- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS DOCUMENT IS AN ELECTRONIC CONFIRMING COPY OF THE
COMBINED TENDER OFFER STATEMENT ON SCHEDULE 14D-1 AND STATEMENT
ON SCHEDULE 13D FILED WITH THE COMMISSION ON SEPTEMBER 21, 1995
BY USI ACQUISITION COMPANY AND G-I HOLDINGS INC.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
--------------
U.S. INTEC, INC.
(NAME OF SUBJECT COMPANY)
--------------
USI ACQUISITION COMPANY
G-I HOLDINGS INC.
(BIDDERS)
--------------
COMMON STOCK, $.02 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
912084-10-0
(CUSIP NUMBER OF COMMON STOCK)
--------------
MARK A. BUCKSTEIN, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
GAF CORPORATION
1361 ALPS ROAD
WAYNE, NEW JERSEY 07470
(201) 628-3000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
--------------
COPY TO:
STEPHEN E. JACOBS, ESQ.
WEIL, GOTSHAL & MANGES
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
--------------
SEPTEMBER 14, 1995
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$27,520,244.55 $5,504.05
* Estimated for purposes of calculating the filing fee only. The amount assumes
the purchase of 3,040,911 shares of common stock, $.02 par value (the
"Shares"), at a price per Share of $9.05, net in cash. Such number of Shares
represents all the Shares outstanding as of August 31, 1995.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
Page 1 of 10 Pages
(Exhibit Index is located on Page 10)
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<PAGE>
CUSIP NO. 912084-10-0 14D-1 Page 2 of 10 Pages
<TABLE>
<C> <S>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samuel J. Heyman
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a)/ /
(b)/ /
3 SEC USE ONLY
4 SOURCES OF FUNDS (See Instructions)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F)
N/A / /
6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
(See Item 6(a) to this Statement)
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES (See
Instructions)
N/A / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
(See Item 6(a) to this Statement)
10 TYPE OF REPORTING PERSON (See Instructions)
IN
</TABLE>
<PAGE>
CUSIP NO. 912084-10-0 14D-1 Page 3 of 10 Pages
<TABLE>
<C> <S>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GAF Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a)/ /
(b)/ /
3 SEC USE ONLY
4 SOURCES OF FUNDS (See Instructions)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F)
N/A / /
6 CITIZENSHIP OR PLACE OR ORGANIZATION
State of Delaware
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
(See Item 6(a) to this Statement)
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES (See
Instructions)
N/A / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
(See Item 6(a) to this Statement)
10 TYPE OF REPORTING PERSON (See Instructions)
CO
</TABLE>
<PAGE>
CUSIP NO. 912084-10-0 14D-1 Page 4 of 10 Pages
<TABLE>
<C> <S>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
G-I Holdings Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a)/ /
(b)/ /
3 SEC USE ONLY
4 SOURCES OF FUNDS (See Instructions)
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F)
N/A / /
6 CITIZENSHIP OR PLACE OR ORGANIZATION
State of Delaware
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,835,811 (see Item 6(a) to this Statement)
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES (See
Instructions)
N/A / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
60.4% (see Item 6(a) to this Statement)
10 TYPE OF REPORTING PERSON (See Instructions)
CO
</TABLE>
<PAGE>
CUSIP NO. 912084-10-0 14D-1 Page 5 of 10 Pages
<TABLE>
<C> <S>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
USI Acquisition Company
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a)/ /
(b)/ /
3 SEC USE ONLY
4 SOURCES OF FUNDS (See Instructions)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F)
N/A / /
6 CITIZENSHIP OR PLACE OR ORGANIZATION
State of Texas
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
(see Item 6(a) to this Statement)
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES (See
Instructions)
N/A / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
(see Item 6(a) to this Statement)
10 TYPE OF REPORTING PERSON (See Instructions)
CO
</TABLE>
<PAGE>
This Tender Offer Statement on Schedule 14D-1 is filed by USI Acquisition
Company, a Texas corporation ("Purchaser"), and G-I Holdings Inc., a Delaware
corporation and the direct parent of Purchaser ("Parent"), relating to the offer
by Purchaser to purchase all outstanding shares of common stock, $.02 par value
(the "Shares"), of U.S. Intec, Inc., a Texas corporation (the "Company"), at
$9.05 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated September 21, 1995 (the
"Offer to Purchase"), and in the related Letter of Transmittal, copies of which
are attached hereto as Exhibits (a)(1) and (a)(2), respectively (which
collectively constitute the "Offer").
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D filed by Purchaser, Parent, GAF Corporation, a Delaware
corporation and the 100% stockholder of Parent ("GAF"), and Samuel J. Heyman,
Chairman of the Board, Chief Executive Officer and the beneficial owner of
approximately 93% of the outstanding capital stock of GAF ("Mr. Heyman"), with
respect to the acquisition by Parent of beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of the Shares held by the Selling
Shareholders pursuant to the Shareholders Agreement (as such capitalized terms
are defined herein). The item numbers, captions and responses set forth below
are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is U.S. Intec, Inc., a Texas corporation
(the "Company"). The address of the Company's principal executive offices is
1212 Brai Drive, Port Arthur, Texas 77643.
(b) The information set forth on the cover page and under "Introduction" in
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d) and (g) This Tender Offer Statement is filed by Purchaser and Parent
and with respect to this Statement on Schedule 13D is filed by Purchaser,
Parent, GAF and Mr. Heyman. The information set forth on the cover page, under
"Introduction", in Section 9 of, and in Schedule I to, the Offer to Purchase is
incorporated herein by reference.
(e)-(f) During the last five years, none of Purchaser, Parent, GAF, Mr.
Heyman nor, to their knowledge, any of the persons listed in Schedule I to the
Offer to Purchase, (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth under "Introduction" and in Sections 9, 10 and
11 of, and in Schedule I to, the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information set forth under "Introduction" and in Section 12 of the
Offer to Purchase is incorporated herein by reference.
Page 6 of 10 Pages
<PAGE>
(b) and (c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a)-(g) The information set forth under "Introduction" and in Sections 7,
10, 11 and 15 of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) The information set forth in cover page Items 7 and 9 in respect of
Parent to this combined Tender Offer Statement on Schedule 14D-1 and Statement
on Schedule 13D, and the information set forth under "Introduction" and in
Sections 9 and 11 of the Offer to Purchase is incorporated herein by reference.
On September 14, 1995, Parent and Purchaser entered into an agreement (the
"Shareholders Agreement") with certain shareholders (collectively, the "Selling
Shareholders") of the Company, pursuant to which the Selling Shareholders agreed
to sell to Purchaser an aggregate of 1,835,811 Shares owned by them
(representing 60.4% of the Shares outstanding). Pursuant to the Shareholders
Agreement, the Selling Shareholders severally have agreed validly to tender
pursuant to the Offer all of the outstanding Shares which are owned of record or
beneficially by them. The Selling Shareholders severally have granted to Parent
and Purchaser an option (collectively, the "Share Options") to purchase from the
Selling Shareholders all of their Shares (the "Option Shares") at the Offer
Price if (i) all waiting periods under the Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended, required for the purchase of the Option
Shares shall have expired or been waived and (ii) there shall not be in effect
any preliminary or final injunction or other order of any court or public or
governmental authority prohibiting such purchase. The right of Parent or
Purchaser to exercise the Share Options will expire on the later of (x) the
180th day next following September 14, 1995 or (y) the first to occur of (i)
consummation of the merger of the Purchaser with and into the Company (the
"Merger") or (ii) termination of the Agreement and Plan of Merger dated
September 15, 1995 among Parent, Purchaser and the Company (the "Merger
Agreement") in accordance with its terms (the "Termination Date").
Each Selling Shareholder has agreed that during the period commencing on
September 14, 1995 and continuing until the Termination Date at any meeting of
the Company's shareholders, however called, or in connection with any written
consent of the Company's shareholders, such Selling Shareholder will vote (or
cause to be voted) the Shares held of record or beneficially owned by such
Selling Shareholder in favor of the Merger and against certain business
combinations and other extraordinary corporate transactions involving the
Company and its subsidiaries which are intended or reasonably could be expected
to impede, interfere with, delay or materially adversely affect the Merger and
the transactions contemplated by the Merger Agreement and the Shareholders
Agreement.
The Shareholders Agreement is described more fully in Section 11 of the
Offer to Purchase and is filed as Exhibit (c)(2) hereto.
By reason of Mr. Heyman's beneficial ownership of approximately 93% of the
outstanding capital stock of GAF which, in turn, is the direct parent and
beneficial owner of 100% of the outstanding capital stock of Parent, Mr. Heyman
and GAF may be deemed to be the beneficial owners of the number and percentage
of Shares indicated in cover page Items 7 and 9 in respect of Parent.
Upon the terms and subject to the conditions of the Shareholders Agreement,
(i) Parent and the Selling Shareholders may be deemed to have shared voting
power in respect of the number and percentage of Shares set forth in cover page
Items 7 and 9 in respect of Parent and (ii) Parent may be deemed to have sole
investment power in respect of the number and percentage of Shares set forth in
cover page Items 7 and 9 in respect of Parent.
Page 7 of 10 Pages
<PAGE>
(b) The information set forth under "Introduction" and in Sections 9, 10 and
11 of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES
The information set forth under "Introduction" and in Sections 9, 10 and 11
of the Offer to Purchase is incorporated herein by reference. In connection with
this combined Tender Offer Statement on Schedule 14D-1 and Statement on Schedule
13D, the Purchaser, Parent, GAF and Mr. Heyman have entered into a Schedule 13D
Joint Filing Agreement, a copy of which is attached hereto as Exhibit (c)(3).
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth under "Introduction" and in Section 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) None.
(b)-(e) The information set forth in Sections 7 and 15 of the Offer to
Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated September 21, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(a)(7) Text of Press Release, dated September 21, 1995.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of September 15, 1995, among Parent, Purchaser
and the Company.
(c)(2) Shareholders Agreement, dated as of September 14, 1995, among Parent, Purchaser and
the Selling Shareholders.
(c)(3) Schedule 13D Joint Filing Agreement, dated September 21, 1995, among Parent,
Purchaser, GAF Corporation and Samuel J. Heyman.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
Page 8 of 10 Pages
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: September 21, 1995
USI ACQUISITION COMPANY
By: /s/ JAMES P. ROGERS
..................................
Name: James P. Rogers
Title: Senior Vice-President
G-I HOLDINGS INC.
By: /s/ JAMES P. ROGERS
..................................
Name: James P. Rogers
Title: Senior Vice-President
GAF CORPORATION
By: /s/ JAMES P. ROGERS
..................................
Name: James P. Rogers
Title: Senior Vice-President
/s/ SAMUEL J. HEYMAN
..................................
Samuel J. Heyman, Individually
Page 9 of 10 Pages
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT PAGE NO.
- -------- --------
<S> <C> <C>
(a)(1) Offer to Purchase, dated September 21, 1995................................ (CE)
(a)(2) Letter of Transmittal...................................................... (CE)
(a)(3) Notice of Guaranteed Delivery.............................................. (CE)
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees................................................................... (CE)
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees............................................... (CE)
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9........................................................ (CE)
(a)(7) Text of Press Release, dated September 21, 1995............................ (CE)
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of September 15, 1995, among Parent,
Purchaser and the Company.................................................. (CE)
(c)(2) Shareholders Agreement, dated as of September 14, 1995, among Parent,
Purchaser and the Selling Shareholders..................................... (CE)
(c)(3) Schedule 13D Joint Filing Agreement, dated September 21, 1995, among
Parent, Purchaser, GAF Corporation and Samuel J. Heyman.................... (CE)
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
Page 10 of 10 Pages
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
U.S. INTEC, INC.
AT
$9.05 NET PER SHARE
BY
USI ACQUISITION COMPANY,
A WHOLLY OWNED SUBSIDIARY OF
G-I HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, OCTOBER 19, 1995, UNLESS THE OFFER IS
EXTENDED.
THE BOARD OF DIRECTORS OF U.S. INTEC, INC. (THE "COMPANY") UNANIMOUSLY HAS
DETERMINED THAT THE OFFER AND THE MERGER, TAKEN TOGETHER, ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, UNANIMOUSLY HAS APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY (INCLUDING THE OFFER
AND THE MERGER), AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER
AND TENDER ALL OF THEIR SHARES PURSUANT THERETO.
PARENT AND PURCHASER HAVE ENTERED INTO AN AGREEMENT WITH CERTAIN SELLING
SHAREHOLDERS DATED SEPTEMBER 14, 1995, PURSUANT TO WHICH SUCH SHAREHOLDERS HAVE
AGREED TO TENDER IN THE OFFER, AND PURCHASER HAS OBTAINED THE RIGHT TO ACQUIRE
AT THE OFFER PRICE UPON THE SATISFACTION OF CERTAIN CONDITIONS, APPROXIMATELY
60% OF THE COMPANY'S OUTSTANDING COMMON SHARES. SEE SECTION 11.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE VALIDLY BEING
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF
SHARES REPRESENTING AT LEAST TWO-THIRDS OF THE COMPANY'S OUTSTANDING COMMON
SHARES (CALCULATED ON A FULLY DILUTED BASIS). THE OFFER ALSO IS SUBJECT TO
CERTAIN OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTIONS 14
AND 15.
IMPORTANT
Any shareholder desiring to tender all or any portion of his or its Shares
should either (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the certificate(s) representing tendered Shares
and any other required documents to the Depositary, or tender such Shares
pursuant to the procedures for book-entry transfer set forth in Section 3 or (2)
request his or its broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for him or it. Any shareholder whose Shares
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such broker, dealer, commercial bank, trust
company or other nominee if he or it desires to tender such Shares.
Any shareholder who desires to tender his or its Shares and whose Share
certificates are not immediately available or who cannot comply with the
procedures for book-entry transfer on a timely basis may tender such Shares by
following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or from brokers, dealers, commercial
banks and trust companies.
SEPTEMBER 21, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE><CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................................................................... 1
1. Terms of the Offer.............................................................. 2
2. Acceptance for Payment and Payment.............................................. 4
3. Procedures for Accepting the Offer and Tendering Shares......................... 6
4. Withdrawal Rights............................................................... 8
5. Certain Tax Consequences........................................................ 9
6. Price Range of the Shares; Dividends............................................ 10
7. Effect of the Offer on the Market for the Shares; Stock Exchange Listing;
Exchange Act Registration; Margin Regulations................................. 10
8. Certain Information Concerning the Company...................................... 11
9. Certain Information Concerning Purchaser, Parent and GAF Corporation............ 13
10. Background of the Offer; Past Contacts, Transactions and Negotiations with the
Company......................................................................... 16
11. Purpose of the Offer and the Merger and Plans for the Company; the Merger
Agreement, the Shareholders Agreement and the Employment Agreement.............. 17
12. Source and Amount of Funds...................................................... 26
13. Dividends and Distributions..................................................... 26
14. Certain Conditions to the Offer................................................. 26
15. Certain Legal Matters........................................................... 28
16. Fees and Expenses............................................................... 30
17. Miscellaneous................................................................... 30
Schedule I-- DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, PURCHASER AND GAF
CORPORATION............................................................... I-1
</TABLE>
(i)
<PAGE>
TO ALL HOLDERS OF COMMON SHARES
OF U.S. INTEC, INC.:
INTRODUCTION
USI Acquisition Company, a Texas corporation ("Purchaser") and a wholly
owned subsidiary of G-I Holdings Inc., a Delaware corporation ("Parent"), hereby
offers to purchase all of the outstanding shares of common stock, $.02 par value
(the "Shares"), of U.S. Intec, Inc., a Texas corporation (the "Company"), at
$9.05 per Share, net to the seller in cash, without any interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). Parent and Purchaser sometimes collectively hereafter
are referred to as the "Acquirors." Tendering shareholders will not be obligated
to pay brokerage fees or commissions or, except as set forth in Instruction 6 of
the Letter of Transmittal, stock transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer. Parent will pay all fees and expenses of The
Bank of New York, as depositary (the "Depositary"), and Kissel-Blake Inc., as
information agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
September 15, 1995 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, that (as soon as
practicable after consummation of the Offer and, if required, the approval and
adoption of the Merger Agreement by the shareholders of the Company), upon the
terms and subject to the conditions therein specified, Purchaser will be merged
with and into the Company (the "Merger"), with the Company surviving the Merger
as a direct wholly owned subsidiary of Parent (in this context, the "Surviving
Corporation"). In the Merger, each outstanding Share (other than Shares owned by
the Company or any of its subsidiaries, or by Parent, Purchaser or any other
subsidiary of Parent, and Shares owned by shareholders who properly have
exercised their appraisal rights under Texas law) will be converted at the
effective time of the Merger (the "Effective Time") into the right to receive
the Offer Price in cash, without any interest thereon and less applicable
withholding taxes (the "Merger Consideration").
THE COMPANY'S BOARD OF DIRECTORS (THE "BOARD") UNANIMOUSLY HAS DETERMINED
THAT THE OFFER AND THE MERGER, TAKEN TOGETHER, ARE FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, UNANIMOUSLY HAS APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY (INCLUDING THE OFFER
AND THE MERGER), AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER
AND TENDER ALL OF THEIR SHARES PURSUANT THERETO.
FIRST SOUTHWEST COMPANY, THE COMPANY'S FINANCIAL ADVISOR ("FSC"), THE HOLDER
OF APPROXIMATELY 8% OF THE OUTSTANDING SHARES AND ONE OF THE SELLING
SHAREHOLDERS (DEFINED BELOW), HAS DELIVERED TO THE COMPANY ITS WRITTEN OPINION,
DATED SEPTEMBER 14, 1995, THAT THE CONSIDERATION TO BE RECEIVED BY HOLDERS OF
THE SHARES IN THE MERGER IS FAIR TO SUCH HOLDERS FROM A FINANCIAL POINT OF VIEW.
A COPY OF FSC'S OPINION IS CONTAINED IN THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9")
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN
CONNECTION WITH THE OFFER, A COPY OF WHICH IS BEING FURNISHED TO SHAREHOLDERS
CONCURRENTLY HEREWITH.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1 BELOW) THAT NUMBER OF SHARES REPRESENTING AT LEAST TWO-THIRDS OF THE
OUTSTANDING SHARES, CALCULATED ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION"). THE OFFER ALSO IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS
14 AND 15.
The Company has informed Purchaser that, as of August 31, 1995, 3,040,911
Shares were outstanding and 158,250 Shares were reserved for issuance upon the
exercise of outstanding share options granted by the Company. As a result,
Purchaser believes that the Minimum Condition would be satisfied if at least
2,027,274 Shares validly are tendered and not properly withdrawn prior to the
Expiration Date.
<PAGE>
Parent and Purchaser have entered into an agreement dated September 14, 1995
(the "Shareholders Agreement") with certain selling shareholders, including FSC
and certain directors and executive officers of the Company (collectively, "the
Selling Shareholders") owning, in the aggregate, 1,835,811 (or approximately
60%) of the outstanding Shares. Pursuant to the Shareholders Agreement, the
Selling Shareholders severally have (i) agreed validly to tender pursuant to the
Offer (and not to withdraw) all Shares owned of record or beneficially by them
and (ii) granted to Parent and Purchaser an option to purchase all of their
Shares at the Offer Price if (x) all waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the regulations thereunder
(the "HSR Act"), required for such purchase of Shares shall have expired or been
waived and (y) there shall not be in effect any preliminary or final injunction
or other order of any court or public or governmental authority prohibiting such
purchase of Shares. Subject to certain conditions specified in the Shareholders
Agreement, the right referred to in clause (ii) of the preceding sentence is
exercisable in whole (but not in part) until the later of (x) the 180th day next
following September 14, 1995 or (y) the first to occur of consummation of the
Merger or termination of the Merger Agreement in accordance with its terms (such
date hereafter being referred to as the "Termination Date"). The Selling
Shareholders further have agreed that until the Termination Date, at any meeting
of the Company's shareholders, however called, such shareholders will vote or
cause to be voted all Shares held of record or beneficially owned by them in
favor of the Merger and against certain business combination and other
extraordinary corporate transactions involving the Company and its subsidiaries
which are intended or reasonably could be expected to impede, interfere with,
delay or materially adversely affect the Merger and the transactions
contemplated by the Merger Agreement and the Shareholders Agreement. See Section
11.
Consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, approval of the Merger by the
requisite vote or consent of the Company's shareholders. Under the Texas
Business Corporation Act, as amended (the "TBCA"), the shareholder vote
necessary to approve the Merger is the affirmative vote of at least two-thirds
of the outstanding Shares. If Purchaser acquires at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, Purchaser will be able to effect the
Merger pursuant to the "short-form" merger provisions of Section 5.16 of the
TBCA, without action by any other shareholder. In such event, Purchaser intends
to effect the Merger as promptly as practicable following the purchase of Shares
in the Offer. See Section 11.
The Merger Agreement and the Shareholders Agreement are more fully described
in Section 11. Certain United States federal income tax consequences of the sale
of Shares pursuant to the Offer are described in Section 5 below.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN VERY
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO PARTICIPATION IN THE OFFER (AND THE TENDER OF SHARES PURSUANT
THERETO).
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of any such extension or amendment), Purchaser will accept for payment and
thereby purchase all of the outstanding Shares validly tendered and not
withdrawn in accordance with the procedures set forth in Section 3 on or prior
to the Expiration Date. The term "Expiration Date" means 12:00 midnight, New
York City time, on Thursday, October 19, 1995, unless and until Purchaser, in
its sole discretion, shall have extended the period of time for which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by Purchaser, shall expire.
Purchaser expressly reserves the right, in its sole discretion (subject to
the terms of the Merger Agreement), at any time and from time to time (but shall
not be obligated), to extend the period during which the Offer remains open for
any reason, including the failure to satisfy any of the conditions specified in
Section 14, by giving oral or written notice of such extension to the Depositary
and by making a public announcement of such extension. During any such
extension, all Shares previously
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tendered and not withdrawn will remain subject to the Offer and subject to the
right of a tendering shareholder to withdraw such shareholder's Shares.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the HSR Act. The Offer also is subject to certain other conditions
set forth in Section 14 below. Subject to the terms of the Merger Agreement
(described in Section 11 below), Purchaser expressly reserves the right (but
shall not be obligated) to waive any or all of the conditions of the Offer.
Subject to applicable laws (including applicable regulations of the Commission
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), and to the terms of the Merger Agreement, if by the Expiration Date any
or all of the conditions to the Offer are not satisfied or waived, Purchaser
reserves the right (but shall not be obligated) to (i) extend the period during
which the Offer remains open and, subject to the rights of tendering
shareholders to withdraw their Shares (described below in Section 4), retain all
tendered Shares until the Expiration Date, (ii) waive or reduce the Minimum
Condition or waive any or all of the conditions to the Offer and, subject to
complying with applicable rules and regulations of the Commission, accept for
payment or purchase all validly tendered Shares and not extend the Offer, (iii)
terminate the Offer and not accept for payment any Shares and return promptly
all tendered Shares to tendering shareholders, or (iv) delay acceptance for
payment of or (irrespective of whether Shares theretofore were accepted for
payment) delay payment for any Shares pending receipt of any regulatory or
governmental approvals referred to in Section 15, in each case by giving oral or
written notice of such delay, termination, waiver or amendment to the Depositary
and by making a public announcement thereof. Purchaser acknowledges (i) that
Rule 14e-1(c) under the Exchange Act requires Purchaser to pay the consideration
offered or return the Shares tendered promptly after the termination or
withdrawal of the Offer and (ii) that Purchaser may not delay acceptance for
payment of, or (except as provided in clause (iv) of the preceding sentence)
payment for, any Shares upon the failure to satisfy any of the conditions
specified in Section 14, without appropriately extending the period of time
during which the Offer remains open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, and such announcement
in the case of an extension will be made no later than 9:00 a.m., New York City
time, on the business day next following the previously scheduled Expiration
Date. Without limiting the manner in which Purchaser may choose to make any
public announcement, and subject to applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act, which require that material changes promptly be
disseminated to holders of Shares), Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
Pursuant to the terms of the Merger Agreement, without the prior written
consent of the Company, Purchaser will not (and Parent has agreed not to cause
Purchaser to) (i) decrease the Offer Price or modify the form of consideration
therefor or decrease the number of Shares sought pursuant to the Offer; (ii)
change the conditions to the Offer; (iii) impose additional conditions to the
Offer; (iv) extend the Expiration Date, except as required by law and except
that Purchaser may extend the Expiration Date for not more than (x) 180 calendar
days from the date the Offer initially is commenced to comply with the
requirements of the HSR Act (as described in Sections 14 and 15 in this Offer to
Purchase) and (y) 90 calendar days from the date the Offer initially is
commenced to satisfy any condition to the Offer set forth in Section 14 below
other than as set forth in clause (x) above; or (v) amend any term of the Offer
in any manner materially adverse to holders of Shares; provided that the Offer
may be extended in connection with an increase in the consideration to be paid
pursuant to the Offer so as to comply with applicable rules and regulations of
the Commission. Assuming the prior satisfaction or waiver of the conditions to
the Offer, Purchaser shall accept for payment and pay for in accordance with the
terms of the Offer, all Shares validly tendered and not properly withdrawn
pursuant to the Offer as soon as practicable after the Expiration Date.
