the transactions
contemplated herein have been duly and validly taken, and all
conditions to Purchaser's obligation to consummate the
transactions contemplated in this Agreement have been fulfilled.
-5-
<PAGE>
EXHIBIT 1.4
Adjustments to EBIT
In calculating Adjusted EBIT, as used in the
Agreement, the EBIT shall be adjusted as follows:
1. Factoring commissions shall be
treated as an item of "Other Expense", i.e.,
below the Income from Operations line.
2. Loan Discount Amortization shall be
treated as interest expense.
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT made and entered into as of December 1, 1993, by
and among INTERFACE, INC., a Georgia corporation ("Interface"),
HEUGA NEDERLAND B.V., a "besloten vennootschap met beperkte
aansprakelijkheid" (private company with limited liability)
incorporated and existing under the laws of The Netherlands with
its registered seat in Scherpenzeel, Gld., The Netherlands
("Heuga Nederland"), HEUGA UK LIMITED, a private company limited
by shares organized and existing under the laws of England and
Wales ("Heuga UK"), INTERFACE FLOORING SYSTEMS LIMITED, a private
company limited by shares organized and existing under the laws
of England and Wales ("IFSL"; Interface, Heuga Nederland, Heuga
UK, and IFSL referred to collectively herein as the "Borrowers"),
TRUST COMPANY BANK, a banking corporation organized under the
laws of the State of Georgia ("TCB"), THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association ("FNBC"), the other banks
and lending institutions listed on the signature pages hereof,
and any assignees of TCB, FNBC, or such other banks and lending
institutions which become "Lenders" as provided herein (TCB,
FNBC, and such other banks, lending institutions, and assignees
referred to collectively herein as the "Lenders"), TRUST COMPANY
BANK, in its capacity as agent for those Lenders having Revolving
Loan Commitments or Term Loan Commitments, or both, or having
outstanding Revolving Loans or Term Loans, or both, as provided
herein, and each successor agent for such Lenders as may be
appointed from time to time pursuant to Article XI hereof (the
"Domestic Agent"), THE FIRST NATIONAL BANK OF CHICAGO, in its
capacity as agent for those Lenders having outstanding
Multicurrency Loan Commitments or having outstanding
Multicurrency Loans as provided herein, and each successor agent
for such Lenders as may be appointed from time to time pursuant
to Article XI hereof (the "Multicurrency Agent"; the Domestic
Agent and the Multicurrency Agent referred to collectively herein
as the "Co-Agents"), and TRUST COMPANY BANK, in its capacity as
collateral agent for the Co-Agents and Lenders and each successor
collateral agent as may be appointed from time to time pursuant
to Article XI hereof (the "Collateral Agent");
W I T N E S S E T H:
WHEREAS, Interface, Heuga Nederland, Heuga UK, IFSL,
the Co-Agents, the Collateral Agent, and the Lenders are parties
to a certain Second Amended and Restated Credit Agreement dated
as of June 11, 1993 (the "Credit Agreement");
WHEREAS, Interface has advised the Lenders that it
intends to acquire the business of Prince Street Technologies,
Ltd., a Georgia corporation;
WHEREAS, Interface has requested that the Lenders amend
certain provisions of the Credit Agreement to facilitate
Interface's acquisition of Prince Street Technologies, Ltd.;
WHEREAS, the Co-Agents, the Collateral Agent, and
certain Lenders constituting the "Required Lenders" pursuant to
the Credit Agreement have agreed to such amendments, as more
particularly set forth in this First Amendment, on the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, Interface, Heuga
Nederland, Heuga UK, IFSL, the Lenders, the Co-Agents and the
Collateral Agent agree as follows:
1. Defined Terms. Except as otherwise expressly defined
herein, each capitalized term used in this First Amendment that
is defined in the Credit Agreement shall be used herein with the
meaning assigned to such capitalized term in the Credit
Agreement.
2. Amendments to Section 1.01 ("Definitions").
(a) Section 1.01 of the Credit Agreement is hereby amended
by adding the following defined terms in proper alphabetical
order:
"Prince Street" shall mean Prince Street Technologies,
Ltd., a Georgia corporation, and, if applicable, the wholly
owned Subsidiary of Interface into which Prince Street
Technologies, Ltd. may be merged to effect the Prince Street
Acquisition.