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If Purchaser effects a material change in the terms of or information
respecting the Offer, or if it waives a material condition to consummation of
the Offer, Purchaser will extend the Offer and disseminate additional tender
offer materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act. According to judicial interpretations of applicable Exchange Act
rules, the minimum period during which an offer must remain open following
material changes to the terms thereof (other than a change in price or a change
in percentage of securities sought or a change in any dealer's soliciting fee)
will depend upon the facts and circumstances, including the overall materiality,
of the changes. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought or a change in any
dealer's soliciting fee, a minimum 10-business day period from the date of such
change generally is required to allow for adequate dissemination to
shareholders. Accordingly, if prior to the Expiration Date, Purchaser increases
(other than increases of not more than 2% of the outstanding Shares) or (with
the Company's consent) decreases the number of Shares being sought, or increases
or (with the Company's consent) decreases the consideration offered pursuant to
the Offer, and if the Offer is scheduled to expire at any time earlier than the
period ending on the 10th business day next succeeding the date that notice of
such increase or decrease is first published, sent or given to holders of
Shares, the Offer will be extended until such date that is not less than the
expiration of such 10-business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
If the Offer is not consummated, Purchaser (in addition to its right to
acquire at the Offer Price the Selling Shareholders' Shares in the manner
contemplated by the Shareholders Agreement described in Section 11 below) may
seek to acquire Shares through open market purchases, privately negotiated
transactions, a merger or similar business combination, or otherwise, in each
case upon such terms and conditions and at such prices as it shall determine,
which may be more or less than the Offer Price and which may be paid for in
cash, property or a combination thereof.
The Company has provided Purchaser with its shareholder list and security
position and clearing agency participant listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase and the
related Letter of Transmittal and, if required, other relevant materials will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder list or who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of the Offer as so extended or amended), Purchaser will
purchase, by accepting for payment, and will pay for, all outstanding Shares
validly tendered and not properly withdrawn (as provided in Section 4) prior to
the Expiration Date, promptly after the later to occur of (i) the Expiration
Date and (ii) the satisfaction or waiver of the conditions to the Offer set
forth in Section 14, including, without limitation, the expiration or
termination of the waiting period applicable to the acquisition of Shares
pursuant to the Offer under the HSR Act. In addition, subject to applicable
rules of the Commission, Purchaser expressly reserves the right to delay
acceptance for payment of, or payment for, Shares pending receipt of or to
comply in whole or in part with any regulatory or governmental approvals,
regulations or conditions referred to in Section 15.
On September 20, 1995, Parent and the Company filed with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") their respective Premerger Notification and Report
Forms under the HSR Act with respect to the Offer. The waiting period under the
HSR Act applicable to the Offer will expire at 11:59 P.M., New York City time,
on October 5, 1995, unless extended by a request for additional information.
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In all cases, payment for Shares purchased in the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares or
timely confirmation (a "Book-Entry Confirmation") of the book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company,
Midwest Securities Trust Company or Philadelphia Depository Trust Company
(collectively, the "Book-Entry Transfer Facilities"), pursuant to the procedures
set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined below) in connection with a book-entry transfer,
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to and received by the Depositary and forming part of a
Book-Entry Confirmation, which states that (i) such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, (ii) such participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and (iii) Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn, if and when Purchaser gives oral or written notice to the Depositary
of Purchaser's acceptance of such Shares for payment pursuant to the Offer. In
all cases, upon the terms and subject to the conditions to the Offer, payment
for Shares purchased pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, who will act as agent for tendering
shareholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering shareholders. If, for any reason,
acceptance for payment of any Shares tendered pursuant to the Offer is delayed,
or Purchaser is unable to accept for payment Shares tendered in the Offer, then,
without prejudice to Purchaser's rights under Section 14, the Depositary
nevertheless may, on behalf of Purchaser, retain all tendered Shares, and such
Shares may not be withdrawn, except to the extent that the tendering
shareholders are entitled to withdrawal rights as described in Section 4 below
and otherwise as required by Rule 14e-1(c) under the Exchange Act. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE BE PAID BY PURCHASER BY REASON OF
ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates representing Shares ("Share Certificates") are
submitted representing more Shares than are tendered, Share Certificates
representing unpurchased or untendered Shares will be returned, without expense
to the tendering shareholder (or, in the case of Shares delivered by book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility
pursuant to the procedures set forth in Section 3, such Shares will be credited
to an account maintained within such Book-Entry Transfer Facility), as promptly
as practicable following the expiration, termination or withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER INCREASES THE CONSIDERATION
OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED CONSIDERATION
SHALL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT TO THE OFFER,
WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of Purchaser's subsidiaries or Affiliates (as such
term is defined in Rule 12b-2 under the Exchange Act), the right to purchase all
or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer or prejudice the rights of tendering shareholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
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3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDER OF SHARES
Except as set forth below, for Shares validly to be tendered pursuant to the
Offer, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with all required signature guarantees, or an
Agent's Message in connection with a book-entry delivery of Shares, and all
other documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date and either (i) Share Certificates
representing tendered Shares must be received by the Depositary, or such Shares
must be tendered pursuant to the procedures for book-entry transfer set forth
below and a Book-Entry Confirmation must be received by the Depositary, in each
case on or prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
SHAREHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS EFFECTED BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY TO THE DEPOSITARY.
BOOK-ENTRY TRANSFER
The Depositary will make a request to establish accounts with respect to the
Shares at each of the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in a Book-Entry Transfer Facility system may
effect book-entry delivery of Shares by causing such Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account maintained at
such Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with all required signature guarantees, or
an Agent's Message in connection with a book-entry transfer, and all other
required documents must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES SHALL NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
SIGNATURE GUARANTEES
Signatures on all Letters of Transmittal must be guaranteed by a firm that
is a bank, broker, dealer, credit union, savings association or other entity
which is a member in good standing of the Securities Transfer Agent's Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program (each, an "Eligible Institution"), unless the
Shares tendered thereby are tendered (i) by a registered holder of Shares who
has not completed either the box labeled "Special Payment Instructions" or the
box labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If Share Certificates are registered in the name of a person other than the
person executing the Letter of Transmittal, or if payment is to be made to, or
Share Certificates are to be issued or returned to, a person other than the
registered holder, then the tendered certificates must be endorsed or
accompanied by appropriate stock powers, signed exactly as the name or names of
the registered holder or holders appear on the certificates, with the signatures
on the certificates or stock powers guaranteed
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by an Eligible Institution as provided in the Letter of Transmittal. See
Instructions 1 and 5 of the Letter of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
GUARANTEED DELIVERY
If a shareholder desires to tender Shares pursuant to the Offer and such
shareholder's Share Certificates are not immediately available or time will not
permit all required documents to reach the Depositary on or prior to the
Expiration Date, or the procedures for book-entry transfer cannot be completed
on a timely basis, such Shares nevertheless may be tendered if all of the
following guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is received
by the Depositary, as provided below, on or prior to the Expiration Date;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) representing
all tendered Shares, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with all required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and all other documents required by the Letter
of Transmittal, are received by the Depositary, within five American Stock
Exchange, Inc. ("AMEX") trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with all
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and all other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering shareholders at the same
time, and will depend upon the time(s) at which Share Certificates or Book-Entry
Confirmations of such Shares are deposited into the Depositary's account at a
Book-Entry Transfer Facility.
BACKUP FEDERAL TAX WITHHOLDING
Under United States federal income tax laws, the Depositary will be required
to withhold 31% of the amount of any payments made to shareholders pursuant to
the Offer. To prevent backup federal income tax withholding on payments made to
shareholders with respect to the purchase price of Shares purchased in the
Offer, each such shareholder must provide the Depositary with his or its correct
taxpayer identification number and certify that he or it is not subject to
backup federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. See Instruction 9 of the Letter of
Transmittal.
APPOINTMENT AS PROXY
By executing the Letter of Transmittal, a tendering shareholder irrevocably
shall appoint designees of Purchaser, and each of them, as such shareholder's
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such shareholder's
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rights with respect to the Shares tendered by such shareholder and accepted for
payment and paid for by Purchaser (and with respect to any and all other Shares
and other securities or rights issued or issuable in respect of such Shares on
or after the date of this Offer to Purchase). All such powers of attorney and
proxies shall be considered irrevocable and coupled with an interest in the
tendered Shares. Such appointment will be effective when and if Purchaser pays
for such Shares by depositing the purchase price therefor with the Depositary.
Upon such payment, all powers of attorney and proxies theretofore provided by
such shareholder with respect to such Shares and such other securities or rights
prior to such payment will be revoked, without further action, and no subsequent
powers of attorney or proxies may be provided by such shareholder (and, if
provided, will not be deemed effective). The designees of Purchaser will, with
respect to the Shares for which such appointment is effective, be empowered to
exercise all voting and other rights of such shareholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
shareholders, or any adjournment or postponement thereof. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the payment for such Shares, Purchaser or its designee must be
able to exercise full voting and other beneficial ownership rights with respect
to such Shares and other securities, including voting at any meeting of
shareholders, however called.
DETERMINATION OF VALIDITY
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by Purchaser, in its sole discretion, whose determination
shall be final and binding on all parties. Purchaser reserves the absolute right
to reject any or all tenders determined by it not to be in proper form or the
acceptance of or payment for which, in the judgment of Purchaser's counsel, may
be unlawful. Subject to the terms of the Merger Agreement, Purchaser also
reserves the absolute right to waive any of the conditions of or to amend the
Offer or any defect or irregularity in any tender of Shares of any particular
shareholder whether or not similar defects or irregularities are waived in the
case of other shareholders.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed validly to have been made until
all defects and irregularities with respect to such tender have been cured or
waived. None of Parent, Purchaser or any of their respective affiliates or
assigns, the Depositary, the Information Agent or any other person will be under
any duty to provide any holder of Shares with notification of any defects or
irregularities in tenders or incur any liability for failure to provide any such
notification.
Purchaser's acceptance for payment of Shares tendered pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering shareholder's acceptance of all the terms and
conditions of the Offer, as well as the tendering shareholder's representation
and warranty to Purchaser that (a) such shareholder has a "net long" position in
the Shares being tendered within the meaning of Rule 14e-4 under the Exchange
Act and (b) the tender of such Shares complies with Rule 14e-4. It is a
violation of Rule 14e-4 for a person, directly or indirectly, to tender Shares
for such person's own account unless, at the time of tender, the person so
tendering (i) has a "net long" position equal to or greater than the amount of
(x) Shares tendered or (y) other securities immediately convertible into or
exchangeable or exercisable for the Shares tendered (and such person will
acquire such Shares for tender by conversion, exchange or exercise) and (ii)
will cause such Shares to be delivered in accordance with the terms of the
Offer. Rule 14e-4 provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any
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time on or prior to the Expiration Date and, unless theretofore accepted for
payment as provided herein, also may be withdrawn at any time after November 19,
1995.
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or Purchaser is unable to accept for payment
or pay for Shares validly tendered pursuant to the Offer, then, without
prejudice to Purchaser's rights set forth herein, the Depositary nevertheless
may, on behalf of Purchaser, retain tendered Shares and such Shares may not be
withdrawn except to the extent that the tendering shareholder is entitled to and
duly exercises withdrawal rights as described in this Section 4. Any such delay
will be effected by an extension of the Offer to the full extent required by
law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn, and (if Share Certificates
theretofore have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering shareholder must submit the serial numbers shown on
the particular certificates evidencing the Shares to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of the
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares, in which case a
notice of withdrawal will be effective only if delivered to the Depositary by
method of delivery described in the first two sentences of this paragraph.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will
be deemed not validly tendered for purposes of the Offer, but may be re-tendered
at any subsequent time prior to the Expiration Date by following any of the
procedures for the valid tender of Shares described in Section 3.
5. CERTAIN TAX CONSEQUENCES. Sales of Shares pursuant to the Offer will be
taxable transactions for federal income tax purposes and also may be taxable
transactions under applicable state, local and other tax laws. If all of the
Shares actually and constructively owned by a shareholder are sold for cash
pursuant to the Offer (or otherwise), such shareholder generally would recognize
gain or loss equal to the difference between the amount of cash received and his
or its tax basis for the Shares. Such gain or loss will be a capital gain or
loss (assuming the Shares are held as a capital asset) and any such capital gain
or loss will be long-term if, as of the date of sale, the Shares were held for
more than one year, or will be short-term if, as of such date, the Shares were
held for one year or less.
The foregoing discussion may not be applicable to certain shareholders,
including shareholders who acquired Shares pursuant to the exercise of employee
stock options or otherwise as compensation, individuals who are not citizens or
residents of the United States, and foreign corporations or entities that
otherwise are subject to special tax treatment under the Internal Revenue Code
of 1986, as amended (such as insurance companies, tax-exempt entities and
regulated investment companies).
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH SHAREHOLDER IS URGED TO CONSULT WITH HIS OR ITS OWN TAX
ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO HIM OR IT OF THE OFFER AND THE
MERGER, INCLUDING THE EFFECTS OF UNITED STATES FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES.
9
<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS. According to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 (the "Company
1994 10-K"), the Shares are listed on the AMEX and are publicly traded under the
symbol "USI." The following table sets forth, for the periods indicated, the
reported high and low closing sale prices for the Shares on the AMEX, all as
reported in published financial sources:
YEAR ENDED
DECEMBER 31, 1993 HIGH LOW
- ------------------------------------------------------------- ---- ---
First Quarter................................................ $6 3/8 $3 3/4
Second Quarter............................................... 5 3/8 4 5/8
Third Quarter................................................ 7 7/8 4 1/2
Fourth Quarter............................................... 7 6 1/8
YEAR ENDED
DECEMBER 31, 1994 HIGH LOW
- ------------------------------------------------------------- ---- ---
First Quarter................................................ $9 1/4 $6 1/8
Second Quarter............................................... 6 3/4 5 1/2
Third Quarter................................................ 6 1/8 4 7/8
Fourth Quarter............................................... 7 5/8 5 1/4
YEAR ENDING
DECEMBER 31, 1995 HIGH LOW
- ------------------------------------------------------------- ---- ---
First Quarter................................................ $7 3/4 $6 1/8
Second Quarter............................................... 81 3/16 6 5/8
Third Quarter (through September 20, 1995)................... 8 7/8 6 7/8
On September 14, 1995, the last trading day before the public announcement
of the execution of the Merger Agreement, the reported closing sale price per
Share on the AMEX was $7 7/8.
On September 20, 1995, the last trading day prior to the commencement of the
Offer, the reported closing sale price per Share on the AMEX was $8 7/8.
Shareholders are urged to obtain a current market quotation for the Shares.
The Company has informed Purchaser that as of August 31, 1995, 3,040,911
Shares were outstanding and held of record by approximately 113 shareholders.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that otherwise might trade publicly and could affect adversely the
liquidity and market value of the remaining Shares held by shareholders other
than Purchaser. The purchase of Shares pursuant to the Offer also can be
expected to reduce the number of holders of Shares. Purchaser cannot predict
whether the reduction in the number of Shares that otherwise might trade
publicly would have an adverse or beneficial effect in the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than the Offer Price.
STOCK EXCHANGE LISTING
According to the published guidelines of the AMEX, the AMEX would consider
delisting the Shares if, among other things, (i) the number of Shares publicly
held (exclusive of holdings of officers, directors, controlling shareholders or
other family or concentrated holdings) is less than 200,000, (ii)
10
<PAGE>
the total number of "round lot" shareholders of record (i.e., holders of record
of at least 100 Shares) is less than 300, or (iii) the aggregate market value of
Shares publicly held is less than $1,000,000.
If the Shares no longer were listed or traded on the AMEX, it is possible
that the Shares would trade on another securities exchange or in the
over-the-counter market and that price quotations would be reported by such
exchange, through the National Association of Securities Dealers, Inc. Automated
Quotation System or other sources. Such trading and the availability of such
quotations would, however, depend upon the number of shareholders and/or the
aggregate market value of the Shares remaining at such time, the interest in
maintaining a market in and for the Shares by securities firms, the possible
termination of registration of the Shares under the Exchange Act as described
below, and other factors.
EXCHANGE ACT REGISTRATION
The Shares currently are registered under Section 12(b) of the Exchange Act.
The purchase of the Shares pursuant to the Offer may result in the Shares
becoming eligible for deregistration under the Exchange Act. Registration of the
Shares may be terminated upon certification (on Form 15) by the Company to the
Commission if, among other things, the Shares are not then listed on a "national
securities exchange" and there are fewer than 300 record holders of Shares.
Termination of registration of the Shares under the Exchange Act would reduce
substantially the information required to be furnished by the Company to its
shareholders and the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) and the requirements of furnishing a proxy statement in connection with
shareholders' meetings pursuant to Section 14(a), no longer applicable to the
Company. Moreover, if the Shares no longer were registered under the Exchange
Act, the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions no longer would be applicable to the Company.
Furthermore, the ability of affiliates of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
the resale provisions of Rule 144 under the Securities Act of 1933, as amended
(the "Securities Act"), would be impaired or eliminated. If, as a result of the
purchase of Shares pursuant to the Offer or the Merger, the Company no longer is
required to maintain registration of the Shares under the Exchange Act,
Purchaser intends to cause the Company to seek termination of such registration.
If registration of the Shares is not terminated prior to consummation of the
Merger, then the Shares will be delisted from the AMEX and the registration of
the Shares under the Exchange Act promptly will be terminated following the
consummation of the Merger.
MARGIN REGULATIONS
The Shares currently are "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which have the effect, among other things, of allowing brokers to extend credit
on the collateral loan value of such Shares for the purpose of buying, carrying
or trading in securities ("Purpose Loans"). Depending upon factors such as the
number of record holders of the Shares and the number and market value of
publicly held Shares following the purchase of Shares pursuant to the Offer, the
Shares no longer may constitute "margin securities" for purposes of the Federal
Reserve Board's margin regulations and, therefore, no longer could be used as
collateral for Purpose Loans made by brokers. In addition, if registration of
the Shares under the Exchange Act were terminated as described above, the Shares
no longer would constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY. According to the Company 1994
10-K, the Company manufactures and sells roofing materials used primarily in
commercial re-roofing projects. These materials also are used in new
construction projects. The Company was organized in 1980 and imported roofing
materials from Europe until it opened its first manufacturing facility in Port
Arthur, Texas in April 1982. The Company subsequently has built or acquired
manufacturing facilities in North
11
<PAGE>
Branch, New Jersey; Stockton, California; Corvallis, Oregon; Monroe, Georgia;
and Houston, Texas. The Company is a Texas corporation with its principal
executive offices located at 1212 Brai Drive, Port Arthur, Texas 77643, where
its telephone number is: (409) 724-7024.
The Company's operating and marketing philosophy emphasizes a quality
product with available warranty, application training and support services for
wholesale distributors and roofing contractors. As of December 31, 1994, the
Company sold domestically to approximately 650 independent distributors, for
resale to an estimated 5,500 roofing contractors who install the Company's
roofing products for their customers. Sales to the Company's largest customer,
ABC Supply Co., Inc., accounted for approximately 15.5% of its total 1994 sales.
The Company is a producer of modified bitumen roofing products and also
engages in the manufacture and sale of roll products utilized in the built-up
roofing ("BUR") business. The Company's BUR roofing activities are conducted
through its Intec/Permaglas Division which utilizes the same sales and
distribution network used to market the Company's other products.
The Company holds a 40% interest in Thermo Manufacturing Company, L.P. (the
"Partnership"). The Company and the Partnership each purchase products
manufactured by the other. During the first quarter of 1994, the Partnership
purchased certain assets to manufacture roof-coating products. To date,
incremental sales by the Partnership have not been significant.
In 1993, the Company purchased a manufacturing facility and related assets
in Houston, Texas, where the Company has installed a residential shingle
manufacturing line. The Company entered into the residential roofing segment of
the roofing product market by beginning shingle production at this location
during the first quarter of 1995.
According to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1995 (the "June 30 10-Q"), due to the cash requirements
of the Company's Houston, Texas facility and to losses associated with
discontinued operations, the Company expected to require borrowings in excess of
its projected borrowing base and not to meet its tangible net worth loan
covenants. As a result, the Company planned to restructure its revolving credit
facility during the third or fourth quarter of 1995. The June 30 10-Q further
discloses that the Company had total assets and shareholders' equity of
$88,811,918 and $19,763,271, respectively.
SET FORTH BELOW IS CERTAIN SUMMARY CONSOLIDATED FINANCIAL INFORMATION WITH
RESPECT TO THE COMPANY AND ITS SUBSIDIARIES WHICH HAS BEEN EXCERPTED OR DERIVED
FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE COMPANY
1994 10-K AND THE JUNE 30 10-Q PROVIDED TO PARENT AND PURCHASER BY THE COMPANY.
MORE COMPREHENSIVE FINANCIAL INFORMATION IS INCLUDED IN SUCH EXCHANGE ACT
REPORTS (INCLUDING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS) AND OTHER DOCUMENTS FILED BY THE COMPANY WITH THE
COMMISSION. THE FOLLOWING FINANCIAL INFORMATION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
COMPANY 1994 10-K AND THE JUNE 30 10-Q AND ALL OTHER SUCH REPORTS AND DOCUMENTS
FILED WITH THE COMMISSION, AND TO ALL OF THE FINANCIAL STATEMENTS AND RELATED
NOTES CONTAINED THEREIN. THE COMPANY 1994 10-K AND THE JUNE 30 10-Q AND CERTAIN
OTHER EXCHANGE ACT REPORTS RELATING TO THE COMPANY AND ITS SUBSIDIARIES MAY BE
EXAMINED AND COPIES THEREOF MAY BE OBTAINED AT THE OFFICES OF THE COMMISSION IN
THE MANNER SET FORTH IN THE PARAGRAPH NEXT FOLLOWING THE FINANCIAL TABLES WITH
RESPECT TO THE COMPANY APPEARING BELOW.
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
<TABLE><CAPTION>
SIX MONTHS
ENDED JUNE 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
-------------- -------------------------------
1995 1994 1993 1992
-------------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales........................................ $ 55,568 $95,622 $83,311 $73,856
Earnings (loss) before income taxes and
cumulative effect of accounting change..... (5,249) 1,679 3,605 473
Net earnings (loss).......................... (3,097) 991 2,203 779
Net earnings (loss) per share................ (1.02) .33 .74 .09
<CAPTION>
AT JUNE 30, AT
(UNAUDITED) DECEMBER 31,
-------------- -------------------
1995 1994 1993
-------------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA
Current assets............................... $ 42,320 $29,250 $25,814
Total assets................................. 88,812 77,973 56,324
Current liabilities.......................... 26,643 20,688 12,779
Long-term debt............................... 35,913 28,182 15,820
Total shareholders' equity................... 19,763 22,790 21,648
</TABLE>
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith files periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Certain information, as of particular
dates, concerning the Company's directors and officers (including their
remuneration and the share options granted to them), the principal holders of
the Company's securities, any material interests of such persons in transactions
with the Company, and certain other matters, is required to be disclosed in
proxy statements and annual reports distributed to the Company's shareholders
and filed with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the Commission's public reference
facilities at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and also are available for inspection at the following regional
offices of the Commission: 7 World Trade Center, New York, New York 10048; and
500 West Madison Street, Chicago, Illinois 60621; and copies thereof may be
obtained by mail at prescribed rates from the principal office of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. Exchange Act reports, proxy
statements and other information concerning the Company also are available for
inspection at the AMEX, 86 Trinity Place, New York, New York 10006-1881.
EXCEPT AS OTHERWISE STATED IN THIS OFFER TO PURCHASE, THE INFORMATION
CONCERNING THE COMPANY AND ITS SUBSIDIARIES AND AFFILIATES CONTAINED HEREIN HAS
BEEN EXCERPTED FROM OR BASED UPON PUBLICLY AVAILABLE DOCUMENTS ON FILE WITH THE
COMMISSION AND OTHER PUBLICLY AVAILABLE INFORMATION. ALTHOUGH THE ACQUIRORS DO
NOT HAVE ANY KNOWLEDGE THAT ANY SUCH INFORMATION IS UNTRUE, NEITHER PURCHASER
NOR PARENT TAKES ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION OR FOR ANY FAILURE BY THE COMPANY TO DISCLOSE EVENTS THAT MAY HAVE
OCCURRED AND WHICH MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH
INFORMATION.
9. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT AND GAF CORPORATION.
Purchaser, a Texas corporation, was organized in September 1995 to acquire
all of the outstanding Shares pursuant to the Merger Agreement and has not
conducted any unrelated activities since its date
13
<PAGE>
of organization. The Purchaser's principal executive offices are located at 1361
Alps Road, Wayne, New Jersey 07470, where its telephone number is: (201)
628-3000.
Parent was incorporated under the laws of Delaware in 1988 and is a direct
wholly owned subsidiary of GAF Corporation ("GAF"). Parent owns all of the
outstanding capital stock of G Industries Corp. ("G Industries") which, in turn,
owns, directly or indirectly, all of the outstanding capital stock of each of
Building Materials Corporation of America ("BMCA"), GAF Broadcasting Company,
Inc. ("GAF Broadcasting") and GAF Chemicals Corporation ("GCC"). GCC owns
approximately 82% of the outstanding capital stock of International Specialty
Products Inc. ("ISP"), and the remaining approximately 18% of ISP's capital
stock is publicly held and traded on the New York Stock Exchange, Inc. Parent's
principal executive offices are located at 818 Washington Street, Wilmington,
Delaware 19801, where its telephone number is: (302) 429-8525. Samuel J. Heyman,
Chairman of the Board of Directors and Chief Executive Officer of each of GAF,
Parent, GAF Broadcasting and ISP, beneficially owns approximately 93% of the
outstanding capital stock of GAF.
GAF, through Parent and its subsidiaries, principally is engaged in the
manufacture and sale of specialty chemicals and building materials. GAF was
incorporated under the laws of Delaware in 1987 and its principal executive
offices are located at 1361 Alps Road, Wayne, New Jersey 07470, where its
telephone number is: (201) 628-3000. GAF acquired its business on March 29, 1989
by means of the merger of a subsidiary of GAF with and into GAF Corporation
(incorporated under the laws of Delaware in 1929 (the "Predecessor Company")).
The Predecessor Company was liquidated on April 10, 1989, and its assets and
liabilities were distributed to certain of Parent's other subsidiaries.