"Prince Street Acquisition" shall mean the acquisition
by Interface of Prince Street through the consummation of
the transactions described in the Prince Street Acquisition
Agreement.
"Prince Street Acquisition Costs" shall mean the total
consideration paid by Interface and each other Consolidated
company to effect the Prince Street Acquisition (including
cash payments made by Interface to repurchase any shares of
Class A Common Stock of Interface previously delivered as a
portion of the consideration paid in the Prince Street
Acquisition, as may be provided in the Prince Street
Acquisition Agreement).
"Prince Street Acquisition Agreement" shall mean the
agreement(s) pursuant to which Interface shall purchase all
issued and outstanding capital stock of Prince Street, or
shall acquire Prince Street through the merger of Prince
Street and Prince Street Holding Company with and into a
wholly owned Subsidiary of Interface (with such Subsidiary
being the surviving corporation in such transaction), or
through the merger of a wholly owned Subsidiary of Interface
with and into Prince Street (with Prince Street being the
surviving corporation in such transaction), in any case for
a consideration valued at an amount up to $10,500,000, plus
payment of expenses and fees up to $1,000,000 incurred or
payable by Prince Street in connection with the Prince
Street Acquisition.
(b) The definition of the term "Free Cash Flow" in Section
1.01 of the Credit Agreement is hereby amended by deleting from
said definition clause (iii) in its entirety and substituting in
lieu thereof the following clause (iii):
(iii) Capital Expenditures for such fiscal period (but
excluding therefrom the amount of the Bentley Acquisition
Costs and the Prince Street Acquisition Costs to the extent
otherwise included in such Capital Expenditures),
3. Amendment to Section 9.04 ("Dividends, Etc."). Section 9.04
of the Credit Agreement is hereby amended by deleting said
Section 9.04 in its entirety and substituting in lieu thereof the
following Section 9.04:
Section 9.04. Dividends, Etc. Interface shall not
declare or pay any dividend on its capital stock, or make
any payment to purchase, redeem, retire or acquire any of
its Subordinated Debentures or capital stock or any option,
warrant, or other right to acquire such Subordinated
Debentures or capital stock, other than:
(i) dividends payable solely in shares of
capital stock;
(ii) payments made by Interface to repurchase
any shares of Class A Common Stock of Interface
previously delivered as a portion of the
consideration paid in the Prince Street
Acquisition, as may be provided in the Prince
Street Acquisition Agreement; and
(iii) cash dividends declared and paid, and
all other such payments made, after December 29,
1991 (but excluding any payments made pursuant to
clause (ii) above) in an aggregate amount at any
time not to exceed (x) $10,000,000 plus fifty
percent (50%) of Consolidated Net Income (or minus
one hundred percent (100%) of Consolidated Net
Loss) earned during Interface's 1992 fiscal year
and thereafter (such period to be treated as one
accounting period);
provided, however, no such payment may be made
pursuant to clause (ii) above, and no such
dividend or other payment may be paid or made
pursuant to clause (iii) above, unless (x) the
full amount of the mandatory prepayment required
by Section 2.03(b), Section 3.04 or Section 4.04
has been made, and (y) no Default or Event of
Default exists at the time of such declaration or
payment, or would exist as a result of such
declaration or payment. Nothing in this Section
9.04 shall prevent the conversion of the
Convertible Preferred Stock or the Subordinated
Debentures into the common stock of Interface.
4. Status of Prince Street as Additional Credit
Party. Interface and the other Borrowers acknowledge and agree
that, upon the acquisition by Interface of Prince Street pursuant
to the Prince Street Purchase Agreement, (i) Prince Street shall
be and become a Consolidated Company, Material Subsidiary, and
Material Company for purposes of this Agreement, and (ii)
Interface shall execute and deliver, and cause to be executed and
delivered, to the Co-Agents (x) a pledge and security agreement
(or an amendment or supplement to the existing Pledge Agreement
from Interface, as the Co-Agents may require pursuant to the
advice of their counsel) with respect to all capital stock of
Prince Street, (y) a Guaranty Agreement from Prince Street, and
(z) all related documents of the kind described in Section
6.01(c), (d), (f), (g), (h), and (t), all in form and substance
satisfactory to the Co-Agents.