Parent's principal domestic operations are conducted through the following
subsidiaries: (i) ISP which, through its wholly owned subsidiaries, operates six
specialty derivative chemicals plants, three mineral granules plants, six
filters plants and one advanced materials plant, (ii) BMCA, which operates 11
roofing manufacturing facilities, one roofing accessory plant, one glass fiber
manufacturing facility, one glass mat plant and two perlite roofing insulation
manufacturing facilities, and (iii) GAF Broadcasting, which operates WAXQ,
Q104.3-FM, a commercial radio station broadcasting contemporary rock music in
the New York City metropolitan area. Parent's international operations
(consisting principally of international sales of domestically produced
specialty derivative chemicals) are conducted through ISP's subsidiaries,
branches and independent distributors. In addition, a specialty derivative
chemicals plant is operated by GAF-Huls Chemie GmbH, a joint venture between ISP
and Huls Aktiengesellschaft in Marl, Germany.
The name, business address, citizenship, present principal occupation and
employment history of each of the directors and executive officers of Parent,
Purchaser and GAF are set forth in Schedule I to this Offer to Purchase.
SET FORTH BELOW IS CERTAIN SUMMARY CONSOLIDATED FINANCIAL INFORMATION WITH
RESPECT TO PARENT AND ITS CONSOLIDATED SUBSIDIARIES WHICH HAS BEEN EXCERPTED OR
DERIVED FROM PARENT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1994 INCLUDED IN PARENT'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1994 (THE "PARENT 1994 10-K") AND PARENT'S
QUARTERLY REPORT ON FORM 10-Q FOR ITS FISCAL QUARTER ENDED JULY 2, 1995 (THE
"PARENT JULY 2 10-Q") FILED WITH THE COMMISSION. MORE COMPREHENSIVE FINANCIAL
INFORMATION (INCLUDING IN RESPECT OF EACH OF PARENT'S INDUSTRY SEGMENTS) IS
CONTAINED IN SUCH EXCHANGE ACT REPORTS (INCLUDING MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS) AND OTHER DOCUMENTS
FILED BY PARENT WITH THE COMMISSION, AND THE FINANCIAL INFORMATION SUMMARY SET
FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO PARENT'S CONSOLIDATED
FINANCIAL STATEMENTS INCLUDED IN SUCH EXCHANGE ACT REPORTS AND DOCUMENTS FILED
WITH THE COMMISSION, AND TO ALL THE FINANCIAL INFORMATION AND RELATED NOTES
CONTAINED THEREIN. THE PARENT 1994 10-K AND PARENT JULY 2 10-Q AND CERTAIN OTHER
EXCHANGE ACT REPORTS RELATING TO PARENT AND ITS SUBSIDIARIES MAY BE EXAMINED AND
COPIES THEREOF MAY BE OBTAINED AT THE OFFICES OF THE COMMISSION IN THE MANNER
SET FORTH IN THE PARAGRAPH NEXT FOLLOWING THE FINANCIAL TABLES WITH RESPECT TO
PARENT APPEARING BELOW.
14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF PARENT
<TABLE><CAPTION>
SIX MONTHS
ENDED JULY 2,
(UNAUDITED) YEAR ENDED DECEMBER 31,
--------------- --------------------------------------
1995 1994 1993 1992
--------------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales.............................. $658,556 $1,156,173 $1,068,951 $1,043,344
Income (loss) before income taxes,
extraordinary item and cumulative
effect of accounting change.......... 33,321 65,054 34,174 (238,971)
Net income (loss)...................... 14,113 28,010 14,406 (167,859)
<CAPTION>
AT
DECEMBER 31,
AT JULY 2, 1995 ------------------------
(UNAUDITED) 1994 1993
--------------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA
Current assets......................... $ 568,386 $ 555,885 $ 374,298
Total assets........................... 2,414,994 2,412,101 2,049,955
Total current liabilities.............. 357,375 327,845 230,388
Total long-term debt, less current
maturities........................... 1,438,550 1,422,207 1,265,983
Total shareholders' equity (deficit)
......................................... (20,383) (15,791) (42,614)
</TABLE>
Parent is subject to the information and reporting requirements of Section
15(d) of the Exchange Act and in accordance therewith files periodic reports and
other information with the Commission relating to its business, financial
condition and other matters. Certain information, as of particular dates,
concerning the directors and officers of Parent (including their remuneration
and the share options granted to them), the principal holders of Parent's
securities, any material interests of such persons in transactions with Parent,
and certain other matters, is required to be disclosed in annual reports filed
with the Commission. Such reports and other information may be inspected and
copied at the Commission's public reference facilities at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549, and also are available for
inspection at the following regional offices of the Commission: 7 World Trade
Center, New York, New York 10048; and 500 West Madison Street, Chicago, Illinois
60621; and copies thereof may be obtained by mail at prescribed rates from the
principal office of the Commission at 450 Fifth Street, N.W., Washington, DC
20549.
Except as set forth elsewhere in this Offer to Purchase (including, without
limitation, the descriptions of the Merger Agreement and the Shareholders
Agreement set forth in Section 11 below and the matters set forth in Schedule I
to this Offer to Purchase): (i) other than Messrs. John M. Sergey (an executive
officer of Purchaser and a director and Executive Vice President of GAF) and
Sunil Kumar (a Vice President, director and the President--Commercial Roofing
Products Division of Purchaser) who own 200 Shares and one Share, respectively,
of the Company, none of the Acquirors, GAF, Samuel J. Heyman or, to their
knowledge, any of the persons listed in Schedule I hereto nor any associate or
majority owned subsidiary of GAF, Samuel J. Heyman, Parent or Purchaser or any
of the persons so listed, beneficially owns or has a right to acquire any Shares
or any other equity securities of the Company; (ii) none of the Acquirors, GAF,
Samuel J. Heyman or, to their knowledge, any of the persons or entities referred
to in clause (i) above nor any of their executive officers, directors or
subsidiaries has effected any transaction in the Shares or any other equity
securities of the Company during the 60 days immediately preceding the date of
this Offer to Purchase; (iii) none of the Acquirors, GAF, Samuel J. Heyman nor,
to their knowledge, any of the persons listed in Schedule I hereto, has any
contract, arrangement, understanding or relationship with any other person with
respect to any
15
<PAGE>
securities of the Company, including, without limitation, the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the provision or withholding of proxies,
consents or authorizations; (iv) since January 1, 1992, there have been no
transactions which would require reporting in this Offer to Purchase under the
rules and regulations of the Commission between either of the Acquirors or, to
their knowledge, any of the persons listed in Schedule I hereto, on the one
hand, and the Company or any of its executive officers, directors or affiliates,
on the other hand; and (v) since January 1, 1992, there have been no contracts,
negotiations or transactions between any of the Acquirors or, to their
knowledge, any of the persons listed in Schedule I hereto, on the one hand, and
the Company or its subsidiaries or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets of the Company.
10. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS AND NEGOTIATIONS
WITH THE COMPANY.
During the past several years, representatives of GAF contacted, on an
intermittent basis, Danny J. Adair, the Company's President and Chief Executive
Officer, to express interest regarding a possible strategic financial
transaction or business combination involving Parent and the Company. No formal
discussions and no negotiations ensued as a result of these contacts and, until
June 28, 1995, neither Parent, GAF, nor any of their respective affiliates or
subsidiaries pursued any such possible transaction.
On June 28, 1995, James P. Rogers, Senior Vice President and Chief Financial
Officer of Parent and GAF, contacted FSC regarding a possible transaction
between Parent and the Company. At such time, FSC delivered publicly available
information (which included filings by the Company with the Commission) to Mr.
Rogers. Representatives of FSC then met with Mr. Rogers on June 29, 1995 to
discuss Parent's interest in acquiring the Company.
On July 7, 1995, representatives of FSC telephoned Mr. Rogers, informing him
that Parent needed to propose a range of prices for the Shares if Parent was
interested in acquiring the Company. In a subsequent telephone conversation on
July 11, 1995, Mr. Rogers informed representatives of FSC that Parent was not
prepared to provide a range of prices at that time. Discussions between the
parties continued, and on July 28, 1995, Parent delivered a letter to the
Company indicating its preliminary interest in acquiring the Company at a price
not to exceed $12.00 per Share. On July 28, 1995, the Company entered into a
confidentiality agreement with Parent to facilitate Parent's receipt of
information with respect to the Company and the conduct of Parent's due
diligence investigation.
On July 30, 1995, a meeting was held among Mr. Adair, representatives of
FSC, and representatives of Parent. Preliminary information concerning the
Company was provided to Parent, and Parent was encouraged to provide a more
specific price range for the Shares if Parent had an interest in acquiring the
Company.
On August 11, 1995, the Company received a letter from Parent indicating its
interest in acquiring the Company at a price of between $10.00 and $12.00 per
Share. Parent agreed to commence its due diligence review, provided that the
Company agreed to negotiate exclusively with Parent until the earliest of (i)
the execution of definitive documentation with respect to the acquisition, (ii)
the expiration date for the exclusive negotiating period (September 14, 1995,
subject to extension to September 29, 1995 if definitive documentation was being
negotiated on September 14, 1995), and (iii) the date upon which Parent notified
the Company that Parent no longer was interested in pursuing a transaction with
the Company on the terms outlined in its proposal.
On September 12, 1995, Mr. Rogers informed FSC that based on the results of
Parent's due diligence, the price at which Parent would be willing to negotiate
the acquisition of the Company was $8.00 per Share.
16
<PAGE>
Further negotiations ensued between representatives of FSC and Mr. Rogers on
the evening of September 12, 1995, including a discussion of the proposed
structure of the acquisition. Mr. Rogers informed FSC on September 13, 1995 that
he believed that the price Parent was willing to pay for the Shares could be
increased and that Parent and Purchaser were interested in entering into a
merger agreement with the Company providing for a cash tender offer for all of
the outstanding Shares, a draft of which was provided to the Company, FSC and
the Company's counsel. On the evening of September 13, 1995, Mr. Adair,
representatives of FSC and counsel to the Company met with representatives of
Parent and its counsel.
Following further negotiations of the terms and conditions of the Merger
Agreement provided by Parent to the Company, Parent submitted a final price of
$9.05 net per share. Parent required as a condition to continuing negotiations
of the terms of the Merger Agreement that the Selling Shareholders execute the
Shareholders Agreement on the evening of September 14, 1995. The Shareholders
Agreement was executed by such shareholders by such deadline.
According to the Company and as set forth in the Schedule 14D-9 which
accompanies this Offer to Purchase, on the evening of September 14, 1995, a
special meeting of the Board was convened to consider Parent's acquisition
proposal. The Board reviewed the terms of Parent's proposal in detail with
counsel to the Company. After receiving a written opinion and oral presentation
by FSC as to the fairness of the Offer Price and the Merger Consideration to the
Company's shareholders, from a financial point of view, the Board unanimously
determined that the Offer and the Merger, taken together, are fair to and in the
best interests of the Company's shareholders, approved the execution and
delivery of the definitive Merger Agreement, and agreed unanimously to recommend
acceptance of the Offer to the Company's shareholders.
11. PURPOSE OF THE OFFER AND THE MERGER AND PLANS FOR THE COMPANY; THE
MERGER AGREEMENT, THE SHAREHOLDERS AGREEMENT AND THE EMPLOYMENT AGREEMENT.
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer is to enable Parent, through Purchaser, to obtain
control of the Company's Board and acquire the entire equity interest in the
Company. The purpose of the Merger is to acquire all outstanding Shares not
acquired pursuant to the Offer or otherwise. The Offer is intended to increase
the likelihood that the Merger will be completed as promptly as practicable.
Parent regards the acquisition of the Company as an attractive opportunity to
acquire a significant and well-established roofing business.
PLANS FOR THE COMPANY
Parent intends, after consummation of the Offer, for the selling, marketing
and technical service efforts of the Company to remain in place and to promote
the present major product lines of the Company to its customer base. Parent
intends for major product lines to continue to be manufactured in the Company's
plants to current specifications.
Moreover, Parent intends to evaluate and review the Company's assets,
operations, management and personnel and consider what, if any, changes would be
desirable in light of circumstances which then exist (which may include an
assessment of industry trends and conditions, and general economic and market
circumstances prevailing at the time). Parent reserves the right to take such
actions or effect such changes as it deems advisable.
Except as noted in this Offer to Purchase, neither Parent nor Purchaser has
any present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, relocation of
operations, or sale or transfer of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's corporate structure or
business, the composition of its Board, management or personnel or in the
capitalization or dividend policy of the Company.
17
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THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE MERGER AGREEMENT.
THIS SUMMARY IS NOT A COMPLETE DESCRIPTION OF THE TERMS AND CONDITIONS THEREOF
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT THEREOF, WHICH IS
INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH HAS BEEN FILED WITH THE
COMMISSION AS EXHIBIT (C)(1) TO THE SCHEDULE 14D-1 FILED IN CONNECTION WITH THE
OFFER. THE MERGER AGREEMENT MAY BE EXAMINED, AND COPIES THEREOF MAY BE OBTAINED,
FROM THE LOCATIONS SET FORTH IN SECTION 9 ABOVE.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable after the execution and delivery thereof. Without the
prior written consent of the Company, Purchaser will not (and Parent has agreed
not to cause Purchaser to) (i) decrease the Offer Price or modify the form of
consideration therefor or decrease the number of Shares sought pursuant to the
Offer, (ii) change the conditions to the Offer, (iii) impose additional
conditions to the Offer, (iv) extend the Expiration Date, except as required by
law and except that Purchaser may extend the Expiration Date for not more than
(x) 180 calendar days from the date the Offer initially is commenced to comply
with the requirements of the HSR Act (as described in Sections 14 and 15 in this
Offer to Purchase) and (y) 90 calendar days from the date the Offer initially is
commenced to satisfy any condition to the Offer set forth in Section 14 below
other than as set forth in clause (x) above, or (v) amend any term of the Offer
in any manner materially adverse to holders of Shares, provided that,
irrespective of the foregoing, the Offer may be extended in connection with an
increase in the consideration to be paid pursuant to the Offer so as to comply
with applicable rules and regulations of the Commission.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
purchase by Parent or any of its subsidiaries of such number of Shares which
represents at least two-thirds of the Shares outstanding (calculated on a fully
diluted basis), and from time to time thereafter, Parent will be entitled to
designate such number of directors, rounded up to the next whole number as will
give Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board equal to the product of (x) the number of directors
on the Board (giving effect to any increase in the number of directors pursuant
to the Merger Agreement) and (y) the percentage that such number of Shares so
purchased bears to the aggregate number of Shares outstanding (such number being
the "Board Percentage"). The Company has agreed, upon the request of Parent,
promptly to satisfy the Board Percentage by increasing the size of the Board or
using its best efforts to secure the resignations of such number of directors as
is necessary to enable Parent's designees to be elected to the Board and to
cause Parent's designees promptly to be so elected. In this connection, Parent
and Purchaser have agreed to supply the Company with any information with
respect to either of them and their respective nominees, officers, directors and
affiliates as may be required by Section 14(f) of the Exchange Act and Rule
14f-1 thereunder. Following the election or appointment of Parent's designees
pursuant to the Merger Agreement and prior to the Effective Time, any amendment
or termination of the Merger Agreement, any extension for the performance or any
waiver of the obligations or other acts of Parent or Purchaser or waiver of the
Company's rights thereunder, will require the concurrence of a majority of the
directors of the Company then in office who were directors on the date of the
Merger Agreement and who voted to approve the Merger Agreement, provided that
any such director remains in office.
CONSIDERATION TO BE PAID IN THE MERGER. The Merger Agreement provides that
upon the terms and subject to the conditions set forth therein, Purchaser will
be merged with and into the Company, and the Company will be the Surviving
Corporation. In the Merger, each Share outstanding immediately prior to the
Effective Time (excluding Shares owned directly or indirectly by the Company or
any of its subsidiaries, or by Parent, Purchaser or any other subsidiary of
Parent and Dissenting Shares (as defined below)) will be converted into the
right to receive the Merger Consideration. Each of the shares of capital stock
of Purchaser outstanding immediately prior to the Effective Time will be
converted into and become one fully paid and nonassessable share of common
stock, $.02 par value, of the Surviving Corporation, which thereupon will become
a direct wholly owned subsidiary of Parent. In addition, at the Effective Time,
each then outstanding option to purchase Shares under the Company's 1985 Stock
Option Plan and the Company's 1994 Long-Term Incentive Plan, whether or not then
exercisable, will,
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in settlement thereof, be converted into the right to receive for each Share
underlying such option, an amount (subject to applicable withholding tax) in
cash equal to the difference between the Offer Price and the per Share exercise
price of such option (to the extent such difference results in a positive
number); provided that with respect to any holder of an option who then is
subject to the provisions of Section 16(a) of the Exchange Act, any such
settlement amount will, upon the written request of such holder, be paid as soon
as practicable after the first date payment lawfully can be made without
liability being incurred by such holder under Section 16(b) of the Exchange Act.
The Merger Agreement provides that the surrender of an option to the Company in
exchange for the settlement amount described above will constitute the release
by the option holder of all rights he or it then may have in respect of the
option which, upon such surrender, will be cancelled. Prior to the Effective
Time, the Company will use its commercially reasonable best efforts to obtain
all necessary consents or releases from holders of options under the
aforementioned option plans. The Merger Agreement further provides that, except
as otherwise agreed to by the parties, all Company option plans will terminate
at the Effective Time, and the Company will take all action necessary to ensure
that from and after the Effective Time no participant will have any rights to
acquire any equity securities (including Shares) of the Company, the Surviving
Corporation or any subsidiaries thereof.
Shares that are outstanding immediately prior to the Effective Time and
which are held by shareholders who have not voted in favor of the Merger or
consented thereto in writing and who have demanded properly in writing appraisal
for such Shares in accordance with Section 5.12 of the TBCA (collectively, the
"Dissenting Shares") will not be converted into or represent the right to
receive the Merger Consideration. Such shareholders instead will be entitled to
receive payment of the appraised value of such Shares held by them in accordance
with the provisions of such Section 5.12, except that all Dissenting Shares held
by shareholders who have failed to perfect or who effectively have withdrawn or
lost their rights to appraisal of such Shares under such Section 5.12 thereupon
will be deemed to have been converted into, at the Effective Time, the right to
receive, without any interest thereon, the Merger Consideration.
CLOSING; EFFECTIVENESS OF THE MERGER. Unless the Merger Agreement shall have
been terminated and the transactions contemplated thereby (including the Offer
and the Merger) shall have been abandoned, and subject to the satisfaction or
waiver of the conditions to closing prescribed therein, the closing of the
Merger will occur on the second business day after satisfaction of the
conditions set forth in the Merger Agreement (or as soon as practicable
thereafter following satisfaction or waiver of such conditions). The Merger will
become effective upon the filing of Articles of Merger and the issuance of a
certificate of merger by the Texas Secretary of State under the TBCA.
SHAREHOLDER MEETING. The Merger Agreement provides that if required by
applicable law, as soon as practicable following acceptance for payment and
payment for Shares in the Offer, the Company will prepare requisite proxy
solicitation materials and duly call a meeting (the "Special Meeting") of its
shareholders for the purpose of approving the Merger Agreement and the
transactions contemplated thereby. At the Special Meeting, Parent will cause all
the Shares of the Company then owned by Parent and Purchaser and any of their
respective subsidiaries or affiliates to be voted in favor of the Merger.
If Purchaser acquires at least 90% of the outstanding Shares of the Company
in the Offer, the Merger may be effected as soon as practicable following
consummation of the Offer, without a meeting of the Company's shareholders in
accordance with the provisions of the TBCA.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to organization,
standing and power, capital structure, authority, no violations and consents and
approvals, Commission documents, information supplied, compliance with
applicable laws, litigation, taxes, pension and benefit plans, opinion of
financial advisor, vote required, intangible property, environmental matters,
material contracts, related party transactions, no material changes, finder's
fees, liens, and other matters.
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Parent and Purchaser also have made certain representations and warranties
with respect to organization, standing and power, authority, no violations and
consents and approvals, information supplied, and other matters.
CONDUCT OF BUSINESS PENDING THE MERGER. The Company has agreed that during
the period from the date of the Merger Agreement to the Effective Time, except
as otherwise provided in the Merger Agreement or as consented to by Parent, the
Company and its subsidiaries will conduct their businesses only in the regular
and ordinary course consistent with past practice, and will use all reasonable
efforts to preserve intact their business organizations and preserve their
relationships with third parties with whom they have business dealings such that
their goodwill and ongoing business will not be impaired in any material respect
at the Effective Time.
OTHER AGREEMENTS. The Company, Parent and Purchaser have agreed to take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on each such party with respect to the Offer, the Merger
and the transactions contemplated by the Shareholders Agreement (including
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any other Governmental Entity (as defined in the
Merger Agreement)) and promptly to cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them or
any of the subsidiaries in connection with the Offer, the Merger and the
transactions contemplated by the Shareholders Agreement; provided that Parent
need not so comply if required by the Department of Justice or any other
Governmental Entity to hold separate, sell or otherwise dispose of any
subsidiary of Parent or the Company or assets or properties of any of the
foregoing. Each of the Company, Parent and Purchaser will take, and will cause
its subsidiaries to take, all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public
authority or private third party, required to be obtained or made by the
Company, Parent or any of their subsidiaries in connection with the Offer, the
Merger, or the taking of any action contemplated thereby. Parent and the Company
also have made certain agreements regarding access to information and holding in
confidence information so furnished.
The Merger Agreement also provides that for a period of six years after the
Effective Time, Parent and the Surviving Corporation, as applicable, will
indemnify, defend and hold harmless, each person who was an officer or director
of the Company or any of its subsidiaries (the "Indemnified Parties"), against
all losses, claims, damages, costs, expenses (including reasonable attorneys'
fees and expenses), liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (not unreasonably to be
withheld) of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on, or arising in whole or
in part out of, the fact that such person is or was a director or officer of the
Company or any of its subsidiaries, whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted or claimed
prior to, or at or after, the Effective Time ("Indemnified Liabilities"),
including all Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to the Merger Agreement or the
transactions contemplated thereby. Parent and the Surviving Corporation, as the
case may be, have agreed to pay expenses in advance of the final disposition of
any such action or proceeding to each Indemnified Party to the fullest extent
permitted by law.
NO SOLICITATION. The Company has agreed that, from and after the date of the
Merger Agreement until the termination thereof, the Company shall not, nor shall
it permit any of its subsidiaries to, nor shall it permit or authorize any of
its respective officers, directors, employees, representatives, agents or
affiliates, to directly or indirectly, initiate, solicit or encourage (including
by way of furnishing non-public information or assistance), nor take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to any Acquisition Proposal
(as defined below), nor enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries, nor to
obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal,
provided that the Board is not prohibited from (i) furnishing information to, or
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entering into discussions or negotiations with, any person or entity that makes
an unsolicited, written, bona fide Acquisition Proposal, if, and only to the
extent that, (A) the Board, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Board to comply with its fiduciary duties to shareholders
under applicable law, and (B) prior to taking such action, the Company (x)
provides reasonable notice to Parent to the effect that it is taking such
action, and (y) receives from such person or entity an executed confidentiality
agreement in reasonably customary form, or (ii) disclosing to the Company's
shareholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2 under the Exchange Act or from making such disclosures
to the Company's shareholders which in the judgment of the Board, made in good
faith after consultation with and based upon the advice of independent legal
counsel, is required under applicable law. The term "Acquisition Proposal" means
any of the following transactions (other than transactions among the Company,
Parent and Purchaser contemplated in the Merger Agreement) involving the Company
or any of its subsidiaries: (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of the
assets of the Company and its subsidiaries outside of the ordinary course of
business; (iii) any tender or exchange offer for the outstanding capital shares
of the Company or the filing of a registration statement under the Securities
Act in connection therewith; or (iv) any public announcement of a proposal, plan
or intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
FEES AND EXPENSES. The Merger Agreement provides that all costs and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby will be paid by the party incurring such expenses; provided
that, if the Company terminates the Merger Agreement under certain
circumstances, the Company has agreed to pay Parent's fees and expenses
(including counsel fees) incurred in connection with the transactions
contemplated by the Merger Agreement (not in excess of $1,000,000) and, if
within 12 months of such termination, the Company consummates or approves any
Acquisition Proposal, the Company has agreed to pay Parent the sum of $1,500,000
upon the consummation of such transaction. See "The Merger
Agreement--Termination" below.
CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective
obligation of each party to effect the Merger is subject to the satisfaction
prior to the Closing Date of the following conditions: (i) the Merger Agreement
and the Merger shall have been approved and adopted by the affirmative vote of
the holders of at least two-thirds of the Shares entitled to vote thereon if
such vote is required by applicable law, (ii) the waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired, and (iii) no temporary restraining order,
preliminary or permanent injunction or other legal restraint or prohibition or
other order issued by a Governmental Entity preventing the consummation of the
Merger shall be in effect.
The obligations of Parent and Purchaser to effect the Merger are subject to
the satisfaction of the following conditions, any or all of which may be waived
in whole or in part by Parent and Purchaser: (i) prior to the Expiration Date,
Purchaser shall have accepted for payment and paid for the Shares tendered in
the Offer such that, after such acceptance and payment, Parent and its
affiliates shall own, upon consummation of the Offer, at least two-thirds of the
outstanding Shares of the Company, provided that this condition shall be deemed
satisfied if Purchaser fails to purchase the Shares in the Offer in violation of
the terms thereof, (ii) the representations and warranties of the Company set
forth in the Merger Agreement shall be true and correct in all material respects
as of the date of the Merger Agreement and (except to the extent such
representations and warranties expressly relate to an earlier date) as of the
Closing Date as though made on and as of the Closing Date, (iii) the Company
shall have performed all obligations required to be performed by it under the
Merger Agreement at or prior to the Closing Date, (iv) all licenses, permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities and certain other third parties (specified in the Merger Agreement), as
are necessary in connection with the transactions contemplated by the Merger
Agreement, shall have been obtained.
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The obligation of the Company to effect the Merger is subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by the Company: (i) the representations and warranties of
Parent and Purchaser set forth in the Merger Agreement shall be true and correct
as of the date of the Merger Agreement and (except to the extent such
representations and warranties expressly relate to an earlier date) as of the
Closing Date as though made on and as of the Closing Date and (ii) Parent and
Purchaser shall have performed all obligations required to be performed by them
under the Merger Agreement at or prior to the Closing Date.
TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Company or Parent by (a) mutual written consent of the
Company and Parent, or mutual action of their respective boards of directors;
(b) either the Company or Parent, (i) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the other set
forth in the Merger Agreement, which breach has not been cured within three
business days following receipt by the breaching party of notice of such breach,
or (ii) if any permanent injunction or other order of a court or other competent
authority preventing the consummation of the Merger shall have become final and
non-appealable; provided that Parent and Company shall have used all
commercially reasonable efforts to cause any such injunction or order to be
vacated or lifted; (c) either the Company or Parent, so long as such party has
not breached its obligations under the Merger Agreement, if the Merger shall not
have been consummated on or before March 31, 1996, unless the Offer has expired
and Shares are not purchased pursuant thereto prior to March 31, 1996, in which
event not earlier than 120 days from such expiration date; (d) the Company, if
an Acquisition Proposal has been made and, in the good faith judgment of the
Board, based upon the advice of counsel, the Board determines in good faith that
as a result of such Acquisition Proposal termination is required under
applicable law in the exercise of the Board's fiduciary duties; provided that if
the Merger Agreement is terminated by reason of the foregoing circumstance, the
Company will reimburse Parent and Purchaser for all their fees (including
counsel fees) and expenses in connection with the transactions contemplated by
the Merger Agreement (but not to exceed $1,000,000), plus all fees (including,
without limitation, counsel fees) incurred by Parent and Purchaser in connection
with enforcing their rights under the Merger Agreement and, if within 12 months
next preceding such termination the Company thereafter consummates or approves
any Acquisition Proposal, which is subsequently consummated, the Company will be
required to pay to Parent the sum of $1,500,000 promptly upon consummation of
such transaction; (e) the Company, if Purchaser has failed to commence the Offer
within five business days next following the date of the initial public
announcement of the Offer; (f) Parent, if the Offer terminates, is withdrawn,
abandoned or expires by reason of the failure to satisfy any condition to the
Offer (set forth in Section 14 below); or (g) the Company, if the Offer shall
have expired or has been withdrawn, abandoned or terminated without any Shares
of the Company being purchased by Purchaser thereunder on or prior to the
Expiration Date. In the event of termination of the Merger Agreement by either
the Company or Parent as provided therein, the Merger Agreement forthwith will
become void and there will be no liability or obligation on the part of Parent,
Purchaser or the Company, except otherwise as provided in the Merger Agreement.
AMENDMENT. Subject to applicable law, the Merger Agreement may be amended,
modified or supplemented only by written agreement of Parent, Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained therein; provided that, after the Merger Agreement is approved by the
Company's shareholders, no such amendment or modification may reduce the amount
or change the form of consideration to be delivered to the shareholders of the
Company. In addition, following the election or appointment of Parent's
designees to the Board (if Purchaser acquires in the Offer at least two-thirds
of the outstanding Shares (calculated on a fully diluted basis)) and prior to
the Effective Time, any amendment or termination of the Merger Agreement,
extension for the performance or waiver of the obligations or other acts of
Parent or Purchaser, or waiver of the Company's rights thereunder, will require
the concurrence of a majority of
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the directors of the Company then in office who were directors on the date of
the Merger Agreement and who voted to approve the Merger Agreement; provided
such directors remain in office.
TIMING. The precise timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Parent has agreed to cause
the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
THE SHAREHOLDERS AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE SHAREHOLDERS
AGREEMENT. THIS SUMMARY IS NOT A COMPLETE DESCRIPTION OF THE TERMS AND
CONDITIONS THEREOF AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT THEREOF WHICH IS INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH HAS
BEEN FILED WITH THE COMMISSION AS EXHIBIT(C)(2) TO THE SCHEDULE 14D-1. THE
SHAREHOLDERS AGREEMENT MAY BE EXAMINED, AND COPIES THEREOF MAY BE OBTAINED, FROM
THE LOCATIONS SET FORTH IN SECTION 9 ABOVE.
TENDER OF SHARES IN THE OFFER. On the evening of September 14, 1995, to
induce Parent and Purchaser to continue negotiating the terms and conditions of
the definitive Merger Agreement with a view toward the execution thereof, each
of the Selling Shareholders (which includes FSC and certain directors and
executive officers of the Company) entered into the Shareholders Agreement with
Parent and Purchaser. Upon the terms and subject to the conditions thereof, the
Selling Shareholders have agreed validly to tender and not to withdraw pursuant
to and in accordance with the terms and subject to the conditions of the Offer,
the respective number of Shares owned beneficially by them (1,835,811 Shares in
the aggregate, representing approximately 60% of the outstanding Shares). Each
Selling Shareholder further has agreed that the transfer to Purchaser in the
Offer of his or its Shares will pass to and unconditionally vest in Purchaser
good and valid title to such Shares, free and clear of all claims, liens,
restrictions, security interests, pledges, limitations and other encumbrances.
SHARE OPTION. Each of the Selling Shareholders has granted to Parent an
irrevocable option (each a "Share Option", and collectively, the "Share
Options") to purchase his or its Shares (the "Option Shares"), at a purchase
price per Share equal to the Offer Price if (i) all waiting periods under the
HSR Act required for the purchase of the Option Shares shall have expired or
been waived and (ii) there shall not be in effect any preliminary or final
injunction or other order of any court or public or governmental authority
prohibiting such purchase. The right of Parent or Purchaser to exercise the
Share Options will expire on the Termination Date. In the event that Parent
elects to exercise the Share Options, Parent must send a written notice (the
"Notice") to the Selling Shareholders identifying the place and date (not less
than two nor more than 20 business days from the date of the Notice) for the
closing of such purchase. Pursuant to the Shareholders Agreement, the Share
Options are exercisable in whole, but not in part.
In addition, the Selling Shareholders and Parent have agreed that if Parent
exercises the Share Options pursuant to the Shareholders Agreement, Parent,
within 30 calendar days after the date of such exercise, will be obligated to
offer to all other shareholders of the Company an opportunity to sell their
Shares to Parent upon the equivalent terms and conditions provided with respect
to exercise of the Share Options.
VOTING. Each Selling Shareholder has agreed that during the period
commencing on September 14, 1995 and continuing until the Termination Date, at
any meeting of the Company's shareholders, however called, or in connection with
any written consent of the Company's shareholders, such Selling Shareholder will
vote (or cause to be voted) the Shares held of record or beneficially owned by
such shareholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and the Shareholders
Agreement, and any actions required in furtherance thereof; (ii) against any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger
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Agreement or the Shareholders Agreement (after giving effect to any materiality
or similar qualifications contained therein); and (iii) except as otherwise
agreed to in writing in advance by Parent, against the following actions (other
than the Merger and the transactions contemplated by the Merger Agreement): (A)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or its subsidiaries; (B) a
sale, lease or transfer of a material amount of assets of the Company or its
subsidiaries or a reorganization, recapitalization, dissolution or liquidation
of the Company of its subsidiaries; (C)(1) any change in a majority of the
persons who constitute the Board of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's articles of
incorporation or bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action which, in the case of
each of the matters referred to in clauses C(1), (2), or (3) above, is intended,
or reasonably could be expected, to impede, interfere with, delay or materially
adversely affect the Merger and the transactions contemplated by the Merger
Agreement and the Shareholders Agreement. The Selling Shareholders further have
agreed not to enter into any agreement or understanding with any person or
entity the effect of which would be inconsistent with, or violative of, the
provisions and agreements described above.
REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER AGREEMENTS. The Selling
Shareholders have made certain customary representations, warranties and
covenants, including with respect to (i) their ownership of the Shares, (ii)
their authority to enter into and perform their obligations under the
Shareholders Agreement, (iii) noncontravention, (iv) the receipt of requisite
governmental consents and approvals, (v) the absence of liens and encumbrances
on and in respect of their Shares, (vi) restrictions on the transfer of their
Shares, (vii) the solicitation of Acquisition Proposals, and (viii) the waiver
of their appraisal rights.
Parent has agreed to indemnify, defend and hold harmless each Selling
Shareholder against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities, judgments or amounts that
are paid in settlement with the approval of the indemnifying party (which
approval shall not unreasonably be withheld) of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person entered into the Shareholders Agreement, other than as a result of, or
relating to, any claim asserted by a Selling Shareholder. In this connection,
Parent has agreed to pay to the foregoing indemnified parties expenses in
advance of the final disposition of any such action or proceeding to the fullest
extent permitted by law. Such indemnification will terminate and no longer be
effective upon notification from Parent delivered to the Selling Shareholders
that the Share Options have terminated.
Danny J. Adair, the Company's President and Chief Executive Officer (and
holder of approximately 27% of the outstanding Shares) has (i) acknowledged in
the Shareholders Agreement that pursuant to a certain Debt Restructuring and
Non-Competition Agreement dated as of September 28, 1990, as amended, the
Company holds the executive's secured promissory note (the "Note") in the
principal amount of $2,803,000 (together with all accrued and unpaid interest
thereon, the "Loan Amount") and (ii) agreed that any amount to be paid to him in
the Offer or pursuant to the Shareholders Agreement in respect of his Shares
shall be net of the Loan Amount and that the Loan Amount shall instead be paid
to the Company in full satisfaction of his obligations under the Note.
TERMINATION. Other than as provided therein, the Shareholders Agreement will
terminate by its terms on the Termination Date.
EMPLOYMENT AGREEMENT
In connection with the Merger Agreement, the Company entered into a
three-year agreement (the "Employment Agreement") with Danny J. Adair, its
President and Chief Executive Officer which will become effective upon the
earlier to occur of (i) consummation of the Offer and (ii) the Effective Time.
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If the Merger Agreement terminates in accordance with its terms and the Offer is
not consummated, the Employment Agreement will terminate without liability of
either party. Pursuant to the Employment Agreement, the Company has the right to
terminate the executive's employment at any time, with or without cause, upon
six months' prior written notice. In addition, the Company may terminate the
executive's employment upon his Disability or for Cause (as such terms are
defined in the Employment Agreement).
The Employment Agreement provides for the executive to receive base
compensation in an amount not less than his current base compensation per annum,
together with a discretionary bonus determined by the Board. In addition, the
executive has agreed that for a period of three years from the termination of
his employment, he will not, directly or indirectly, engage in or become
associated with any entity (or any affiliate thereof) engaged in the
manufacture, distribution, marketing or sale of roofing or re-roofing products.
Prior to the Effective Time, the Employment Agreement cannot be amended
without the Purchaser's prior written consent, and consummation of the Offer is
conditioned upon the Employment Agreement being in full force and effect on the
date of the Offer. See Section 14.
STATUTORY REQUIREMENTS
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, holders of Shares will have
certain rights under Section 5.12 of the TBCA to dissent and demand appraisal
of, and payment in cash for the fair value of, their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than or in addition to
the Offer Price and the market value of the Shares, including asset values and
the investment value of the Shares. The value so determined could be more or
less than the Offer Price or the Merger Consideration.
If any holder of Shares who demands appraisal under Section 5.12 of the TBCA
fails to perfect, or effectively withdraws or loses his or its right to
appraisal, as provided in the TBCA, the Shares of such holder will be converted
into the Merger Consideration in accordance with the Merger Agreement. A
shareholder may withdraw his or its demand for appraisal by delivery to Parent
of a written withdrawal of such demand for appraisal and acceptance of the
Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING SHAREHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHT REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF SECTION 5.12 OF THE TBCA.
"GOING PRIVATE" TRANSACTIONS. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which under certain circumstances may be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. Generally,
Rule 13e-3 governs transactions by an issuer and its affiliates which either
have a reasonable likelihood of causing or are designed to cause (i) a class of
equity securities subject to section 12(g) or 15(d) of the Exchange Act to be
held of record by less than 300 persons or (ii) any class of equity securities
to cease either to be listed on a national securities exchange or authorized for
quotation in an inter-dealer quotation system of a registered national
securities association. However, Rule 13e-3 would be inapplicable if (i) the
Shares are deregistered under the Exchange Act prior to the Merger or other
business combination or (ii) the Merger or other business combination is
consummated within one year after the purchase of the Shares pursuant to the
Offer and the amount paid per Share in the Merger or other business combination
is equal to or greater than the amount paid per Share in the Offer. If
applicable, Rule 13e-3 would require, among other things, that certain financial
and other information
25
<PAGE>
concerning the fairness of the proposed transaction and the consideration
offered to minority shareholders in such transaction be filed with the
Commission and disclosed to shareholders prior to the consummation of the
transaction.
12. SOURCE AND AMOUNT OF FUNDS. The aggregate amount of funds required by
Parent and Purchaser to consummate the Offer and the Merger, and to pay all fees
and expenses associated therewith, will aggregate approximately $28,500,000.
Such amount will be funded from Parent's internal resources, including available
cash on hand.
13. DIVIDENDS AND DISTRIBUTIONS. If, on or after the date of the Merger
Agreement, the Company (i) splits, combines or otherwise changes the Shares or
its capitalization, (ii) acquires Shares or otherwise causes a reduction in the
number of issued and outstanding Shares, (iii) issues or sells additional Shares
(except Shares issuable upon the exercise of options outstanding on the date of
the Merger Agreement) or shares of any other class or series (whether or not
voting securities) or any securities convertible into or exchangeable or
exercisable for any of the foregoing ("Derivative Securities"), or (iv)
discloses that it has taken such action, then, without prejudice to Parent's
rights under Section 14, and subject to the terms of the Merger Agreement,
Purchaser, in its sole discretion, may adjust the Offer Price and the Merger
Consideration to reflect such split, combination or other change including,
without limitation, the number or type of securities offered to be purchased in
the Offer.
If, on or after the date of the Merger Agreement, the Company should declare
or pay any cash dividend or make distributions of securities or other property
in respect of the Shares (including the issuance of any Derivative Securities),
payable or distributable to shareholders of record on a date after the date of
this Offer to Purchase and prior to the transfer to Purchaser of the Shares
purchased pursuant to the Offer (or to Purchaser's nominee or transferee on the
Company's share transfer records), then, subject to the provisions of Section 14
below, (a) the Offer Price may, in the sole discretion of Purchaser, be reduced
by the amount of any such cash dividend and (b) the whole of any such noncash
dividend, distribution or issuance to be received by the tendering shareholders
will (i) be received and held by the tendering shareholders for the account of
Purchaser and will be required to be remitted and transferred promptly by each
tendering shareholder to the Depositary for the account of Purchaser,
accompanied by appropriate transfer documentation, or (ii) at the direction of
Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds
of such exercise promptly will be remitted to Purchaser. Pending such remittance
and subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any noncash dividend, distribution, issuance or proceeds
and may withhold the entire Offer Price or deduct from the Offer Price the
amount or value thereof, as determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing herein shall constitute a waiver by Purchaser or Parent of any of its
rights under the Merger Agreement or a limitation of the remedies available to
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
14. CERTAIN CONDITIONS TO THE OFFER. Notwithstanding any other provisions of
the Offer, Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or to
return tendered Shares promptly after expiration or termination of the Offer),
to pay for any Shares tendered, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
and, subject to the terms of the Merger Agreement, may amend or terminate the
Offer if, before acceptance for payment of such Shares (whether or not any
Shares theretofore have been purchased or paid for) (i) there have not been
validly tendered and not withdrawn prior to the Expiration Date a number of
Shares which constitutes at least two-thirds of the Shares outstanding,
calculated on a fully diluted basis on the date of purchase ("on a fully diluted
26
<PAGE>
basis" having the meaning, as of any date: the number of Shares outstanding,
together with Shares the Company then is required to issue pursuant to
obligations outstanding at that date under employee share option or other
benefit plans or otherwise); (ii) all material regulatory and related approvals
have not been obtained or made on terms reasonably satisfactory to Purchaser and
the Company shall not have obtained consents to all material contracts specified
as such in the Merger Agreement on terms reasonably satisfactory to Purchaser;
(iii) any applicable waiting periods under the HSR Act shall not have expired or
been terminated prior to the Expiration Date; or (iv) at any time on or after
the date of the Merger Agreement and before acceptance for payment of, or
payment for, such Shares any of the following events shall occur:
(A) any governmental entity or federal or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, decree, injunction or other
order which is in effect and which (1) materially restricts, prevents or
prohibits consummation of the Offer, the Merger or any transaction
contemplated by the Merger Agreement, (2) prohibits or limits materially the
ownership or operation by the Company, Parent or any of their subsidiaries
of all or any material portion of the business or assets of the Company and
its subsidiaries taken as a whole, or compels the Company, Parent or any of
their subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Company and its subsidiaries taken
as a whole, (3) imposes limitations on the ability of Parent, Purchaser or
any other subsidiary of Parent to exercise effectively full rights of
ownership of any Shares, including, without limitation, the right to vote
any Shares acquired by Purchaser pursuant to the Offer or otherwise on all
matters properly presented to the Company's shareholders, including, without
limitation, the approval and adoption of the Merger Agreement and the
transactions contemplated thereby, or (4) requires divestitures by Parent,
Purchaser or any other affiliate of Parent of any Shares; provided that
Parent shall have used all commercially reasonable efforts to cause any such
decree, judgment, injunction or other order to be vacated or lifted;
(B) any action, suit or proceeding before any court or any Governmental
Entity shall be pending, or shall have been threatened, seeking to restrain,
prevent, enjoin or change the transactions contemplated hereby, or
questioning the validity or legality of any such transactions or seeking
damages in connection with such transactions;
(C) the representations and warranties of the Company contained in the
Merger Agreement shall not be true and correct in all material respects as
of the date of consummation of the Offer as though made on and as of such
date;
(D) the Company shall not have performed or complied in all material
respects with its material obligations under the Merger Agreement to be
performed or complied with by it;
(E) the Merger Agreement shall have been terminated in accordance with
its terms;
(F) prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company shall exist and the Board shall have
withdrawn or materially modified or changed (including by amendment of
Schedule 14D-9) in a manner adverse to Purchaser its recommendation of the
Offer, the Merger Agreement or the Merger;
(G) it shall have been publicly disclosed or Purchaser otherwise shall
have learned that, except as contemplated by the Shareholders Agreement, any
person or "group" (as defined in Section 13(d)(3) of the Exchange Act),
other than Parent, its affiliates or any group of which any of them is a
member, or any Selling Shareholder, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 under the Exchange Act) of more than 7%
of any class or series of capital shares of the Company (including the
Shares) (or in the case of any holder of Shares identified in the Company's
most recent proxy statement who is not a party to the Shareholders Agreement
("Other Shareholder"), such Other Shareholder shall have increased its
holding of Shares by more than 1% of the outstanding Shares), through the
acquisition of Shares,
27
<PAGE>
the formation of a group or otherwise, or shall have been granted an option,
right or warrant (conditional or otherwise), to acquire beneficial ownership
of more than 7% of any class or series of capital shares of the Company
(including the Shares) (or in the case of an Other Shareholder, such Other
Shareholder shall have been granted an Option to acquire an additional 1% of
the outstanding Shares) or any person or group shall have entered into a
definitive agreement or agreement-in-principle with the Company with respect
to a merger, consolidation or other business combination with the Company;
(H) the Company shall not have terminated its coal tar operations on
terms satisfactory to Parent;
(I) the Employment Agreement between the Company and Danny J. Adair,
dated the date of the Merger Agreement, shall have been terminated and shall
not be in full force and effect; or
(J) the Company shall not own or have the right under the lease
currently in effect with Armco Inc. to acquire the warehouse located in
Greenport Industrial Park, Houston, Texas;
which, in the judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or omission by Purchaser) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for payment
or payments.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
(including, without limitation, any action or inaction by Purchaser or any of
its affiliates) giving rise to any such condition or may be waived by Purchaser,
in whole or in part, from time to time in its sole discretion, except as
otherwise provided in the Merger Agreement. The failure by Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time. Any determination by Purchaser concerning any
of the events described herein shall be final and binding.
15. CERTAIN LEGAL MATTERS. Except as described in this Section 15, based on
a review of publicly available filings made by the Company with the Commission
and other publicly available information concerning the Company, but without any
independent investigation thereof, neither Purchaser nor Parent is aware of any
license or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might adversely be affected
by Purchaser's acquisition of Shares as contemplated herein or of any approval
of other action by any public or governmental authority that would be required
for acquisition or ownership of Shares by Purchaser as contemplated herein.
Should any such approval or other action be required, Purchaser and Parent
currently contemplate that such approval or other action will be sought, except
as described below under "State Takeover Laws." While (except as otherwise
expressly described in this Section 15) Purchaser presently does not intend to
delay the acceptance for payment of or payment for Shares tendered in the Offer
pending the outcome of any such matter, there can be no assurance that any such
approval or action, if needed, would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, Purchaser could decline to accept for
payment or pay for any Shares tendered. See Section 14 above for certain
conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more
28
<PAGE>
difficult, imposed a substantial burden on interstate commerce and therefore was
unconstitutional. In CTS Corp. v. Dynamics Corp. of America, however, the
Supreme Court of the United States held that a state, as a matter of corporate
law and, in particular, those laws concerning corporate governance, may
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without prior approval of the remaining shareholders,
provided that such laws were applicable only under certain conditions.
Based on information supplied by the Company, Purchaser does not believe
that any state takeover statutes apply to the Offer or the Merger and,
therefore, neither Purchaser nor Parent currently has complied with any state
takeover statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer or the Merger, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant state
authorities, and Purchaser might not be able to accept for payment or pay for
Shares tendered in the Offer, or be delayed in consummating the Offer or the
Merger. In such case, Purchaser may not be obligated to accept for payment or
pay for any Shares tendered pursuant to the Offer.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares in the Offer may be consummated following the expiration of a
15-calendar-day waiting period following the filing by Parent of a Notification
and Report Form with respect to the Offer, unless Parent receives a request for
additional information or documentary material from the staff of the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. On September 20, 1995, Parent filed such report form and, therefore,
such waiting period will expire at 11:59 p.m. on October 5, 1995. If, within the
initial 15-day waiting period, either the staff of the Antitrust Division or the
FTC requests additional information or documentary material from Parent
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the 10th calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. In practice, complying with a request for
additional information or documentary material can take a significant amount of
time. In addition, if either the Antitrust Division or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. Moreover, the
Merger Agreement provides that the Offer may be extended for an aggregate period
of not more than 180 calendar days from the date the Offer initially is
commenced to comply with the requirements of the HSR Act.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Parent or its
subsidiaries, or the Company or its subsidiaries. State antitrust authorities
and private parties also may commence legal action under the antitrust laws
under certain circumstances. There can be no assurance that a challenge to the
Offer on antitrust grounds will not be made or, if such a challenge is made, of
the result thereof.
TEXAS LAW REQUIREMENTS. Under Texas law, the affirmative vote of holders of
at least two-thirds of the outstanding Shares entitled to vote, including any
Shares owned by Purchaser, would be required to adopt the Merger. If Purchaser
acquires, through the Offer or otherwise, voting power with respect to at
29
<PAGE>
least two-thirds of the outstanding Shares (which would be the case if the
Minimum Condition were satisfied), it would have sufficient voting power to
effect the Merger without the vote of any other shareholder of the Company.
Texas law also provides that if a parent company owns at least 90% of each class
of shares of a subsidiary, the parent company can effect a merger with the
subsidiary without the authorization of the other shareholders of the
subsidiary. Accordingly, if, as a result of the Offer, the Shareholders
Agreement or otherwise, Purchaser acquires at least 90% of the outstanding
Shares, Purchaser could, and intends to, effect the Merger without approval of
any other shareholder of the Company.
16. FEES AND EXPENSES. Kissel-Blake Inc. has been engaged by Parent as
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interview, and may request brokers, dealers and other nominee shareholders to
forward material relating to the Offer to beneficial owners of Shares. Customary
compensation will be paid for all such services, together with reimbursement of
reasonable out-of-pocket expenses. Parent has agreed to indemnify the
Information Agent against certain liabilities and expenses, including
liabilities under the federal securities laws.
In addition, The Bank of New York has been engaged as the Depositary. The
Depositary has not been retained to make solicitations or recommendations in its
capacity as such. The Depositary will receive reasonable and customary
compensation for its services in connection with the Offer, will be reimbursed
for its reasonable out-of-pocket expenses, and will be indemnified against
certain liabilities and expenses in connection therewith.
Except as set forth above, Parent will not pay any fees or commissions to
any broker, dealer or other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial
banks, trust companies and other shareholder nominees, upon request, will be
reimbursed by Parent for customary clerical and mailing expenses incurred by
them in forwarding materials to their customers.
17. MISCELLANEOUS. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares residing in any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the securities, blue sky or other laws of such jurisdiction.
However, Parent may, in its discretion, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in such jurisdiction.
Parent has filed with the Commission the Schedule 14D-1, together with
exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, containing certain additional information with respect to the
Offer, and may file amendments thereto. Such Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
office of the Commission in the manner described in Section 8 with respect to
information concerning the Company, except that they will not be available at
the regional offices of the Commission.
NO PERSON HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF PROVIDED OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
NEITHER THE DELIVERY OF THIS OFFER TO PURCHASE, NOR ANY PURCHASE OF SHARES MADE
PURSUANT TO THE OFFER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF PARENT, PURCHASER OR THE COMPANY
SINCE THE DATE AS OF WHICH INFORMATION IS FURNISHED OR THE DATE OF THIS OFFER TO
PURCHASE.
USI ACQUISITION COMPANY
SEPTEMBER 21, 1995
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<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, PURCHASER AND GAF
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment, and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent. The business
address of each such person is 818 Washington Street, Wilmington, Delaware
19801, and such person is a United States citizen.
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND FIVE-YEAR
NAME EMPLOYMENT HISTORY
- -------------------------------------- ---------------------------------------------------
<S> <C>
Samuel J. Heyman...................... Mr. Heyman has been a director and Chairman and
Chief Executive Officer of Parent since August 1988
and of GAF, G Industries and certain of its
subsidiaries since April 1989, prior to which he
held the same position with the predecessor to GAF
(the "Predecessor Company") from December 1983 to
April 1989. Mr. Heyman has been Chairman and Chief
Executive Officer of ISP and has been a director
and Chairman of BMCA and Purchaser since their
respective dates of organization. He is also the
Chief Executive Officer, Manager and General
Partner of a number of closely held real estate
development companies and partnerships whose
investments include commercial real estate and a
portfolio of publicly traded securities.
Carl R. Eckardt....................... Mr. Eckardt has been a director and Executive Vice
President of GAF since April 1989 and held the same
positions with the Predecessor Company from January
1987 to April 1989. He has been President and Chief
Operating Officer of ISP since January 3, 1994 and
was Executive Vice President-Corporate Development
of ISP from its formation to January 2, 1994. Mr.
Eckardt has been Executive Vice President of Parent
since March 1993. Mr. Eckardt was President of GCC
and the Predecessor Company's chemicals division
from 1985 to 1987. Mr. Eckardt was Senior Vice
President-Worldwide Chemicals and Senior Vice
President-International Chemicals of the
Predecessor Company from 1982 to 1985 and 1981 to
1982, respectively. Mr. Eckardt joined the
Predecessor Company in 1974.
Mark A. Buckstein..................... Mr. Buckstein has been a director, Executive Vice
President, General Counsel and Secretary of Parent,
GAF, G Industries and certain of its subsidiaries,
including ISP, since August 1, 1993, and has been a
director and Executive Vice President and Secretary
of BMCA and Purchaser since their respective dates
of formation. From July 1992 to April 1993, he was
Executive Vice President of the American
Arbitration Association. From February
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
1986 to June 1992, he was a director, Senior Vice
President, External Affairs and General Counsel of
Trans World Airlines, Inc.
James P. Rogers....................... Mr. Rogers has been Senior Vice President and Chief
Financial Officer of Parent, GAF and certain of its
subsidiaries and Senior Vice President-Finance of
ISP since November 1, 1993, and a director and
Senior Vice President of BMCA and Purchaser since
their respective dates of formation. Mr. Rogers has
served as Treasurer of Parent, GAF and certain of
its subsidiaries since March 1992, was Vice
President-Finance of such corporations from March
1992 to October 31, 1993 and was Treasurer of ISP
from March 1992 through December 1994 and has
served as such since September 1995. From August
1987 to March 1992, Mr. Rogers was Treasurer of
Amphenol Corporation, a manufacturer of electronic
connectors.
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, present principal occupation or
employment, and material occupations, positions, officers or employment for the
past five years of each director and executive officer of Purchaser, other than
Messrs. Heyman, Buckstein and Rogers who are executive officers of Parent. The
business address of each such person is 1361 Alps Road, Wayne, New Jersey 07470,
and such person is a United States citizen.
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND FIVE-YEAR
NAME EMPLOYMENT HISTORY
- -------------------------------------- ---------------------------------------------------
<S> <C>
John M. Sergey........................ Mr. Sergey has been a director and Executive Vice
President of GAF and a director of GAF Building
Materials Corporation ("GAFBMC") since April 1989.
He was President of GAFBMC from April 1989 to May
1994 and has been Executive Vice President of
GAFBMC since May 1994. He has been a director,
Chief Executive Officer and President of BMCA and
Purchaser since their respective dates of
formation. From 1978 to 1989 he served in various
management positions with Avery Dennison
Corporation, a company engaged in the manufacture
and conversion of pressure sensitive adhesive prod-
ucts, including Group Vice President of the
Materials Group from 1987 to 1989 and Group Vice
President of the Soabar Group from 1984 to 1987.
Sunil Kumar........................... Mr. Kumar has been President-Commercial Roofing
Products Division of BMCA and Vice President of
BMCA since February 1995, and a director of BMCA
since May 1995, and has held the same positions
with the Purchaser since its formation. From 1992
to February 1995, he was Executive Vice President
of Bridgestone/Firestone Inc., a retail distributor
and manufacturer of tires and a provider of
automobile services. From
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
1982 to 1990, Mr. Kumar was President of Firestone
Building Products Company, and from 1990 to 1992 he
was Vice President of Bridgestone/Firestone.
Leonard S. Goodman.................... Mr. Goodman has been Vice President-Finance and
Chief Financial Officer of BMCA and the Purchaser
since their respective dates of formation and held
the position of Vice President-Finance with GAFBMC
from August 1989 to May 1994. He was a director of
GAFBMC from January 1991 to May 1994. From 1988 to
1989 he was Managing Director of Leonard S. Good-
man Associates, a financial management consulting
firm. From 1976 to 1988 he held senior financial
management positions at General Foods Corporation,
including Director of Financial Planning and
Analysis-U.S. Grocery Business, from 1985 to 1988.
Richard A. Weinberg................... Mr. Weinberg has been Vice President and General
Counsel of BMCA since September 1994 and of Pur-
chaser since its formation, was Vice President-Law
of BMCA from May 1994 to September 1994 and was
Vice President-Law of GAFBMC from April 1993 to May
1994. Mr. Weinberg was employed by Reliance Group
Holdings Inc., a diversified insurance holding
company, as Staff Counsel from October 1987 to
January 1990 and as Assistant Vice President and
Corporate Counsel from January 1990 to April 1993.
</TABLE>
C. DIRECTORS AND EXECUTIVE OFFICERS OF GAF
The following table sets forth the name, present principal occupation or
employment, and material occupations, positions, offices or employment for the
past five years of each director and executive officer of GAF, other than
Messrs. Heyman, Eckardt, Buckstein and Rogers who are also executive officers of
Parent and Mr. Sergey who is also an executive officer of Purchaser. The
business address of each such person is 1361 Alps Road, Wayne, New Jersey 07470,
and such person is a United States citizen.
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND FIVE-YEAR
NAME EMPLOYMENT HISTORY
- -------------------------------------- ---------------------------------------------------
<S> <C>
Ronnie F. Heyman...................... Mrs. Heyman is a director of GAF.
James J. Strupp....................... Mr. Strupp has been Senior Vice President-Human
Resources of GAF since August 1991 and of ISP since
May 1991. From 1987 to May 1991, he was Executive
Vice President and Partner of Bastion Industries.
Mr. Strupp was Vice President-Human Resources of
the Predecessor Company from 1984 to 1987.
</TABLE>
I-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of U.S. Intec, Inc. or his or its broker, dealer, commercial bank, trust company
or other nominee to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE><CAPTION>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
(for Eligible Institutions Only)
Tender and Exchange Department Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 FOR INFORMATION TELEPHONE: New York, New York 10286
(800) 507-9357
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below, and
will be furnished promptly at the expense of Purchaser. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
KISSEL-BLAKE INC.
110 Wall Street, 21st floor
New York, New York 10005
Call Toll-Free (800) 554-7733
Brokers and Banks, please call (212) 344-6733
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
U.S. INTEC, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED SEPTEMBER 21, 1995
BY
USI ACQUISITION COMPANY,
A WHOLLY OWNED SUBSIDIARY OF
G-I HOLDINGS INC.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
(for Eligible Institutions Only)
Tender and Exchange Department Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 FOR INFORMATION TELEPHONE: New York, New York 10286
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OR TELEX TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if
tenders of Shares are to be made by book-entry transfer to an account maintained
by The Bank of New York, as depositary (the "Depositary") at The Depository
Trust Company ("DTC"), Midwest Securities Trust Company ("MSTC") or Philadelphia
Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and
collectively the "Book-Entry Transfer Facilities"), pursuant to the procedures
set forth in Section 3 of the Offer to Purchase, dated September 21, 1995 (the
"Offer to Purchase"). Shareholders who tender Shares by book-entry transfer are
referred to herein as "Book-Entry Shareholders."
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary on or prior to
the Expiration Date, or who cannot complete the procedures for book-entry
transfer on a timely basis, must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. See
Instruction 2. Delivery of documents to a Book Entry Transfer Facility does not
constitute delivery to the Depositary.
NOTE: SIGNATURES MUST BE PROVIDED ON THE INSIDE AND REVERSE BACK COVER. PLEASE
READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING INFORMATION:
Name of Tendering Institution: _____________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: _________________ Transaction Code Number: _________________
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING
INFORMATION: (PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY).
Name(s) of Registered
Holder(s): _____________________________________________________________________
Window Ticket Number (if any): _________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ____________________________
Name of Institution which Guaranteed Delivery: _________________________________
<TABLE><CAPTION>
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) (PLEASE FILL IN, IF BLANK,
EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE AND SHARE(S) TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
<S> <C> <C> <C>
TOTAL NUMBER OF
SHARES
SHARE REPRESENTED BY
CERTIFICATE SHARE NUMBER OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
TOTAL SHARES
</TABLE>
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, it will be assumed that all Shares represented
by certificates delivered to the Depositary are being tendered. See
Instruction 4.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to USI Acquisition Company, a Texas
corporation ("Purchaser") and a wholly owned subsidiary of G-I Holdings Inc., a
Delaware corporation ("Parent"), the above described shares of common stock,
$.02 par value (the "Shares"), of U.S. Intec, Inc., a Texas corporation (the
"Company"), at a price of $9.05 per share net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase, receipt of which is hereby acknowledged, and in this Letter
of Transmittal (which, together with the Offer to Purchase, constitute the
"Offer").
The undersigned understands that Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of Purchaser's
subsidiaries or Affiliates (as such term is defined in Rule 12b-2 under the
Securities and Exchange Act of 1934, as amended), the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer or
prejudice the rights of tendering shareholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns, and transfers
to, or upon the order of, Purchaser all right, title and interest in and to all
of the Shares that are being tendered hereby and any cash dividend on the Shares
or other distributions on the Shares or issuance of any additional shares,
capital shares of any other class, other voting securities or any securities
convertible into, or rights, warrants or options, (conditional or otherwise), to
acquire, any of the foregoing, payable or distributable to shareholders of
record on a date after the date of the Offer to Purchase and prior to the
transfer to Purchaser of the Shares purchased pursuant to the Offer or to
Purchaser's nominee or transferee on the Company's share transfer records and
constitutes and irrevocably appoints the Depositary the true and lawful agent,
attorney-in-fact and proxy of the undersigned to the full extent of the
undersigned's rights with respect to such Shares with full power of substitution
(such power of attorney and proxy being deemed to be an irrevocable power
coupled with an interest), to (a) deliver Share Certificates or transfer
ownership of such Shares on the account books maintained by the Book-Entry
Transfer Facilities, together in either such case with all accompanying
evidences of transfer and authenticity, to or upon the order of Purchaser upon
receipt by the Depositary, as the undersigned's agent, of the purchase price,
(b) present such Shares for transfer on the books of the Company, and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares, all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints such persons as Purchaser shall
designate, and each of them, as the undersigned's attorneys-in-fact and proxies,
with full power of substitution, to the full extent of the undersigned's rights
with respect to the Shares tendered by the undersigned and accepted for payment
and paid for by Purchaser (and with respect to any and all other Shares and
other securities or rights issued or issuable in respect of such Shares on or
after the date of the Offer to Purchase). All such powers of attorney and
proxies shall be considered irrevocable and coupled with an interest in the
tendered Shares. Such appointment will be effective as, when and if Purchaser
pays for such Shares by depositing the purchase price therefor with the
Depositary. Upon such payment, all powers of attorney and proxies theretofore
provided by the undersigned with respect to such Shares and such other
securities or rights prior to such payment will be revoked, without further
action, and no subsequent powers of attorney or proxies may be provided by the
undersigned (and, if provided, will not be deemed effective). The designees of
Purchaser will, with respect to the Shares for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned as they in their sole discretion may deem proper at any annual or
special meeting of the Company's shareholders, or any adjournment or
postponement thereof. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon the payment for such
Shares, Purchaser or its designee must be able to exercise full voting and other
beneficial ownership rights with respect to such Shares and and other
securities, including voting at any meeting of shareholders, however called
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and that, when the same are accepted for payment by Purchaser, Purchaser
will acquire good, marketable and unencumbered title thereto, free and clear of
all liens, restrictions, charges and encumbrances, and the same will not be
subject to any adverse claim. The undersigned, upon request, will execute and
deliver any additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby. In addition, the undersigned shall promptly remit and
transfer to the Depositary for the account of Purchaser any and all other
distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer and, pending such remittance or
appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of any such distributions, and may withhold the entire
purchase price or deduct from the purchase price of Shares tendered hereby the
amount or value thereof, as determined by Purchaser in its sole discretion.
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any Share Certificates not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated. Shareholders
tendering Shares by book-entry transfer may request that any Shares not accepted
for payment be returned by crediting such account maintained at such Book-Entry
Transfer Facility as such shareholder may designate by making an appropriate
entry under "Special Payment Instructions." The undersigned recognizes that
Purchaser has no obligation pursuant to the "Special Payment Instructions" to
transfer any Shares from the name of the registered holder thereof if Purchaser
does not accept for payment any of such Shares.
<PAGE>
<TABLE><CAPTION>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7) (SEE INSTRUCTIONS 1, 5, 6, AND 7)
<S> <C>
To be completed ONLY if Share Certificates not To be completed ONLY if Share Certificates not
tendered or not purchased and/or the check for tendered or not purchased and/or the check for
the purchase price of Shares purchased are to the purchase price of Shares purchased are to be
be issued in the name of someone other than the sent to someone other than the undersigned, or to
undersigned, or if Shares tendered by book entry the undersigned at an address other than that
transfer which are not purchased are to be shown on the front cover.
returned by credit to an account maintained at a
Book-Entry Transfer Facility other than that
designated on the front cover. Mail check and/or certificates to:
Name
Isuue check and/or certificates to: -------------------------------------------
(Please Print)
Name Address
------------------------------------------- ----------------------------------------
(Please Print)
Address ------------------------------------------------
----------------------------------------
------------------------------------------------
- ------------------------------------------------ (Include Zip Code)
- ------------------------------------------------ ------------------------------------------------
(Include Zip Code) (Taxpayer Identification or Social Security No.)
- ------------------------------------------------
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9 on Back Cover)
/ / Credit unpurchased Shares tendered by book-
entry transfer to the Book-Entry Transfer
Facility account set forth below:
/ / DTC / / MSTC / / PDTC
- ------------------------------------------------
(Account Number)
</TABLE>
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
________________________________________________________________________________
________________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
DATED: _________________
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the necessary information.
See Instruction 5.)
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Tax Identification or Social Security No.:
_________________________________________
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Dated: _________________________________________________________________________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the Shares tendered herewith, unless such holder has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the inside front cover hereof or (ii)
if such Shares are tendered for the account of a firm that is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of the Securities Transfer Agent's Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange, Inc. Medallion
Signature Program (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, if tenders are to be made pursuant to the procedures for tender by
book-entry transfer set forth in Section 3 of the Offer to Purchase. Share
Certificates, or timely confirmation (a "Book-Entry Confirmation") of a book-
entry transfer of such Shares into the Depositary's account at a Book-Entry
Transfer Facility, as well as a Letter of Transmittal (or a facsimile hereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in the case of a book-entry delivery, and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth herein prior to the Expiration Date. Shareholders
whose Share Certificates are not immediately available or who cannot deliver
their Share Certificates and all other required documents to the Depositary
prior to the Expiration Date or who cannot complete the procedures for delivery
by book-entry transfer on a timely basis may tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by Purchaser, must
be received by the Depositary on or prior to the Expiration Date; and (iii) the
Share Certificates (or a Book-Entry Confirmation) representing all tendered
Shares, in proper form for transfer, together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry delivery, an Agent's
Message) and any other documents required by the Letter of Transmittal, must be
received by the Depositary within five American Stock Exchange, Inc. ("AMEX")
trading days after the date of execution of such Notice of Guaranteed Delivery
or as provided in Section 3 of the Offer to Purchase. If Share Certificates are
forwarded separately to the Depositary, a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal or facsimile hereof, waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS. (Not applicable to shareholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shares Tendered" as appropriate. In such case, new
certificate(s) for the remainder of the Shares that were evidenced by your old
certificate(s) will be sent to you, unless otherwise provided in the appropriate
box marked "Special Payment Instructions" and/or "Special Delivery Instructions"
on this Letter of Transmittal, as soon as practicable after the Expiration Date.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
Purchaser of their authority so to act must be submitted.
<PAGE>
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or purchased are to be issued in the name
of a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner(s) appear(s) on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder, or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder or such person) payable on account of
the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
Except as provided in this Instruction 6, it will not be necessary for
Transfer Tax Stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of and/or certificates for unpurchased Shares are to be returned to a
person other than the signer of this Letter of Transmittal, or if a check is to
be sent and/or such certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown on
the front cover hereof, the appropriate boxes on this Letter of Transmittal
should be completed. Shareholders tendering Shares by book-entry transfer may
request that Shares not purchased be credited to such account maintained at such
Book-Entry Transfer Facility as such shareholder may designate hereon. If no
such instructions are given, such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above. See
Instruction l.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to the Information Agent at its addresses set forth below. Requests
for additional copies of the Offer to Purchase and this Letter of Transmittal
may be directed to the Information Agent or to brokers, dealers, commercial
banks or trust companies.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a shareholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such shareholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
shareholder or other payee to a $50 penalty. In addition, payments that are made
to such shareholder or other payee with respect to Shares purchased pursuant to
the Offer may be subject to 31% backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-9, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-9 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the shareholder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary. The shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON
OR PRIOR TO THE EXPIRATION DATE.
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(SEE INSTRUCTION 9)
<PAGE>
<TABLE>
<S> <C>
PAYOR'S NAME: [NAME TO BE SUPPLIED]
PART 1--PLEASE PROVIDE YOUR TIN
IN THE BOX AT RIGHT AND CERTIFY
BY SIGNING AND SOCIAL SECURITY NUMBER OF
DATING BELOW. EMPLOYER ID NUMBER
SUBSTITUTE PART 2--Certificates--Under penalties of perjury, I certify that:
FORM W-9
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be issued
to me) and
(2) I am not subject to backup withholding because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
DEPARTMENT OF THE TREASURY dividends, or (c) the IRS has notified me that I am no longer
INTERNAL REVENUE SERVICE subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to
PAYER'S REQUEST FOR TAXPAYER backup withholding because of underreporting interest or dividends
IDENTIFICATION NUMBER ("TIN") on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another
notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2).
PART 3
SIGNATURE DATE AWAITING TIN / /
------------------- ----------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within sixty
(60) days.
Signature Date
------------------------------------------------ --------------
FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY
EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES
AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH SHAREHOLDER
OF THE COMPANY OR HIS BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH BELOW:
<PAGE>
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
(for Eligible Institutions Only)
Tender and Exchange Department Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 FOR INFORMATION TELEPHONE: New York, New York 10286
(800) 507-9357
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of the
Offer to Purchase, this Letter of Transmittal and other tender offer materials
may be obtained from the Information Agent as set forth below, and will be
furnished promptly at Purchaser's expense. You also may contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
KISSEL-BLAKE INC.
110 Wall Street, 21st Floor
New York, New York 10005
Call Toll-Free (800) 554-7733
Brokers and Banks, please call (212) 344-6733
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
U.S. INTEC, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
OCTOBER 19, 1995, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
shares of common stock, $.02 par value (the "Shares"), of U.S. Intec, Inc., a
Texas corporation (the "Company"), are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach The Bank of New York (the
"Depositary") on or prior to the Expiration Date (as defined in the Offer to
Purchase). This Notice of Guaranteed Delivery may be delivered by hand or sent
by facsimile transmission or mail to the Depositary. See Section 3 of the Offer
to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
(for Eligible Institutions
Only)
Tender and Exchange Department Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 FOR INFORMATION TELEPHONE: New York, New York 10286
(800) 507-9357
</TABLE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile or telex
transmission to a number other than as set forth above will not constitute a
valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes the form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to USI Acquisition Company, a Texas
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated September 21, 1995 (the "Offer to Purchase") and in the
related Letter of Transmittal, receipt of each of which is hereby acknowledged
(which together constitute the "Offer"), the number of Shares indicated below
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
-----------------------
----------------------------------------
Certificate No(s). (if available):
Address(es):
- ---------------------------------------- ----------------------------
- ---------------------------------------- ----------------------------------------
If Share(s) will be tendered by book- Area Code and Telephone Number(s):
entry transfer, check one box.
----------------------------------------
/ / The Depository Trust Company
/ / Midwest Securities Trust Company Signature(s):
/ / Philadelphia Depository Trust Company --------------------------
Account Number: ----------------------------------------
-------------------------
----------------------------------------
Date:
-----------------------------------
</TABLE>
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agent's Medallion Program, hereby (a) represents that the
tender of Shares effected hereby complies with Rule l4e-4 under the Securities
Exchange Act of 1934, as amended, and (b) guarantees to deliver to the
Depositary, at one of its addresses set forth above, the certificates
representing all tendered Shares, in proper form for transfer, or a Book-Entry
Confirmation (as defined in the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or an Agent's Message (as defined in the
Offer to Purchase) in the case of a book-entry delivery, and any other documents
required by the Letter of Transmittal within five New York Stock Exchange, Inc.
trading days after the date of execution of this Notice of Guaranteed Delivery.
<TABLE>
<S> <C>
Name of Firm:
-------------------------------------------
- ------------------------------------------- (AUTHORIZED SIGNATURE)
Address: Title:
---------------------------------- ------------------------------------
- ------------------------------------------- Name:
(ZIP CODE) ------------------------------------
(PLEASE TYPE OR PRINT)
Area Code and
Telephone Number: Date:
------------------------- ------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
U.S. INTEC, INC.
BY
USI ACQUISITION COMPANY,
A WHOLLY OWNED SUBSIDIARY OF
G-I HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
OCTOBER 19, 1995, UNLESS THE OFFER IS EXTENDED.
September 21, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
In connection with the offer to purchase by USI Acquisition Company, a Texas
corporation ("Purchaser") and a wholly owned subsidiary of G-I Holdings Inc., a
Delaware corporation ("Parent"), upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated September 21, 1995 (the "Offer to
Purchase") and in the related Letters of Transmittal (which, together with the
Offer to Purchase, constitute the "Offer") all outstanding shares of common
stock, $.02 par value (the "Shares"), of U.S. Intec, Inc., a Texas corporation
(the "Company"), at a price of $9.05 per Share, net to the seller in cash,
without interest thereon, please furnish copies of the enclosed materials to
those of your clients for whose accounts you hold Shares registered in your name
or in the name of your nominee.
The Offer is subject to terms contained in the Offer to Purchase. See
Section l of the Offer to Purchase.
The Board of Directors of the Company has unanimously approved the Merger
Agreement and the Offer, has determined that the Offer and the Merger are fair
to, and in the best interests of, the Company's shareholders and recommends that
the Company's shareholders accept the Offer.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated September 21, 1995.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients.
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if certificates for Shares are not immediately available or if such
certificates and all other required documents cannot be delivered to The
Bank of New York (the "Depositary") by the Expiration Date or if the
procedure for book-entry transfer cannot be completed by the Expiration
Date.
4. A printed form of the letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
<PAGE>
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
6. A return envelope addressed to the Depositary.
7. A letter to shareholders of the Company from Danny J. Adair,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to shareholders
of the Company.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, OCTOBER 19, 1995
UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal and any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery of
Shares, and any other required documents should be sent to the Depositary, and
either Share Certificates representing the tendered Shares should be delivered
to the Depositary, or such Shares should be tendered by book-entry transfer into
the Depositary's account maintained at one of the Book Entry Transfer Facilities
(as described in the Offer to Purchase), all in accordance with the instructions
set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Information Agent, as described in the Offer to
Purchase) for soliciting tenders of Shares pursuant to the Offer. Purchaser
will, however, upon request, reimburse you for customary clerical and mailing
expenses incurred by you in forwarding any of the enclosed materials to your
clients. Purchaser will pay or cause to be paid any stock transfer taxes payable
on the transfer of Shares to it, except as otherwise provided in Instruction 6
of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed material may be obtained from, the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover of the Offer to Purchase.
Very truly yours,
USI ACQUISITION COMPANY
1361 Alps Road
Wayne, New Jersey 07470
G-I HOLDINGS INC.
818 Washington Street
Wilmington, Delaware 19801
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, THE COMPANY, THE DEPOSITARY OR THE
INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
2
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
U.S. INTEC, INC.
AT
$9.05 NET PER SHARE
BY
USI ACQUISITION COMPANY
A WHOLLY OWNED SUBSIDIARY OF
G-I HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
OCTOBER 19, 1995, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is the Offer to Purchase, dated September
21, 1995 (the "Offer to Purchase") and the Letter of Transmittal (which,
together with the Offer to Purchase constitute the "Offer") relating to the
offer by USI Acquisition Company, a Texas corporation ("Purchaser") and a wholly
owned subsidiary of G-I Holdings Inc., a Delaware corporation ("Parent"), to
purchase all the outstanding shares of common stock, $.02 par value (the
"Shares"), of U.S. Intec, Inc., a Texas corporation (the "Company"), at a price
of $9.05 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase, and
the related Letter of Transmittal.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $9.05 per Share, net to you in cash without
interest thereon upon the terms and subject to the conditions set forth in
the Offer.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer
two-thirds of the outstanding Shares on a fully diluted basis. The Offer is
also subject to other terms contained in the Offer to Purchase. See the
Introduction and Sections 1, 14 and 15 of the Offer to Purchase.
<PAGE>
4. The Board of Directors of the Company has unanimously approved the
Merger Agreement, the Merger and the Offer, has determined that the Offer
and the Merger are fair to, and in the best interests of, the Company's
shareholders and recommends that the Company's shareholders accept the
Offer.
5. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer.
6. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, October 19, 1995, unless the Offer is extended.
7. Payment for Shares purchased pursuant to the Offer will in all cases
be made only after timely receipt by The Bank of New York (the "Depositary")
of Share Certificates or timely confirmation of the book-entry transfer of
such Shares into the account maintained by the Depositary at The Depository
Trust Company, Midwest Securities Trust Company or Philadelphia Depository
Trust Company (collectively, the "Book-Entry Transfer Facilities"), pursuant
to the procedures set forth in Section 3 of the Offer to Purchase, (b) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase), in connection with a book-entry delivery,
and (c) any other documents required by the Letter of Transmittal.