5. Representations and Warranties. Each of Interface
(as to itself and all other Consolidated Companies, whether or
not Interface is a Borrower hereunder) and each of the other
Borrowers (as to itself and all of its Subsidiaries) represents
and warrants to the Lenders as follows:
(a) All representations and warranties set forth
in the Credit Agreement are true and correct in all material
respects with the same effect as though such representations and
warranties have been made on and as of the date hereof (except
that the representation and warranty set forth in Section 7.19 of
the Credit Agreement shall not be deemed to relate to any time
subsequent to the date of the initial Loans under the Credit
Agreement);
(b) No Default or Event of Default has occurred
and is continuing on the date hereof; and
(c) Since the date of the most recent financial
statements of the Consolidated Companies submitted to the Lenders
pursuant to Section 8.07(b), there has been no change which has
had or could reasonably be expected to have a Materially Adverse
Effect (whether or not any notice with respect to such change has
otherwise been furnished to the Lenders pursuant to Section
8.07).
6. Effectiveness of First Amendment. This First
Amendment shall become effective upon the execution and delivery
to the Domestic Agent of counterparts hereof (whether originals
or facsimile transmissions thereof) on behalf of each of the
Borrowers, the Co-Agents, the Collateral Agent, and those Lenders
constituting the Required Lenders for purposes of the Credit
Agreement.
7. References to Credit Agreement. On and after the
date this First Amendment becomes effective as provided in
paragraph 6 above, each and every reference in the Credit
Documents to the Credit Agreement shall be deemed to refer to and
mean the Credit Agreement as amended by this First Amendment.
The Borrowers further confirm and agree that (i) except as
expressly amended herein, the Credit Agreement remains in full
force and effect in accordance with its terms, and (ii) all other
Credit Documents remain in full force and effect in accordance
with their respective terms.
8. Counterparts. This First Amendment may be
executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
9. Miscellaneous. This First Amendment and the
rights and obligations of the parties hereunder shall be
construed in accordance with and be governed by the law (without
giving effect to the conflict of law principles thereof) of the
State of Georgia. This First Amendment shall be binding on and
shall inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused
this First Amendment to be duly executed and delivered in
Atlanta, Georgia, by their duly authorized officers as of the day
and year first above written.
INTERFACE, INC.
By: /s/ Daniel T. Hendrix
Daniel T. Hendrix
Vice President
HEUGA NEDERLAND B.V.
By: /s/ Daniel T. Hendrix
Daniel T. Hendrix
Attorney-in-Fact
HEUGA UK LIMITED
By: /s/ Daniel T. Hendrix
Daniel T. Hendrix
Attorney-in-Fact
INTERFACE FLOORING SYSTEMS
LIMITED
By: /s/ Daniel T. Hendrix
Daniel T. Hendrix
Attorney-in-Fact
TRUST COMPANY BANK,
As Domestic Agent and
Collateral Agent
By: /s/ John K. Shoffner
Name: John K. Shoffner
Title: Group Vice President
By: /s/ Laura Sowders
Name: Laura Sowders
Title: Bank Officer
THE FIRST NATIONAL BANK
OF CHICAGO, As
Multicurrency Agent
By: /s/ Larry E. Cooper
Name: Larry E. Cooper
Title: Vice President
TRUST COMPANY BANK
By: /s/ John K. Shoffner
Name: John K. Shoffner
Title: Group Vice President
By: /s/ Laura Sowders
Name: Laura Sowders
Title: Bank Officer
THE FIRST NATIONAL BANK
OF CHICAGO
By: /s/ Larry E. Cooper
Name: Larry E. Cooper
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ W. D. Suttles
Name: W.D. Suttles
Title: Vice President
By: /s/ Thomas Dawe
Name: Thomas Dawe
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ William C. Purinton
Name: William C. Purinton
Title: Vice President
BANK SOUTH, N.A.
By: /s/ George Hodges
Name: George Hodges
Title: Vice President
THE BANK OF TOKYO LTD.,
ATLANTA AGENCY
By: /s/ Richard Davis
Name: Richard Davis
Title: Assistant Vice President
CIBC, INC.