Accordingly, payment may not be made to all tendering shareholders at the
same time depending upon when certificates for or confirmations of
book-entry transfer of such Shares into the Depositary's account at a
Book-Entry Transfer Facility are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the next page of this letter. An envelope to return your
instructions to us is enclosed. Your instructions should be forwarded to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
U.S. INTEC, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated September 21, 1995 (the "Offer to Purchase"), and the
Letter of Transmittal (which documents together constitute the "Offer") in
connection with the offer by USI Acquisition Company, a Texas corporation
("Purchaser") and a wholly owned subsidiary of G-I Holdings Inc., a Delaware
corporation ("Parent"), to purchase all outstanding shares of common stock, $.02
par value (the "Shares"), of U.S. Intec, Inc., a Texas corporation.
This will instruct you to tender to Purchaser the number of Shares indicated
below (or if no number is indicated below, all Shares) which are held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Number of Shares to Be Tendered Shares
------------ ---------------------------
Date:
-------------------------------------
SIGN HERE
Signature(s)
-------------------------------------------------------------------
(Print Name(s))
--------------------------------------------------------------
(Print Address(es))
----------------------------------------------------------
(Area Code and Telephone Number(s))
------------------------------------------
(Taxpayer Identification or Social Security Number(s))
-----------------------
EXHIBIT (a)(6)
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number
to give the payer.
<TABLE>
<S> <C> <C> <C>
Give the Give the EMPLOYER
For this type of account: SOCIAL SECURITY For this type of account: IDENTIFICATION
number of-- number of--
1. An individual's The individual 8. Sole The owner(4)
account proprietorship
account
2. Two or more The actual owner of the 9. A valid trust, The legal entity (Do not
individuals account or, if combined estate or pension furnish the identifying
(joint account) funds, any one of the trust number of the personal
individuals(1) representative or trustee
unless the legal entity
itself is not designated
in the account title.(5)
3. Husband and wife The actual owner of
(joint account) the account or, if joint
funds, either person (1)
10. Corporate account The corporation
4. Custodian account The minor(2) 11. Religious, The organization
of a minor charitable, or
(Uniform Gift to educational
Minors Act) organization
account
5. Adult and minor The adult, or if the 12. Partnership The partnership
(joint account) minor is the only account held in
contributor, the minor(1) the name of the
business
6. Account in the The ward, minor, or 13. Association, The organization
name of guardian incompetent person(3) club, or other
or committee for tax-exempt
a designated organization
ward, minor, or
incompetent
person 14. A broker or registered The broker or
nominee nominee
7. a. The usual The grantor-trustee(1) 15. Account with the The public entity
revocable savings Department of
trust account Agriculture in
(grantor is also the name of a
trustee) public entity
(such as a state
b. So-called trust The actual owner(4) or local
account that is not government,
a legal or valid school district,
trust under State or prison) that
las receives
agricultural
program payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL
BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
Payees Exempt From Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A state, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of
1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include
the following:
- - Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
<PAGE>
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THIS SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTITUTE FROM W-9 WITH THE
PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE
OF THE FORM, AND RETURN IT TO THE PAYER, IF THE PAYMENTS ARE INTEREST,
DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice. Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a taxpayer identification number top a payer. Certain penalties may also
apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.
Falsifying certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
(4) Failure to Report Certain Dividend and Interest Payments. If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to
that failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
EXHIBIT (a)(7)
<PAGE>
GAF NEWS
GAF Corporation 1361 Alps Road, Wayne, NJ 07470 201-628-3000
FOR IMMEDIATE RELEASE CONTACT:
- ---------------------
Thursday, September 21, 1995 Leonard S. Goodman
Chief Financial Officer
Building Materials Corporation
of America
(201) 628-3712
GAF SUBSIDIARY COMMENCES CASH
TENDER OFFER FOR U.S. INTEC
Wayne, NJ, September 21, 1995 -- GAF Corporation today announced that, pursuant
to a merger agreement entered into on September 15, 1995, between U.S. Intec,
Inc. (AMEX: USI) and GAF's wholly owned subsidiaries, G-I Holdings Inc. and
USI Acquisition Company has commenced a cash tender offer to purchase all
outstanding common shares of U.S. Intec at a price of $9.05 net per share.
The offer, which is scheduled to expire on October 19, 1995 unless extended,
is subject to certain conditions, including, among others, that there be
validly tendered and not properly withdrawn at least 66 2/3% of U.S. Intec's
total outstanding common shares and the expiration of all applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
As previously reported, on September 14, 1995, G-I Holdings entered into an
agreement with the holders of approximately 60% of U.S. Intec's outstanding
shares, including Danny J. Adair, U.S. Intec's founder, President and Chief
Executive Officer. Mr. Adair and the other shareholders have agreed to tender
all of their share in the offer and, if such share are not purchased in the
tender offer, such shareholders have granted G-I Holdings the option to
acquire; their shares at the tender offer price.
According to filings made today by U.S. Intec with the Securities and Exchange
Commission, the Board of Directors of U.S. Intec unanimously has determiend
that the tender offer and ther merger, taken together, are fair to and in the
best interest of U.S. Intec and its shareholders and unanimously has
recommended that its shareholders accept the offer and tender all of their
share pursuant thereto.
*********
GAF Corporation, A Fortune 1000 Company, is a leading manufacturer of specialty
chemicals and building materials thorugh its two principal subsidiaries,
International Specialty Products Inc. and Building Materials Corporation of
America.
EXHIBIT (c)(1)
<PAGE>
AGREEMENT AND PLAN OF MERGER
BETWEEN
G-I HOLDINGS INC.
USI ACQUISITION COMPANY
AND
U.S. INTEC, INC.
Dated: September 15, 1995
<PAGE>
Table of Contents
Section Page
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ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE OFFER . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Offer. . . . . . . . . . . . . . . . . . . 2
1.2 Offer Documents. . . . . . . . . . . . . . . . 3
1.3 Company Actions. . . . . . . . . . . . . . . . 3
1.4 Directors. . . . . . . . . . . . . . . . . . . 5
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . 6
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 The Merger. . . . . . . . . . . . . . . . . . 6
2.2 Closing. . . . . . . . . . . . . . . . . . . . 6
2.3 Effective Time of the Merger. . . . . . . . . 6
2.4 Effects of the Merger. . . . . . . . . . . . . 6
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . 7
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . 7
3.1 Effect on Capital Stock. . . . . . . . . . . . 7
3.2 Conversion of Securities. . . . . . . . . . . 8
3.3 Payment for Shares. . . . . . . . . . . . . . 8
3.4 Stock Transfer Books. . . . . . . . . . . . . 10
3.5 Stock Options. . . . . . . . . . . . . . . . . 10
3.6 Dissenting Shares. . . . . . . . . . . . . . . 11
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . 12
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 12
4.1 Representations and Warranties of the
Company. . . . . . . . . . . . . . . . . . . . 12
(a) Organization, Standing and Power. . . . . 12
(b) Capital Structure. . . . . . . . . . . . 12
(c) Authority; No Violations; Consents and
Approvals. . . . . . . . . . . . . . . . 13
(d) SEC Documents. . . . . . . . . . . . . . 15
(e) Information Supplied. . . . . . . . . . . 16
(f) Compliance with Applicable Laws. . . . . 16
(g) Litigation. . . . . . . . . . . . . . . . 16
(h) Taxes. . . . . . . . . . . . . . . . . . 17
(i) Pension And Benefit Plans; ERISA. . . . . 18
(j) No Material Change. . . . . . . . . . . . 20
(k) Opinion of Financial Advisor. . . . . . . 21
(l) Vote Required. . . . . . . . . . . . . . 21
. . . . . . . . . . . . . . . . . . . . . . . 21
(m) Intangible Property. . . . . . . . . . . 21
(n) Environmental Matters. . . . . . . . . . 22
. . . . . . . . . . . . . . . . . . . . . . . 24
(o) Material Contracts. . . . . . . . . . . . 24
(p) Related Party Transactions. . . . . . . . 27
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(q) Liens, etc. . . . . . . . . . . . . . . . 27
(r) Finder's Fees. . . . . . . . . . . . . . 27
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . 28
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 28
5.1 Representations and Warranties of Parent and
Sub. . . . . . . . . . . . . . . . . . . . . . 28
(a) Organization, Standing and Power. . 28
(b) Authority; No Violations; Consents
and Approvals. . . . . . . . . . . . . . 28
(c) Information Supplied. . . . . . . . . . . 29
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . 30
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . 30
6.1 Covenants of the Company. . . . . . . . . . . 30
(a) Ordinary Course. . . . . . . . . . . . . 30
(b) No Solicitation. . . . . . . . . . . . . 30
(c) Advice of Changes; SEC Filings. . . . . . 31
(d) Other Actions. . . . . . . . . . . . . . 31
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . 32
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . 32
7.1 Preparation of the Proxy Statement; Offer
Documents; Company Stockholders Meeting;
Merger without a Company Stockholders
Meeting. . . . . . . . . . . . . . . . . . . . 32
7.2 Access to Information. . . . . . . . . . . . . 33
7.3 Current Information. . . . . . . . . . . . . . 33
7.4 Legal Conditions to Merger. . . . . . . . . . 34
7.5 Fees and Expenses. . . . . . . . . . . . . . . 34
7.6 Indemnification. . . . . . . . . . . . . . . 34
7.7 Publicity. . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . 36
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 36
8.1 Conditions to Each Party's Obligation to
Effect the Merger. . . . . . . . . . . . . . . 36
(a) Stockholder Approval. . . . . . . . . . . 36
(b) HSR Act. . . . . . . . . . . . . . . . . 36
(c) No Injunctions or Restraints. . . . . . . 36
8.2 Conditions of Obligations of Parent and Sub. . 37
(a) Payment for Shares. . . . . . . . . . . . 37
(b) Representations and Warranties. . . . . . 37
(c) Performance of Obligations of the
Company. . . . . . . . . . . . . . . . . 37
(d) Consents, etc. . . . . . . . . . . . . . 37
8.3 Conditions of Obligations of the Company. . . 37
(a) Representations and Warranties. . . . . . 37
(b) Performance of Obligations of Parent and
Sub. . . . . . . . . . . . . . . . . . . 38
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . 38
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . 38
9.1 Termination. . . . . . . . . . . . . . . . . . 38
<PAGE>
9.2 Effect of Termination. . . . . . . . . . . . . 39
9.3 Amendment. . . . . . . . . . . . . . . . . . . 39
9.4 Extension; Waiver. . . . . . . . . . . . . . . 40
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . 40
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 40
10.1 Nonsurvival of Representations, Warranties
and Agreements. . . . . . . . . . . . . . . . 40
10.2 Notices. . . . . . . . . . . . . . . . . . . . 40
10.3 Interpretation. . . . . . . . . . . . . . . . 41
10.4 Counterparts. . . . . . . . . . . . . . . . . 41
10.5 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership. . . . . . 41
10.6 Governing Law. . . . . . . . . . . . . . . . . 42
10.7 No Remedy in Certain Circumstances. . . . . . 42
10.8 Assignment. . . . . . . . . . . . . . . . . . 43
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated September 15, 1995,
(the "Agreement"), among G-I HOLDINGS INC., a Delaware
corporation ("Parent"), USI ACQUISITION COMPANY, a Texas
corporation and a direct wholly-owned subsidiary of Parent
("Sub"), and U.S. INTEC, INC., a Texas corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent,
Sub and the Company have unanimously approved the acquisition of
the Company by Parent, by means of the merger of the Sub with and
into Company, upon the terms and subject to the conditions set
forth in the Agreement;
WHEREAS, to effectuate the acquisition, Parent and the
Company each desire that Parent cause Sub to commence a cash
tender offer to purchase all of the outstanding shares of common
stock, par value $.02 per share, of the Company (the "Shares" or
the "Company Common Stock"), upon the terms and subject to the
conditions set forth in this Agreement and the Offer Documents
(as defined in Section 1.2), and the Board of Directors of the
Company has unanimously approved such tender offer and is
recommending to its stockholders that they accept the tender
offer and tender their shares of Company Common Stock pursuant
thereto;
WHEREAS, Parent and Sub are willing to enter into this
Agreement (and effect the transactions contemplated hereby) based
in part on the prior execution and delivery by certain beneficial
and record holders of the Company Common Stock of agreements
(collectively, the "Stockholders Agreement") providing for
certain matters with respect to their Shares, the granting of
options with respect to their Shares, the tender of their Shares
and certain other actions relating to the Offer (as defined in
Section 1.1) and the other transactions contemplated by this
Agreement and, in order to induce Parent and Sub to enter into
this Agreement, such stockholders have executed and delivered the
Stockholders Agreement; and
WHEREAS, Parent, Sub and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the Offer and the Merger and also to prescribe
various conditions to consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and
the mutual premises, representations, warranties, covenants and
agreements herein contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
<PAGE>
ARTICLE I
THE OFFER
1.1 The Offer. (a) Provided that none of the events set
forth in Exhibit A hereto shall have occurred and be continuing,
as promptly as practicable (but in any event not later than five
business days after the public announcement of the execution and
delivery of this Agreement; provided that such announcement
occurs within one business day of such execution and delivery),
Parent shall cause Sub to commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), an offer to purchase (the "Offer") all
outstanding shares of the Company Common Stock at a price of
$9.05 per share, net (subject to any applicable withholding tax)
to the seller in cash (the "Offer Consideration"). The
obligation of Parent and Sub to commence the Offer, consummate
the Offer, accept for payment and to pay for shares of Company
Common Stock validly tendered in the Offer and not withdrawn
shall be subject only to those conditions set forth in Exhibit A
hereto.
(b) Without the prior written consent of the
Company, Sub shall not (and Parent shall not cause Sub to) (i)
decrease the Offer Consideration or modify the form of
consideration therefor or decrease the number of Shares sought
pursuant to the Offer, (ii) change the conditions to the Offer,
(iii) impose additional conditions to the Offer, (iv) extend the
expiration date of the Offer except as required by law and except
that Sub may extend the expiration date of the Offer for up to
(x) 180 calendar days from the date of commencement in order to
comply with the requirements of the HSR Act (as defined in
Section 4.1(c)(iii), and (y) 90 calendar days from the date of
commencement with respect to any other condition set forth on
Exhibit A in the event that any condition to the Offer is not
satisfied, or (v) amend any term of the Offer in any manner
materially adverse to holders of shares of Company Common Stock;
provided, however, that, except as set forth above, Sub may waive
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any other condition to the Offer in its sole discretion; and
provided further, that the Offer may be extended in connection
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with an increase in the consideration to be paid pursuant to the
Offer so as to comply with applicable rules and regulations of
the United States Securities and Exchange Commission (the "SEC").
Assuming the prior satisfaction or waiver of the conditions to
the Offer, Sub shall accept for payment, and pay for, in
accordance with the terms of the Offer, all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the
Offer as soon as legally permitted after the commencement
thereof.
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1.2 Offer Documents. As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file or cause to
be filed with the SEC a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1") with respect to the Offer which shall
contain the offer to purchase and related letter of transmittal
and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements
or amendments thereto, the "Offer Documents") and shall contain
(or shall be amended in a timely manner to contain) all
information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law, and shall conform in all
material respects with the requirements of the Exchange Act and
any other applicable law; provided, however, that no agreement or
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representation hereby is made or shall be made by Parent or Sub
with respect to information supplied by the Company in writing
expressly for inclusion in, or with respect to Company
information derived from the Company's public SEC filings which
is incorporated by reference in, the Offer Documents. Parent,
Sub and the Company each agree promptly to correct any
information provided by them for use in the Offer Documents if
and to the extent that it shall have become false or misleading
in any material respect and Parent and Sub further agrees to take
-
all lawful action necessary to cause the Offer Documents as so
corrected to be filed promptly with the SEC and to be
disseminated to holders of Company Common Stock, in each case as
and to the extent required by applicable law. In conducting the
Offer, Parent and Sub shall comply in all material respects with
the provisions of the Exchange Act and any other applicable law.
The Company and its counsel shall be given the opportunity to
review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC.
1.3 Company Actions. The Company hereby consents to
the Offer and represents that (a) its Board of Directors (at a
meeting duly called and held) has (i) unanimously determined that
each of this Agreement, the Offer and the Merger, taken together,
are fair to and in the best interests of the stockholders of the
Company, (ii) approved this Agreement, and the transactions
contemplated hereby including the Offer and the Merger, and (iii)
after considering its fiduciary duties under applicable law upon
the advice of counsel, resolved to recommend acceptance of the
Offer, approval and adoption of this Agreement and approval of
the Merger by the holders of Company Common Stock, and (b) First
Southwest Company ("First Southwest") has delivered to the Board
of Directors of the Company its written opinion that the Offer
Consideration to be received by the holders of Company Common
Stock in the Offer and the Merger, taken together, is fair, from
a financial point of view, to such holders, subject to the
assumptions and qualifications contained in such opinion. The
Board of Directors of the Company shall not withdraw or modify
its approval or recommendation of the Offer, this Agreement, or
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<PAGE>
the Merger unless the Board of Directors of the Company shall
conclude in good faith, based upon advice of counsel, that such
action is required under applicable law for the discharge of such
Board's fiduciary duties. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation referred
to in this Section 1.3. The Company hereby agrees to file with
the SEC simultaneously with the filing by Parent and Sub of the
Schedule 14D-1, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing such recommendations of
the Board of Directors of the Company in favor of the Offer and
the Merger and otherwise complying with Rule 14d-9 under the
Exchange Act. The Schedule 14D-9 shall comply in all material
respects with the Exchange Act and any other applicable law and
shall contain (or shall be amended in a timely manner to contain)
all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law. The Company, Parent and
Sub each agree promptly to correct any information provided by
them for use in the Schedule 14D-9 if and to the extent that it
shall have become false or misleading in any material respect and
the Company further agrees to take all lawful action necessary to
cause the Schedule 14D-9 as so corrected to be filed promptly
with the SEC and disseminated to the holders of Company Common
Stock, in each case as and to the extent required by applicable
law. Parent, Sub and their counsel shall be given an opportunity
to review the Schedule 14D-9 and any amendments thereto prior to
the filing thereof with the SEC. In connection with the Offer,
the Company shall promptly furnish Parent with mailing labels,
security position listings and all available listings or computer
files containing the names and addresses of the record holders of
the Company Common Stock as of the latest practicable date and
shall furnish Parent with such information and assistance
(including updated lists of stockholders, mailing labels and
lists of security positions) as Parent or its agents may
reasonably request in communicating the Offer to the record and
beneficial holders of Company Common Stock. Subject to the
requirements of applicable law, and except for such actions as
are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger,
Parent and Sub and each of their affiliates, associates,
partners, employees, agents and advisors shall hold in confidence
the information contained in such labels and lists, shall use
such information only in connection with the Offer and the
Merger, and, if this Agreement is terminated, in accordance with
its terms, shall deliver promptly to the Company all copies of
such information then in their possession. The Company has been
advised or reasonably believes that each of its directors and
executive officers and the stockholders whose identities are
listed on Schedule 1.3 hereto intend to tender pursuant to the
Offer all shares of the Company Common Stock owned of record and
beneficially by him or it and which he or it may sell without
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liability pursuant to Section 16(b) of the Exchange Act.
1.4 Directors. (a) Promptly upon the purchase by
Parent or any of its subsidiaries of such number of shares of
Company Common Stock which represents at least two-thirds of the
outstanding shares of Company Common Stock (on a fully diluted
basis), and from time to time thereafter, Parent shall be
entitled to designate such number of directors, rounded up to the
next whole number as will give Parent, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of
Directors of the Company equal to the product of (x) the number
of directors on the Board of Directors of the Company (giving
effect to any increase in the number of directors pursuant to
this Section 1.4) and (y) the percentage that such number of
Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and the
Company shall, upon request by Parent, promptly satisfy the Board
Percentage by (i) increasing the size of the Board of Directors
of the Company or (ii) accepting resignations of such number of
directors as is necessary to enable Parent's designees to be
elected to the Board of Directors of the Company and shall cause
Parent's designees promptly to be so elected; provided that
simultaneously with the execution of this Agreement, Company
shall have secured written resignations of the directors of the
Board, with such resignations conditioned on the Company's
accepting such resignations as and when required to effectuate
the terms of this Section 1.4. At the request of Parent, the
Company shall take, at the Company's expense, all lawful action
necessary to effect any such election, including, without
limitation, mailing to its stockholders the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, unless such information has previously been provided
to the Company's stockholders in the Schedule 14D-9. Parent and
Sub will supply to the Company any information with respect to
either of them and their nominees, officers, directors and
affiliates required by Section 14(f) of the Exchange Act and Rule
14f-1 of the Exchange Act.
(b) Following the election or appointment of Parent's
designees pursuant to this Section 1.4 and prior to the Effective
Time of the Merger, any amendment or termination of this
Agreement, extension for the performance or waiver of the
obligations or other acts of Parent or Sub or waiver of the
Company's rights thereunder, shall require the concurrence of a
majority of directors of the Company then in office who are
directors on the date hereof and who voted to approve this
Agreement, provided any such director remains in office.
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ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with
the Texas Business Corporation Act ("TBCA"), the Sub shall be
merged with and into the Company at the Effective Time. At the
Effective Time, the separate corporate existence of the Sub shall
cease, and the Company shall continue as the surviving
corporation and a direct wholly owned subsidiary of Parent (Sub
and the Company are sometimes hereinafter referred to as
"Constituent Corporations" and, as the context requires, the
Company is sometimes hereinafter referred to as the "Surviving
Corporation").
2.2 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have
been abandoned pursuant to Section 9.1, and subject to the
satisfaction or waiver of the conditions set forth in Article
VIII, the closing of the Merger (the "Closing") shall take place
at 10:00 a.m., New York time, on the second business day after
satisfaction of the conditions set forth in Section 8.1 (or as
soon as practicable thereafter following satisfaction or waiver
of the conditions set forth in Sections 8.2 and 8.3) (the
"Closing Date"), at the offices of Weil, Gotshal & Manges, 767
Fifth Avenue, New York, New York 10153, unless another date, time
or place is agreed to in writing by the parties hereto.
2.3 Effective Time of the Merger. Subject to the
provisions of this Agreement, the parties hereto shall cause the
Merger to be consummated by filing a articles of merger (the
"Articles of Merger") with the Secretary of State of the State of
Texas, as provided in the TBCA, as soon as practicable on or
after the Closing Date. The Merger shall become effective upon
such filing of the Articles of Merger and the issuance by the
Secretary of State of the State of Texas of the Certificate of
Merger (the "Effective Time").
2.4 Effects of the Merger. (a) The Merger shall have
the effects as set forth in the applicable provisions of the
TBCA.
(b) The directors of Sub and the officers of the
Company immediately prior to the Effective Time shall, from and
after the Effective Time, be the initial officers and directors,
respectively, of the Surviving Corporation until their successors
have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal in accordance with the
Surviving Corporation's Articles of Incorporation and Bylaws.
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(c) The Articles of Incorporation of the Company
immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the TBCA.
(d) The Bylaws of the Company as in effect
immediately prior to the Effective Time shall be the Bylaws of
the Surviving Corporation until thereafter amended as provided by
applicable law, the Articles of Incorporation or the Bylaws.
(e) The Merger shall have the effect on the
Constituent Corporations set forth in Article 5.06 of the TBCA.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the
holder of any shares of Company Common Stock or the holder of any
capital stock of Sub:
(a) Capital Stock of Sub. Each share of the
capital stock of Sub issued and outstanding immediately prior to
the Effective Time shall be converted into common stock, par
value $.02 per share, of the Company.
(b) Cancellation of Treasury Stock and Parent-
Owned Stock. Each share of Company Common Stock and all other
shares of capital stock of the Company that are owned by the
Company and all shares of Company Common Stock and other shares
of capital stock of the Company owned by Parent, Sub or any other
wholly-owned Subsidiary (as defined below) of Parent or the
Company shall be canceled and retired and shall cease to exist
and no consideration shall be delivered or deliverable in
exchange therefor. As used in this Agreement, the word
"Subsidiary", with respect to any party, means any corporation,
partnership, joint venture or other organization, whether
incorporated or unincorporated, of which: (i) such party or any
other Subsidiary of such party is a general partner; (ii) voting
power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation,
partnership, joint venture or other organization is held by such
party or by any one or more of its Subsidiaries, or by such party
and any one or more of its Subsidiaries; or (iii) at least 40% of
the equity, other securities or other interests is, directly or
indirectly, owned or controlled by such party or by any one or
more of its Subsidiaries, or by such party and any one or more of
its Subsidiaries.
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3.2 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of
Sub, the Company or the holders of any of the shares thereof:
(a) (i) Subject to the other provisions of this
Section 3.2 and Section 3.1, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time
excluding Dissenting Shares (as defined in Section 3.6) shall be
converted into the right to receive amount in cash, without
interest, equal to the highest price offered for each share of
Company Common Stock pursuant to the Offer, less any required
withholding taxes (the "Merger Consideration"), upon surrender
and exchange of the Certificates (as defined in Section 3.3(b)).
(ii) All such shares of Company Common Stock,
when converted as provided in Section 3.2(a)(i), no longer shall
be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each Certificate previously
evidencing Shares shall thereafter represent only the right to
receive the Merger Consideration. The holders of Certificates
previously evidencing Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to the
Company Common Stock except as otherwise provided herein or by
law and, upon the surrender of Certificates in accordance with
the provisions of Section 3.3, shall only represent the right to
receive for their Shares, the Merger Consideration, without any
interest thereon.
3.3 Payment for Shares. (a) Paying Agent. Prior to the
Effective Time, Sub shall appoint The Bank of New York (or if The
Bank of New York is unwilling or unable to act or to act upon
commercially reasonable terms, any other United States bank or
trust company mutually acceptable to the Company and Parent) to
act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Parent shall deposit or shall cause to
be deposited with the Paying Agent in a separate fund established
for the benefit of the holders of shares of Company Common Stock,
for payment in accordance with this Article III, through the
Paying Agent (the "Payment Fund"), immediately available funds in
amounts necessary to make the payments pursuant to Section
3.2(a)(i) and this Section 3.3 to holders, as and when requested
in writing by the Paying Agent in respect of shares of Common
stock received by the Paying Agent. The Paying Agent shall,
pursuant to irrevocable instructions, pay the Merger
Consideration out of the Payment Fund.
From time to time at or after the Effective Time,
Parent shall take all lawful action necessary to make the
appropriate cash payments, if any, to holders of Dissenting
Shares.
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(b) Payment Procedures. As soon as reasonably
practicable after the Effective Time, Parent shall instruct the
Paying Agent to mail to each holder of record (other than the
Company or any Subsidiary of the Company or Parent, Sub or any
other Subsidiary of Parent) of a Certificate or Certificates
which, immediately prior to the Effective Time, evidenced
outstanding shares of Company Common Stock (the "Certificates"),
(i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent, and shall be in such form and
have such other provisions as Parent reasonably may specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment therefor. Upon surrender of
a Certificate for cancellation to the Paying Agent together with
such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in respect thereof cash in an amount equal to the product
of (x) the number of shares of Company Common Stock represented
by such Certificate and (y) the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled.
Absolutely no interest shall be paid or accrued on the Merger
Consideration payable upon the surrender of any Certificate. If
payment is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be
promptly endorsed or otherwise in proper form for transfer and
that the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a person other
than the registered holder of the surrendered Certificate or
established to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered
in accordance with the provisions of this Section 3.3(b), each
Certificate (other than Certificates representing Shares owned by
Parent or any subsidiary of Parent or held in the treasury of the
Company) shall represent for all purposes only the right to
receive the Merger Consideration.
(c) Termination of Payment Fund; Interest. Subject to
any applicable abandoned property, escheat or similar law, any
portion of the Payment Fund which remains undistributed to the
holders of Company Common Stock for six months after the
Effective Time shall be delivered to Parent, upon demand, and any
holders of Company Common Stock who have not theretofore complied
with this Article III and the instructions set forth in the
letter of transmittal mailed to such holder after the Effective
Time shall thereafter look only to Parent for payment of the
Merger Consideration to which they are entitled. All interest
accrued in respect of the Payment Fund shall inure to the benefit
of and be paid to Parent.
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(d) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company
Common Stock for any cash from the Payment Fund delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law.
(e) Withholding Rights. Parent shall be entitled to
deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as Parent is required to deduct and
withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to
the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by Parent.
3.4 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be
no further registration of transfers of shares of Company Common
Stock thereafter on the records of the Company. On or after the
Effective Time, any certificates presented to the Paying Agent or
Parent for any reason shall be converted into the Merger
Consideration.
3.5 Stock Options. At the Effective Time, each holder of a
then outstanding option to purchase Shares under the Company's
1985 Stock Option Plan and 1994 Long Term Incentive Plan (collec-
tively, the "Stock Option Plan"), whether or not then exercisable
(the "Option"), shall, in settlement thereof, represent the right
to receive for each Share subject to such Option an amount
(subject to any applicable withholding tax) in cash equal to the
difference between the Offer Consideration and the per Share
exercise price of such Option to the extent such difference is a
positive number (such amount being hereinafter referred to as,
the "Option Consideration"); provided, however, that with respect
-------- -------
to any person subject to Section 16(a) of the Exchange Act, any
such amount shall, at the written request of such Person, be paid
as soon as practicable after the first date payment can be made
without liability to such person under Section 16(b) of the
Exchange Act. Upon receipt of the Option Consideration, the
Option shall be canceled. The surrender of an Option to the
Company in exchange for the Option Consideration shall be deemed
a release of any and all rights the holder had or may have had in
respect of such Option. Prior to the Effective Time, the Company
shall use its commercially reasonable best efforts to obtain all
necessary consents or releases from holders of Options under the
Stock Option Plans and take all such other lawful action as may
be necessary to give effect to the transactions contemplated by
this Section 3.5 (except for such action that may require the
approval of the Company's stockholders). Except as otherwise
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agreed to by the parties, (i) all Stock Option Plans shall
terminate as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of
the Company any Subsidiary thereof, shall be canceled as of the
Effective Time, and (ii) the Company shall take all action
necessary to ensure that following the Effective Time no
participant in any Stock Option Plan or other plans, programs or
arrangements shall have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation or any
Subsidiary thereof and to terminate all such plans.
3.6 Dissenting Shares. Notwithstanding any other
provisions of this Agreement to the contrary, shares of Company
Common Stock that are outstanding immediately prior to the
Effective Time and which are held by stockholders who shall have
not voted in favor of the Merger or consented thereto in writing
and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 5.12 of the TBCA
(collectively, the "Dissenting Shares") shall not be converted
into or represent the right to receive the Merger Consideration.
Such stockholders instead shall be entitled to receive payment of
the appraised value of such shares of Company Common Stock held
by them in accordance with the provisions of such Section 5.12,
except that all Dissenting Shares held by stockholders who shall
have failed to perfect or who effectively shall have withdrawn or
lost their rights to appraisal of such shares of Company Common
Stock under such Section 5.12 shall thereupon be deemed to have
been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest
thereon, the Merger Consideration upon surrender in the manner
provided in Section 3.3, of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such shares of
Company Common Stock.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the
Company and its Subsidiaries, which is a corporation, is duly
organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation, and the Company
and its Subsidiaries has all requisite power and authority to
own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in
good standing to conduct business in each jurisdiction in which
the business it is conducting, or the operation, ownership or
leasing of its properties, makes such qualification necessary,
other than in such jurisdictions where such failure to qualify
could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (as defined below)
with respect to the Company. The Company has heretofore made
available to Parent complete and correct copies of its and its
corporate Subsidiaries' respective Articles of Incorporation and
Bylaws and Minutes of their respective Board of Directors'
meeting held since January 1, 1992. All Subsidiaries of the
Company and their respective jurisdictions of incorporation or
organization are identified on Schedule 4.1(a). As used in this
Agreement, a "Material Adverse Effect" shall mean, with respect
to any party, the result of one or more events, changes or
effects which would have a material adverse effect on the
business, operations, net assets, condition (financial or
otherwise) or prospects of such party and its Subsidiaries, taken
as a whole.
(b) Capital Structure. As of August 31, 1995, the
authorized capital stock of the Company consists of 10,000,000
Shares and 1,000,000 shares of Preferred Stock, $1.00 par value
("Preferred Stock"). As of the date hereof: (i) 3,040,911 Shares
and no shares of Preferred Stock are issued and outstanding,
450,000 Shares are reserved for issuance pursuant to the Stock
Option Plan under which options to acquire 158,250 shares of
Company Common Stock are outstanding, and, except for the
issuance of Shares pursuant to the exercise of the Options, there
are no employment, executive termination or similar agreements
providing for the issuance of Shares; (ii) no Shares were held by
the Company; (iii) no bonds, debentures, notes or other
instruments or evidence of indebtedness having the right to vote,
whether or not upon an event of default or otherwise, (or
convertible into, or exercisable or exchangeable for, securities
having the right to vote) on any matters on which the Company
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stockholders may vote ("Company Voting Debt") were issued or
outstanding; and (iv) neither the Company nor any of its
corporate Subsidiaries is obligated to issue any of the foregoing
securities other than upon exercise of outstanding Options
disclosed pursuant to this Section 4.1(b). All outstanding
Shares are validly issued, fully paid and nonassessable and are
not subject to preemptive or other similar rights. Except as set
forth on Schedule 4.1(b), all outstanding shares of capital stock
or partnership interests of the Subsidiaries of the Company are
owned by the Company or a direct or indirect Subsidiary of the
Company, free and clear of all liens, charges, encumbrances,
claims and options of any nature, and except as set forth on
Schedule 4.1(b), neither the Company nor any Subsidiary holds any
equity interest, including, without limitation, a partnership
interest, in any entity. Except as set forth in this Section
4.1(b) and except for changes since August 31, 1995 resulting
from the exercise of employee stock options granted pursuant to
the Stock Option Plans, there are outstanding: (i) no shares of
capital stock, Company Voting Debt or other voting securities of
the Company; (ii) no securities of the Company or any Subsidiary
of the Company convertible into, or exchangeable or exercisable
for, shares of capital stock, Company Voting Debt or other voting
securities of the Company or any Subsidiary of the Company; and
(iii) no options, warrants, calls, rights (including preemptive
rights), commitments or agreements to which the Company or any
Subsidiary of the Company is a party or by which it is bound, in
any case obligating the Company or any Subsidiary of the Company
to issue, deliver, sell, purchase, redeem or acquire, or cause to
be issued, delivered, sold, purchased, redeemed or acquired,
additional shares of capital stock or any Company Voting Debt or
other voting securities of the Company or of any Subsidiary of
the Company, or obligating the Company or any Subsidiary of the
Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. Since August 31, 1995, the
Company has not amended or repriced any Option or Stock Option
Plans and set forth on Schedule 4.1(b) is a list of all
outstanding options, warrants and rights to purchase shares of
Company Common Stock and the exercise prices relating thereto,
showing all changes to such information since August 31, 1995.
There are not as of the date hereof and there will not be at the
Effective Time any stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or
by which it is bound relating to the voting of any shares of the
capital stock of the Company which will limit in any way the
solicitation of proxies by or on behalf of the Company from, or
the casting of votes by, the stockholders of the Company with
respect to the Merger. There are no restrictions on the Company
to vote the stock of any of its Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
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(i) The Company has all requisite corporate power
and authority to enter into this Agreement and, subject, if
required with respect to consummation of the Merger, to the
Company Stockholder Approval (as defined in Section 4.1(c)(iii)),
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Company,
subject, if required with respect to consummation of the Merger,
to the Company Stockholder Approval. This Agreement has been
duly executed and delivered by the Company and, subject, if
required with respect to consummation of the Merger, to the
Company Stockholder Approval under the TBCA, constitutes a valid
and binding obligation of the Company enforceable in accordance
with its terms.
(ii) The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by
the Company will not conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation, benefit, right or payment or the
loss of a material benefit under, or the creation of a lien,
pledge, security interest or other encumbrance ("Liens")on assets
or property, or right of first refusal with respect to any asset
or property (any such conflict, violation, default, right of
termination, cancellation or acceleration of any obligation,
benefit, right or payment, loss, creation or right of first
refusal, a "Violation") pursuant to, any provision of the
Certificate of Incorporation or Bylaws of the Company or any of
its Subsidiaries or, except as to which requisite waivers or
consents have been obtained and, except as set forth on Schedule
4.1(c)(ii) hereto and assuming the consents, approvals,
authorizations or permits and filings or notifications referred
to in paragraph (iii) of this Section 4.1(c) are duly and timely
obtained or made and, if required, the Company Stockholder
Approval has been obtained, result in any Violation of any loan
or credit agreement, note, mortgage, indenture, lease, or other
agreement, obligation, instrument, Company Permit (as defined in
Section 4.1(f)), concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or their respective
properties or assets (collectively, "Laws"), which could
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect with respect to the Company.
(iii) No consent, approval, order or
authorization of, or registration, declaration or filing with,
notice to, or permit from any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign (a "Governmental Entity"), is required by or
with respect to the Company or any of its Subsidiaries in
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<PAGE>
connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the
transactions contemplated hereby, which if not obtained or made
could reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect with respect to the Company,
except for: (A) the filing of a premerger notification and
report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the
expiration or termination of the applicable waiting period
thereunder; (B) the filing with the SEC of (x), if required by
applicable law, a proxy or information statement in definitive
form relating to a meeting of the holders of Company Common Stock
to approve the Merger under the TBCA ("Company Stockholder
Approval") (such proxy statement as amended or supplemented from
time to time being hereinafter referred to as the "Proxy
Statement"), (y) the Schedule 14D-9 in connection with the Offer,
and (z) such reports under and such other compliance with the
Exchange Act and the rules and regulations thereunder, as may be
required in connection with this Agreement and the transactions
contemplated hereby; (C) the filing of the Articles of Merger
with the Secretary of State of the State of Texas ; (D) such
filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws; and (E) such filings and
approvals as may be required by any foreign pre-merger
notification, securities, or corporate law, rule or regulation.
(d) SEC Documents. The Company has made available to
Parent a true and complete copy of each material report,
schedule, registration statement and definitive proxy statement
filed by the Company with the SEC since January 1, 1992 and prior
to the date of this Agreement (the "Company SEC Documents"),
which are all the material documents (other than preliminary
material) that the Company was required to file with the SEC
since such date. As of their respective dates, none of the
Company SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in
the Company SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as
permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly
present in all material respects in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, none of which will
be material) the consolidated financial position of the Company
and its consolidated Subsidiaries as of their respective dates
and the consolidated results of operations and the consolidated
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cash flows of the Company and its consolidated Subsidiaries for
the periods presented therein.
(e) Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or
incorporation by reference in (i) any of the Offer Documents
will, at the time the Offer Documents are first published, sent
or given to holders of Company Common Stock, and at any time they
are amended or supplemented, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading, and (ii) the Proxy Statement, on the date it is first
mailed to the holders of the Company Common Stock or at the time
of the Company's Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading.
(f) Compliance with Applicable Laws. The Company and
its Subsidiaries hold all permits, licenses, variances,
exemptions, orders, franchises and approvals of all Governmental
Entities necessary for the lawful conduct of their respective
businesses (the "Company Permits"), except where the failure to
possess the same could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect with
respect to the Company. The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except where
the failure so to comply could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect with respect to the Company. The businesses of the
Company and its Subsidiaries are not being conducted in violation
in any material respect of any law, ordinance or regulation of
any Governmental Entity. As of the date of this Agreement, no
investigation or review by any Governmental Entity with respect
to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, other than those the
outcome of which could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect with
respect to the Company.
(g) Litigation. As of the date hereof, except as set
forth on Schedule 4.1(g) hereto, there is no suit, action or
proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary of
the Company or any Company Employee Benefit Plan or Company
Employee Benefit Arrangement (as defined in Section 4.1 (i)
below) ("Company Litigation"). No Company litigation exists and
the Company and its Subsidiaries have no knowledge (after due
inquiry) of any facts which are reasonably likely to give rise to
any Company Litigation, which could reasonably be expected,
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<PAGE>
individually or in the aggregate, to have a Material Adverse
Effect with respect to the Company or any Company Employee
Benefit plan or Company Employee Benefit Arrangement, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company
or any Subsidiary of the Company or any Company Employee Benefit
Plan or Company Employee Benefit Arrangement ("Company Order"),
which could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect with respect to the
Company or any Company Employee Benefit Plan or Company Employee
Benefit Arrangement, or prevent, hinder or materially delay its
ability to consummate the transactions contemplated by this
Agreement. As of the date of this Agreement, except as set forth
on Schedule 4.1(g), the aggregate amount of all claims and
judgments pending, or to the knowledge of the Company, threatened
pursuant to all Company Litigation and Company Orders does not
exceed $250,000. This Section 4.1(g) shall not relate to any
environmental matters referred to in Section 4.1(n).
(h) Taxes. Each of the Company and each of its
Subsidiaries has filed all material tax returns required to be
filed by such party on a timely basis in accordance with all
applicable law in all material respects and has paid (or the
Company has paid on behalf of any such Subsidiary), or has set up
an adequate reserve for the payment of, all taxes required to be
paid as shown on such returns, and the most recent financial
statements contained in the Company SEC Documents reflect an
adequate reserve for all taxes payable by the Company and its
Subsidiaries accrued through the date of such financial
statements. The unpaid taxes, including any contingent tax
liabilities and net deferred tax liabilities, of the Company and
its Subsidiaries which have accrued as of the date of the most
recent financial statements contained in the Company SEC
Documents do not exceed the reserve for accrued tax liability set
forth or included in such financial statements except as set
forth on Schedule 4.1(b). The Company and its consolidated
Subsidiaries have consolidated net operating losses ("NOLs") of
at least $6,000,000 in the aggregate, arising from the 1994 tax
year and arising from so much of the 1995 tax year as if such
year were a short tax year ending on August 31, 1995 ("Short
Year"), which NOL may be used to offset income from prior years
under Section 172(b)(1)(A) of the Code. A detailed computation,
including all material assumptions used therein of the estimated
NOL for the Short Year will be provided to Parent on or before
the close of business on September 22, 1995. No federal income
tax returns that include the Company and each of its Subsidiaries
consolidated in such returns have been examined or currently are
under examination with the United States Internal Revenue Service
(the "IRS"), except for tax year 1991. Except for a waiver
granted with respect to the 1991 Federal income tax return, no
waiver of statute of limitations with respect to such returns has
been given by or requested from the Company and its Subsidiaries
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for tax years beginning after December 31, 1988. The Company has
previously delivered or made available to Parent true and
complete copies of its federal income tax returns for each of the
fiscal years ended December 31, 1992 and December 31, 1993.
Neither the Company nor any of its Subsidiaries is a party to or
bound by any agreement providing for the allocation, sharing or
indemnification of taxes with any entity which is not, either
directly or indirectly, a Subsidiary of the Company. Neither the
Company nor any of its Subsidiaries has filed a consent pursuant
to or agreed to the application of Section 341(f) of the Code.
Neither the Company nor any Subsidiary will be liable for taxes
due on parachute payments under Section 4999 of the Code. The
Company is not a "United States real property holding
corporation" as defined in Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code. Neither of the Company, nor any of its Subsidiaries
ever has been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code, other than the
present affiliated group comprised of the Company and its
Subsidiaries. Since January 1, 1991, the Company has not
adopted, revoked, rescinded or otherwise materially modified any
tax elections or tax accounting method. For the purpose of this
Agreement, the term "tax" (and, with correlative meaning, the
terms "taxes" and "taxable") shall include all federal, state,
local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise
and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with
respect to such amounts.
(i) Pension And Benefit Plans; ERISA.
(i) Set forth on Schedule 4.1(i) is a list of all
Company Employee Benefit Plans and Company Employee Benefit
Arrangements which are in writing, including any amendments
thereto, and a description of all unwritten Company Employee
Benefit Plans and Company Employee Benefit Arrangements. The
Company has delivered to Parent true and correct copies of (A)
all such plans which are in writing, including any amendments
thereto, and (B) the annual report, if required under the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), with respect to each such plan for the last three
years. None of the Company Employee Benefit Plans or Company
Employee Benefit Arrangements is subject to Title IV of ERISA or
Section 412 of the Code. Except as set forth in Schedule 4.1(i)
hereto:
(1) each Company Employee Benefit Plan and
Company Employee Benefit Arrangement, together with any related
trust, is in compliance in all material respects with the
requirements prescribed by all applicable statutes, orders or
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governmental rules or regulations including, without limitation,
ERISA and the Code and with the terms and conditions of the
applicable plan;
(2) each pension plan which is or is
intended to be a pension plan as defined in Section 401(a) of the
Code is qualified under Section 401(a) of the Code and a
favorable determination letter from the Internal Revenue Service
with respect to such qualification has been issued with respect
thereto, copies of which have been delivered to Parent;
(3) none of the Company or any of its
Subsidiaries is or has ever been obligated to contribute to any
Company Employee Benefit Plan or Company Employee Benefit
Arrangement which constitutes a "multiemployer plan" as defined
in Section 3(37) of ERISA.
(4) no amounts payable under the Company
Employee Benefit Plans or Company Employee Benefit Arrangements
will fail to be deductible for federal income tax purposes by
virtue of Section 280G of the Code;
(5) neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby will (A) result in any payment becoming due
to any employee or group of employees of the Company or any of
its Subsidiaries, (B) increase any benefits otherwise payable
under any Company Employee Benefit Plan or Company Employee
Benefit Arrangement or (C) result in the acceleration of the time
of payment or vesting of any such benefits; and
(6) none of the Company or any of its
Subsidiaries has any contract, plan, or commitment, whether
legally binding or not, to create any additional Company Employee
Benefit Plan or Company Employee Benefit Arrangement or to modify
any existing Company Employee Benefit Plan or Company Employee
Benefit Arrangement.
(ii) As used herein:
(1) the term "Employees" shall mean all
current employees, former employees and retired employees of the
Company and its Subsidiaries.
(2) the term "Company Employee Benefit
Plans" shall mean each and all "employee benefit plans" as
defined in Section 3(3) of ERISA, maintained or contributed to by
the Company or the Subsidiaries or in which the Company or the
Subsidiaries participate or participated and which in any such
case provide benefits to Employees, including (a) any such plans
that are "employee welfare benefit plans" as defined in Section
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3(1) of ERISA, including retiree medical and life insurance plans
and (b) any such plans that are "employee pension benefit plans"
as defined in Section 3(2) of ERISA ("Pension Plans").
(3) The term "Company Employee Benefit
Arrangements" shall mean any life and health insurance,
hospitalization, savings, bonus, deferred compensation, stock
option plan, stock incentive plan, incentive compensation,
holiday, vacation, severance pay, sick pay, sick leave,
disability, tuition refund, service award, company car,
scholarship, relocation, patent award, fringe benefit, contracts,
collective bargaining agreements, individual employment,
consulting or severance contracts and other policies or practices
of the Company or its Subsidiaries providing employee or
executive compensation or benefits to Employees, other than
Company Employee Benefit Plans.
(j) No Material Change. Except as disclosed on
Schedule 4.1(j), since June 30, 1995, neither the Company nor any
of its Subsidiaries (i) suffered any changes which have had or
could reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect with respect to the Company,
(ii) incurred any obligation or liability whether absolute,
accrued, contingent or otherwise, including, without limitation,
liabilities as guarantor or otherwise with respect to obligations
of others, or incurred any obligations or liabilities except for
those incurred in the ordinary course of business and not
constituting Indebtedness for Borrowed Money (as defined in
Section 4.1(o)(vii)), (iii) acquired or disposed of assets or
properties, or entered into any agreement or other arrangement
for any such acquisition or disposition, other than the purchase
or sale of inventories in the ordinary course of business, (iv)
increased the wages, salaries, compensation, pension, severance
or other benefits payable to any employee, other than in
connection with normal compensation policies and consistent with
past compensation policies, or instituted any increase in,
merged, terminated or amended any Company Employees Benefit Plan
or Arrangement, (v) discharged or satisfied any Lien, forgiven or
paid or cancelled any debts or claims (absolute or contingent) or
waived any rights, in each case except in the ordinary course of
business and except for those which, individually or in the
aggregate, could not reasonably be expected to be material to the
operation or assets of the Company and its Subsidiaries, their
financial condition, results of operations or prospects, taken as
a whole, (vi) granted any rights or licenses under any Company
Intangible Property (as defined in Section 4.1(m)), (vii)
declared or paid any dividends or made any distribution in
respect of its capital stock (other than from a wholly-owned
Subsidiary of the Company), including by way of repurchase,
redemption or otherwise, (viii) transferred any assets by way of
contribution, loan or otherwise to any of its Subsidiaries other
than a wholly-owned subsidiary or otherwise made an investment by
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way of purchase of equity, capital contribution, loan or
otherwise in any person other than a wholly-owned Subsidiary or
creation of account receivables resulting from the sale of
inventories in the ordinary course of business, (ix) merged or
consolidated with or into any entity, or obligated itself to do
so, (x) made or committed to make any capital expenditures in
excess of $240,000 in the aggregate, (xi) amended its Certificate
of Incorporation or By-Laws or changed its method or basis of
accounting, whether or not permitted under GAAP, (xii)
instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body, which could
reasonably be expected, individually or in the aggregate, to be
material to the operation or net assets of the Company and its
Subsidiaries, their financial condition, results of operations or
prospects, taken as a whole, (xiii) cancelled or terminated any
insurance policy, or (xiv) obligated itself to do any of the
foregoing.
Except as disclosed on Schedule 4.1(j), since June 30,
1995, the Company and its Subsidiaries have not experienced any
strike, work stoppage or unionization attempt and have conducted
their business in the ordinary course and in substantially the
same manner as conducted prior to such date and have preserved
their relationships with customers, suppliers and other with whom
deal.
(k) Opinion of Financial Advisor. The Company has
received the opinion of First Southwest, dated September 14,
1995, to the effect that, as of the date hereof, the Offer
Consideration to be received by the holders of Company Common
Stock in the Offer and the Merger Consideration to be received by
the holders of Company Common Stock in the Merger is fair from a
financial point of view to such holders, a signed, true and
complete copy of which opinion has been delivered to Parent, and
such opinion has not been withdrawn or modified.
(l) Vote Required. The affirmative vote of the
holders of two-thirds of the outstanding shares of Company Common
Stock is the only vote of the holders of any class or series of
the Company's capital stock necessary (under applicable law or
otherwise) to approve the Merger and this Agreement and the
transactions contemplated hereby.
(m) Intangible Property.
(i) Schedule 4.1(m) sets forth a list of each
material trademark, trade name, patent, service mark, brand mark,
brand name, computer program, database, industrial design and
copyright owned, used or useful in connection with the operation
of the businesses of each of the Company and its Subsidiaries as
well as a list of all registrations thereof by jurisdiction and
pending applications therefor, and each license or other contract
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relating thereto (collectively, the "Company Intangible
Property"). Except as set forth on Schedule 4.1(m), all of the
Company Intangible Property is in good standing. Except as set
forth on Schedule 4.1(m), the use of the Company Intangible
Property by the Company or its Subsidiaries does not, in any
material respect, conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any right,
title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, patent,
service mark, brand mark, brand name, computer program, database,
industrial design, copyright or any pending application therefor
of any other person and there have been no claims made and
neither the Company nor any of its Subsidiaries has received any
notice of any claim or otherwise knows that any of the Company
Intangible Property is invalid or conflicts with the asserted
rights of any other person or has not been used or enforced or
has failed to be used or enforced in a manner that would result
in the abandonment, cancellation or unenforceability of any of
the Company Intangible Property. Each of the Company and its
Subsidiaries own or have a right to use all Company Intangible
Property necessary for the operation of its respective business.