By: /s/ William C. Humphries
Name: William C. Humphries
Title: Vice President
CONTINENTAL BANK N.A.
By: /s/ Lynn W. Stetson
Name: Lynn W. Stetson
Title: Vice President
CREDITANSTALT-BANKVERIEN
By: /s/ Robert M. Biringer
Name: Robert M. Biringer
Title: SVP
By: /s/ Donato R. Giuseppi, Jr.
Name: Donato R. Giuseppi Jr.
Title: Deputy General Manager
THE DAIWA BANK, LIMITED
By: /s/ Katherine Bass
Name: Katherine Bass
Title: Executive Officer
By: /s/ M. Sawicki
Name: M. Sawicki
Title: Vice President & Manager
FIRST UNION NATIONAL
BANK OF GEORGIA
By: /s/ Donald Q. Dalton
Name: Donald Q. Dalton
Title: Senior Vice President
NATIONSBANK OF NORTH CAROLINA,
N.A.
By: /s/ J. Lance Walton
Name: J. Lance Walton
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Elspeth G. England
Name: Elspeth G. England
Title: Vice President
EXHIBIT 21
SUBSIDIARIES OF INTERFACE, INC.
Jurisdiction of
Subsidiary Organization
Interface Americas, Inc. Georgia (USA)
Interface Flooring Systems, Inc. Georgia (USA)
Interface Research Corporation Georgia (USA)
Rockland React-Rite, Inc. Georgia (USA)
Pandel, Inc. Georgia (USA)
Interface Asia-Pacific, Inc. <F1> Georgia (USA)
Interface Service Management, Inc. <F2> Georgia (USA)
Invision Carpet Systems, Inc. <F3> Georgia (USA)
Macroseptic Systems, Inc. Georgia (USA)
Bentley Mills, Inc. Delaware (USA)
Interface Europe, Inc. Delaware (USA)
Guilford of Maine, Inc. Delaware (USA)
Guilford (Delaware), Inc. Delaware (USA)
Hydro Projects North, Inc. Delaware (USA)
Interface International (Barbados), Inc. Barbados
Interface Flooring Systems (Canada), Inc. Canada
Guilford of Maine (Canada), Inc. Canada
Guilford of Maine (U.K.), Ltd. United Kingdom
Interface of Europe, Ltd <F4> United Kingdom
Interface Europe B.V. <F5> Netherlands
___________________________
[FN]
<F1> Interface Asia-Pacific, Inc. is the parent of six subsidiaries organized
and operating in Australia, Japan, Hong Kong and Singapore.
<F2> Interface Service Management, Inc. is 50% owned by Interface Flooring
Systems, Inc. (a wholly-owned subsidiary of Interface, Inc.).
<F3> Invision Carpet Systems, Inc. is 85% owned by Interface Flooring Systems,
Inc. (a wholly-owned subsidiary of Interface, Inc.)
<F4> Interface Europe, Ltd. (formerly Interface Flooring systems, Ltd.) is the
parent of three subsidiaries organized and operating in the United Kingdom
and Hong Kong.
<F5> Interface Europe B.V. (formerly Interface Heuga B.V.) is the parent of six
subsidiaries organized and operating in the Netherlands, and 11
subsidiaries organized and operating outside of the Netherlands and the
United States.
Exhibit 23(a)
Consent of Independent Certified Public Accountants
Interface, Inc.
LaGrange, Georgia
We hereby consent to the incorporation by reference in the
Prospectus constituting a part of this Registration Statement of
our reports dated February 16, 1993, relating to the consolidated
financial statements and schedules of Interface, Inc. appearing
in the Company's Annual Report of Form 10-K for the year ended
January 3, 1993.
We also consent to the reference to us under the caption
"Experts" in the Prospectus.
s/ BDO Seidman
BDO Seidman
Atlanta, Georgia
January 12, 1994
Exhibit 23(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of
Interface, Inc. on Form S-4 of our report dated December 29,
1993, (which expresses an unqualified opinion, and includes an
explanatory paragraph referring to a potential future liability
relating to a proposed merger) appearing in this Prospectus,
which is part of this Registration Statement.
We also consent to the reference to us under the heading
"Experts" in such Prospectus.
DELOITTE & TOUCHE
Atlanta, Georgia
January 12, 1994