(n) Environmental Matters.
(i) For purposes of this Agreement:
(1) "Environmental Law" means any applicable
law regulating or prohibiting Releases into any part of the
environment, or pertaining to the protection of natural
resources, the environment and public and employee health and
safety including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act
("CERCLA") (42 U.S.C. Sec. 9601 et seq.), the Hazardous Materials
-- ---
Transportation Act (49 U.S.C. Sec. 1801 et seq.), the Resource
-- ---
Conservation and Recovery Act (42 U.S.C. Sec. 6901 et seq.), the
-- ---
Clean Water Act (33 U.S.C. Sec. 1251 et seq.), the Clean Air Act
-- ---
(33 U.S.C. Sec. 7401 et seq.), the Toxic Substances Control Act
-- ---
(15 U.S.C. Sec. 7401 et seq.), the Federal Insecticide, Fungicide,
-- ---
and Rodenticide Act (7 U.S.C. Sec. 136 et seq.), and the
-- ---
Occupational Safety and Health Act (29 U.S.C. Sec. 651 et seq.)
-- ---
("OSHA") and the regulations promulgated pursuant thereto, and
any such applicable state or local statutes, and the regulations
promulgated pursuant thereto, as such laws have been amended or
supplemented through the Closing Date;
(2) "Hazardous Material" means any
substance, pollutant material or waste which is regulated by
Environmental Law, including, without limitation, coal tar,
asbestos and any material or substance which is defined as a
"hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any
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provision of Environmental Law;
(3) "Release" means any release, spill,
effluent, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or migration into the
indoor or outdoor environment (whether on site or off site), or
into or out of any property owned, operated or leased by the
applicable party or its Subsidiaries; and
(4) "Remedial Action" means all actions,
including, without limitation, any capital expenditures, required
by a governmental entity or required under any Environmental Law,
or voluntarily undertaken to (I) clean up, remove, treat, or in
any other way ameliorate or address any Hazardous Materials,
other substance, or dust, odors, fumes or noise (whether or not
constituting Hazardous Materials) in the indoor or outdoor
environment (whether on site or off site); (II) prevent the
Release or threat of Release, or minimize the further Release of
any Hazardous Material, other substance, or dust, odor, fumes or
noise (whether or not constituting Hazardous Materials) so it
does not endanger or threaten to endanger the public health or
welfare of the indoor or outdoor environment (whether on site or
off site); (III) perform pre-remedial studies and investigations
or post-remedial monitoring and care pertaining or relating to a
Release; or (IV) bring the applicable party into compliance with
any Environmental Law.
(ii) Except as disclosed on Schedule 4.1(n)(ii),
the Company and its Subsidiaries are not currently parties to any
agreements, consent orders, decrees or judgments issued by a
Governmental Entity respecting (A) Environmental Laws, (B)
Remedial Action or (C) any Release or threatened Release of a
Hazardous Material, other substance or dust, odor, fumes or noise
(whether or not constituting Hazardous Materials;
(iii) Since January 1, 1992, the Company and its
Subsidiaries have not received any written communication
alleging, with respect to any such party, the violation of or
liability under any Environmental Law, which violation (whether
or not disclosed) or liability (whether or not disclosed) could
reasonably be expected, individually or in the aggregate, to be
material to the operation or net assets of the Company and its
Subsidiaries, their condition (financial or otherwise), results
of operations or prospects, taken as a whole, provided that the
parties hereto acknowledge that such liabilities, individually,
or in the aggregate, of $1,000,000 or less, would not be deemed
material;
(iv) Neither the Company nor any of its
Subsidiaries has any liability (whether or not disclosed) or
potential liability (whether or not disclosed), known or unknown,
in connection with the Release of any Hazardous Material, other
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substance, or dust, odor, fumes or noise (whether or not
constituting Hazardous Materials) into the indoor or outdoor
environment (whether on-site or off-site) which could reasonably
be expected, individually or in the aggregate, to be material to
the operation or net assets of the Company and its Subsidiaries,
their condition (financial or otherwise), results of operations
or prospects, taken as a whole, provided that the parties hereto
acknowledge that such liabilities, individually or in the
aggregate, of $1,000,000 or less, would not be deemed material;
(v) Except as set forth on Schedule 4.1(n)(v),
there is not now on or in any property of the Company or its
Subsidiaries any of the following: (A) any underground storage
tanks or surface impoundments, (B) any asbestos-containing
materials, (C) any polychlorinated biphenyls, or (D) landfills or
disposal areas, in each case except in material compliance with
applicable Environmental Laws;
(vi) The Company has made available to Parent
copies of all environmental investigations, studies, audits,
tests, reviews and other analyses conducted by or on behalf of,
or that are in the possession of, the Company or any of its
Subsidiaries, in relation to any site or facility owned or
leased,at any time, by the Company or any of its Subsidiaries
(collectively the "Sites");
(vii) Except as disclosed on Schedule 4.1(n)(vii)
hereto, there are no pending applications for any Company Permits
under any Environmental Law in connection with the conduct of the
Company or any Subsidiary thereof;
(viii) Except as disclosed in Section
4.1(n)(viii), the Company and its Subsidiaries are in compliance
with all statutory land use regulation or prohibition under any
Environmental Law or any law of any Governmental Authority
relating to the protection of wetlands, woodlands and endangered
species and there are no environmental liens or deed restrictions
on any sites; and
(ix) Except as set forth on Schedule 4.1(n)(ix)
hereto, there have been no citations, notices or complaints
issued to any of the Company, or any Subsidiary by the
Occupational Safety and Health Administration or any state
occupational safety and health administration since January 1,
1992. Neither the Company, or any of its Subsidiaries, any of
their respective predecessors or their agents has engaged in any
act or omission which could give rise to liabilities (whether
known or unknown) under CERCLA or any equivalent state laws.
(o) Material Contracts. The Company has provided
Parent with a full and complete copy of all material arrangements
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and contracts to which the Company, or any of its Subsidiaries,
is a party or is bound (collectively, the "Contracts"), a list of
which is set forth on Schedule 4.1(o), including, but not limited
to, the following:
(i) employment contracts, sales representative
agency contracts or contracts that are not terminable by the
Company, or a Subsidiary thereof, as applicable, by notice of not
more than sixty (60) days without payment or penalty, and
severance or termination contracts;
(ii) covenants not to compete;
(iii) leases or similar contracts under which the
Company or any Subsidiary thereof is a lessee or sublessee of any
real property or is a lessor or sublessor of, or makes available
for use by any third party, any real property owned or leased by
any of them or any portion of premises otherwise occupied by any
of them;
(iv) leases or similar contracts under which (A)
the Company, or any Subsidiary thereof is a lessee of, or holds
or uses, any machinery, equipment, vehicle or other tangible
personal property owned by a third party or (B) the Company or
any Subsidiary thereof is a lessor or sublessor of, or makes
available for use by any third party, any tangible personal
property owned or leased by such person, in any such case which
has an aggregate future liability in excess of $50,000 and is not
terminable by the Company, or a Subsidiary thereof, as
applicable, by notice of not more than sixty (60) days without
payment or penalty;
(v) (A) contracts for the future purchase of any
type of materials or fixed assets, (B) management, service,
consulting or other similar type of contracts, (C) computer
hardware and/or software contracts, (D) contracts with any
distributors, or (E) advertising contracts, in any such case
which has an aggregate future liability in excess of $50,000 and
is not terminable by the Company, or a Subsidiary thereof, as
applicable, by notice of not more than sixty (60) days without
payment or penalty;
(vi) licenses (if the Company, or any Subsidiary
thereof is the licensor or the licensee) or other contracts
relating in whole or in part to any of the Company Intangible
Property used or held for use by the Company or any Subsidiary
thereof (including any license or other agreement under which any
of them has the right to use any of the same owned or held by a
third party);
(vii) contracts or indentures or other evidence
of indebtedness under which the Company, or any of its
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<PAGE>
Subsidiaries, has borrowed or loaned any money, including without
limitation, relating to the deferred purchase price of property
or services or similar liabilities, agreed to indemnify, defend
or hold harmless any third party or issued any note, bond,
debenture or other evidence of indebtedness, or, directly or
indirectly, guaranteed (including, without limitation, through
so-called take-or-pay or keepwell agreements) indebtedness,
liabilities or obligations of others (other than endorsements for
the purpose of collection in the ordinary course of business)
(collectively "Indebtedness for Borrowed Money");
(viii) agreements or contracts under which any
other person has directly or indirectly guaranteed indebtedness,
liabilities or obligations of the Company or any Subsidiary
thereof (other than endorsements for the purpose of collection in
the ordinary course of business);
(ix) mortgages, pledges, security agreements,
deeds of trust or other documents granting a Lien, including, but
not limited to, Liens on any real or personal property owned or
leased by the Company, or any Subsidiary thereof or any real or
personal property acquired under conditional sales, capital
leases or other title retention or security devices;
(x) joint ventures or partnership contracts;
(xi) tax indemnity, tax allocation or tax-sharing
contracts;
(xii) confidentiality contracts given by the
Company, or any Subsidiary thereof;
(xiii) contracts or understandings with customers
for the supply of products having a remaining term in excess of
one year or obligations in excess of $50,000;
(xiv) other contracts, leases, licenses,
commitments or instruments to which the Company, or any
Subsidiary, thereof is a party or by or to which any of them or
any of their respective assets is bound or subject, which have an
aggregate future liability in excess of $50,000 and are not
terminable by the Company, or a Subsidiary thereof, as
applicable, by notice of not more than sixty (60) days without
payment or penalty; and
(xv) commitments to enter into any of the
foregoing types of contracts or arrangements.
Each of the Contracts is valid and binding and in full force
and effect and is enforceable by the Company, or the applicable
Subsidiary, in accordance with its terms. Each of the Company
and its Subsidiaries have performed all material obligations
26
<PAGE>
required to be performed by them to date under the Contracts and
they are not in breach or default in any material respect
thereunder and, to the knowledge of each of them, no other party
is in default thereunder and there exists no condition or event
which, after notice or lapse of time or both, would constitute
any such breach or default.
(p) Related Party Transactions. Except as set forth
on Schedule 4.1(p) hereto, no director, officer, partner,
employee, "affiliate" or "associate" (as such terms are defined
in Rule 12b-2 under the Exchange Act) of the Company or any of
its Subsidiaries (i) has borrowed any monies from or has
outstanding any indebtedness or other similar obligations to the
Company or any of its Subsidiaries; (ii) owns any direct or
indirect interest of any kind in, or is a director, officer,
employee, partner, affiliate or associate of, or consultant or
lender to, or borrower from, or has the right to participate in
the management, operations or profits of, any person or entity
which is (1) a competitor, supplier, customer, distributor,
lessor, tenant, creditor or debtor of the Company or any of its
Subsidiaries, (2) engaged in a business related to the business
of the Company or any of its Subsidiaries or (3) participating in
any transaction to which the Company or any of its Subsidiaries
is a party or (iii) is otherwise a party to any contract,
arrangement or understanding with the Company or any of its
Subsidiaries.
(q) Liens, etc. Except as set forth on Schedule
4.1(q) and liens in respect of taxes not yet due or which are
being contested in good faith and for which adequate reserves
have been established on the books and records of the Company,
neither the Company nor any of its Subsidiaries has granted,
created or suffered to exist with respect to any of its assets
(owned or leased), any mortgage, pledge, charge, hypothecation,
collateral assignment, lien (statutory or otherwise), encumbrance
or security agreement of any kind or nature whatsoever, and the
Company and each Subsidiary has good and indefensible title (with
respect to real property) and good and ideal title (with respect
to other property). Such assets are all assets necessary for the
operation of the business of the Company and its Subsidiaries as
heretofore conducted. The fifteen (15) acres of real property
currently owned by Danny Adair in Port Arthur, Texas and which
adjoins the twenty-five (25) acre plant of the Company therein is
vacant land not used by the Company or any Subsidiary thereof.
(r) Finder's Fees. Except as previously disclosed in
writing to Parent, neither the Company nor any of its
Subsidiaries has incurred any obligation for any finder's,
broker's or agent's fee in connection with the transaction
contemplated hereby.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation or
organization, has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now
being conducted, and is duly qualified and in good standing to
conduct business in each jurisdiction in which the business it is
conducting, or the operation, ownership or leasing of its
properties, makes such qualification necessary, other than in
such jurisdictions where the failure so to qualify could not
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect with respect to Parent. Parent and Sub
have heretofore made available to the Company complete and
correct copies of their respective Certificates of Incorporation
and Bylaws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This
Agreement has been duly executed and delivered by each of Parent
and Sub and constitutes a valid and binding obligation of Parent
and Sub enforceable in accordance with its terms.
(ii) The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by
each of Parent and Sub will not result in any Violation (as
defined in Section 4.1(c)(ii)) pursuant to any provision of the
respective Articles of Incorporation or Bylaws of Parent or Sub
or, except as to which requisite waivers or consents have been
obtained and assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in paragraph
(iii) of this Section 4.2(b) are duly and timely obtained or made
and, if required, the Company Stockholder Approval has been
obtained, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, or other agreement,
obligation, instrument, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or Sub or their respective properties or
assets, which could reasonably be expected, individually or in
28
<PAGE>
the aggregate, to have a Material Adverse Effect with respect to
Parent.
(iii) No consent, approval, order or
authorization of, or registration, declaration or filing with,
notice to, or permit from any Governmental Entity, is required by
or with respect to Parent or Sub in connection with the execution
and delivery of this Agreement by each of Parent and Sub or the
consummation by each of Parent or Sub of the transactions
contemplated hereby, which the failure to obtain or make would
have a Material Adverse Effect with respect to Parent, except
for: (A) filings under the HSR Act; (B) the filing with the SEC
of (x) the Schedules 14D-1 and 14F-1, respectively, in connection
with the commencement and consummation of the Offer and (y) such
reports under and such other compliance with the Exchange Act and
the rules and regulations thereunder, as may be required in
connection with this Agreement and the transactions contemplated
hereby; (C) the filing of the Articles of Merger with the
Secretary of State of the State of Texas; (D) such filings and
approvals as may be required by any applicable state securities,
"blue sky" or takeover laws; (E) such filings and approvals as
may be required by any foreign pre-merger notification,
securities, corporate or other law, rule or regulation; (F) such
filings in connection with any Gains and Transfer Taxes; and
(G) such other such filings and consents as may be required under
any environmental, health or safety law or regulation pertaining
to any notification, disclosure or required approval necessitated
by the Merger or the transactions contemplated by this Agreement.
(c) Information Supplied. None of the information
supplied or to be supplied by Parent or Sub for inclusion or
incorporation by reference in (i) the Schedule 14D-9 will, at the
time the Schedule 14D-9 is filed with the SEC, and at any time it
is amended or supplemented, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not
misleading, and (ii) the Proxy Statement will, at the date it is
first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading.
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ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company. During the period from the
date of this Agreement and continuing until the Effective Time,
the Company agrees as to the Company and its Subsidiaries that
(except as expressly contemplated or permitted by this Agreement,
or to the extent that Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company and its Subsidiaries
shall carry on its businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted
and shall use all reasonable efforts to preserve intact its
present business organizations, keep available the services of
its current officers, employees and any sales representatives and
preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and
ongoing business shall not be impaired in any material respect at
the Effective Time.
(b) No Solicitation. From and after the date hereof
until the termination of this Agreement, the Company shall not,
nor shall it permit any of its Subsidiaries to, nor shall it
permit or authorize any of its respective officers, directors,
employees, representatives, agents or affiliates (including,
without limitation, any investment banker, attorney or accountant
retained by the Company or any of its Subsidiaries), directly or
indirectly, to initiate, solicit or encourage (including by way
of furnishing non-public information or assistance), or take any
other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal (as defined below), or enter into or
maintain or continue discussions or negotiate with any person or
entity in furtherance of such inquiries or to obtain an
Acquisition Proposal or agree to or endorse any Acquisition
Proposal, provided, however, that nothing contained in this
Section 6.1(b) shall prohibit the Board of Directors of the
Company from (i) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes
an unsolicited written, bona fide Acquisition Proposal if, and
only to the extent that, (A) the Board of Directors of the
Company, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such
action is necessary for the Board of Directors of the Company to
comply with its fiduciary duties to stockholders under applicable
law and (B) prior to taking such action, the Company (x) provides
reasonable notice to Parent to the effect that it is taking such
action and (y) receives from such person or entity an executed
confidentiality agreement in reasonably customary form or (ii)
disclosing to the Company's shareholders a position with respect
to a tender offer by a third party pursuant to Rules 14d.9 and
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14e.2 promulgated under the Exchange Act or from making such
disclosures to the Company's shareholders which, in the judgment
of the Board of Directors of the Company, made in good faith
after consultation with and based upon the advice of independent
legal counsel, is required under applicable law. For purposes of
this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions between the Company,
Parent and Sub contemplated hereunder) involving the Company or
any of its Subsidiaries: (i) any merger, consolidation, share
exchange, recapitalization, business combination, or other
similar transaction; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of any asset of the Company
or any of its Subsidiaries, outside the ordinary course of
business; (iii) any tender offer or exchange offer for the
outstanding shares of capital stock of the Company or the filing
of a registration statement under the Securities Act in
connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
(c) Advice of Changes; SEC Filings. The Company shall
confer on a regular and frequent basis with Parent, report on
operational matters and promptly advise Parent orally and in
writing of any change or event having, or which, insofar as
reasonably can be foreseen, could have, individually or in the
aggregate, a Material Adverse Effect on the Company. The Company
shall promptly provide Parent (or its counsel) with copies of all
filings made by the Company with the SEC or any other
Governmental Entity in connection with this Agreement and the
transactions contemplated hereby, and shall provide Parent with
all reports prepared regarding internal and financial matters.
(d) Other Actions. Except as contemplated by this
Agreement, the Company will not nor will it permit any of its
Subsidiaries to take or agree or commit to take any action or
omit to take any action, which action or omission could
reasonably be expected, individually or in the aggregate, result
in any of the Company's representations or warranties hereunder
being untrue in any material respect or in any of the Company's
covenants hereunder or any of the conditions to the Merger or
Offer not being satisfied in all material respects. Neither the
Company nor any of its Subsidiaries shall amend in any material
respect any of the Contracts. Neither the Company nor any of its
Subsidiaries shall extend the term of the North Branch Warehouse
lease for more than one year on terms no less favorable than the
terms contained in such lease in respect of the current lease
term thereof.
(e) Tax Covenants. The Company and its Subsidiaries
shall not file any tax returns, claims, reports or similar
documents other than in the ordinary course of its operaitons
(including the filing of its 1994 federal tax return, a copy of
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such return shall be deliver to Parent immediately after it is
filed), or close any tax matter with a governmental authority
without notifying Parent of such filing or matter, and providing
Parent reasonable opportunity and time to consult with the
Company and its Subsidiaries on such filing or matter.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Preparation of the Proxy Statement; Offer Documents;
Company Stockholders Meeting; Merger without a Company
Stockholders Meeting. (a) As soon as practicable following the
acceptance for payment of and payment for shares of Company
Common Stock by Sub in the Offer, the Company and Parent shall
prepare and file with the SEC the Proxy Statement. The Company
shall use its best efforts to respond to all SEC comments with
respect to the Proxy Statement and to cause the Proxy Statement
to be mailed to the Company's stockholders at the earliest
practicable date. If at any time prior to the expiration date of
the Offer or the Effective Time any event, with respect to the
Company or any of its Subsidiaries or with respect to other
information supplied by the Company for inclusion in the Offer
Documents or the Proxy Statement, shall occur which is required
to be described in an amendment of, or a supplement to, the Offer
Documents or the Proxy Statement, as the case may be, such event
shall be so described to Parent, and such amendment or supplement
shall be promptly filed with the SEC by Parent or Company, as the
case may be, and, as required by law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it
relates to the Company or its Subsidiaries or other information
supplied by the Company for inclusion therein will comply as to
form, in all material respects, with the provisions of the
Exchange Act on the rules and regulations thereunder. If at any
time prior to the Effective Time any event with respect to Parent
or Sub, or with respect to information supplied by Parent or Sub
for inclusion in the Schedule 14D-9 or the Proxy Statement, shall
occur which is required to be described in an amendment of, or a
supplement to, such documents, such event shall be so described
to the Company and such amendment or supplement shall promptly be
filed by Company, and, as required by law, disseminated to the
Subsidiaries of the Company.
(b) The Company will, as soon as practicable following
the acceptance for payment of and payment for shares of Company
Common Stock by Sub in the Offer, duly call, give notice of,
convene and hold the Company Stockholders Meeting for the purpose
of approving this Agreement and the transactions contemplated
hereby. At the Company Stockholders Meeting, Parent shall cause
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all of the shares of Company Common Stock then owned by Parent or
Sub or any of their Subsidiaries or affiliates to be voted in
favor of the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b),
in the event that Parent or any other Subsidiary of Parent shall
acquire at least 90% of the outstanding shares of Company Common
Stock in the Offer, the parties hereto agree, at the request of
Sub, to take all necessary and appropriate action to cause the
Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the
Company, in accordance with the TBCA.
(d) Parent shall as necessary (i) cause Sub promptly
to submit this Agreement and the transactions contemplated hereby
for approval and adoption by its parent by written consent of
sole stockholder; (ii) cause the shares of capital stock of Sub
to be voted for adoption and approval of this Agreement and the
transactions contemplated hereby; and (iii) cause to be taken all
additional actions necessary for Sub to adopt and approve this
Agreement and the transactions contemplated hereby.
7.2 Access to Information. Upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the Parent, access, during normal business
hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records, employees,
lenders and suppliers and, during such period, each party
hereunder shall (and shall cause each of its Subsidiaries to)
furnish promptly to the other party, (a) a copy of each report,
schedule, registration statement and other document filed or
received by it during such period pursuant to SEC requirements
and (b) in the case of the Company, all other information
concerning its business, properties and personnel as Parent may
reasonably request. Each of the Company and Parent agrees that
it will not, and will cause its representatives not to, use any
information obtained pursuant to this Section 7.2 for any purpose
unrelated to the consummation of the transactions contemplated by
this Agreement. The Confidentiality Agreement, dated as of July
28, 1995, between Parent and the Company (the "Confidentiality
Agreement") shall apply with respect to information furnished
thereunder or hereunder and any other activities contemplated
thereby.
7.3 Current Information. Prior to Closing, the Company and
its Subsidiaries will advise Parent in writing as soon as
practicable after it becomes known to the Company or any its
Subsidiaries:
(i) of the occurrence of any event that renders
any of the representations or warranty of the Company or any
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<PAGE>
Subsidiary set forth herein was not accurate in any material
respect:
(ii) that any representation or warranty of the
Company or any Subsidiary set forth herein was not accurate in
all material respects when made; and
(iii) of the failure of the Company or any
Subsidiary to comply with or accomplish any of the covenants or
agreements set forth herein in any material respect.
7.4 Legal Conditions to Merger. Each of the Company,
Parent and Sub will take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed
on such party with respect to the Offer, the Merger and the
transactions contemplated by the Stockholders Agreement
(including furnishing all information required under the HSR Act
and in connection with approvals of or filings with any other
Governmental Entity and responding at the earliest practicable
date with any requests for additional information received from
any Governmental Entity in connection therewith) and will
promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or
any of their Subsidiaries in connection with the Offer, the
Merger and the transactions contemplated by the Stockholders
Agreement; provided, however, that Parent need not so comply if
required by the Department of Justice or any other Governmental
Entity to hold separate, sell or otherwise dispose of any
Subsidiary of Parent or the Company or assets or properties of
any of the foregoing. Each of the Company, Parent and Sub will,
and will cause its Subsidiaries to, take all reasonable actions
necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by the
Company, Parent or any of their Subsidiaries in connection with
the Offer, the Merger, or the taking of any action contemplated
hereby or thereby. In case at any time after the Effective Time,
any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals,
immunities and franchises of either of the Constituent
Corporations, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
7.5 Fees and Expenses. Except as otherwise provided in
Section 9.1, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense.
7.6 Indemnification. (a) The Company shall, and from and
after the Effective Time, Parent shall, indemnify, defend and
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hold harmless each person who is now, or has been at any time
prior to the date hereof or who becomes prior to the Effective
Time, an officer or director of the Company or any of its
Subsidiaries (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including reasonable attorneys'
fees and expenses), liabilities or judgments or amounts that are
paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is
or was a director or officer of the Company or any of its
Subsidiaries whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted
or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities"), including all Indemnified
Liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement or the
transactions contemplated hereby, in each case to the full extent
a corporation is permitted under the TBCA to indemnify its own
directors or officers as the case may be (and Parent will pay
expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the full extent
permitted by law). Without limiting the foregoing, in the event
any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) the Indemnified Parties may
retain counsel satisfactory to them and the Company (or them and
Parent after the Effective Time) and the Company (or after the
Effective Time, Parent) shall pay all fees and expenses of such
counsel for the Indemnified Parties promptly as statements
therefor are received; and (ii) the Company (or after the
Effective Time, Parent) will use all reasonable efforts to assist
in the vigorous defense of any such matter, provided that neither
the Company nor Parent shall be liable for any settlement
effected without its prior written consent. Any Indemnified
Party wishing to claim indemnification under this Section 7.6,
upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Company (or after the Effective
Time, Parent) and shall deliver to the Company (or after the
Effective Time, Parent) the undertaking contemplated by the TBCA.
The Indemnified Parties as a group may retain only one law firm
to represent them with respect to each such matter unless there
is, under applicable standards of professional conduct, a
conflict, in the written opinion of counsel to the Indemnified
Parties, on any significant issue between the positions of any
two or more Indemnified Parties, provided that in no event shall
the Company (or after the Effective Time, Parent) be obligated to
pay the fees and expenses of more than two law firms on behalf of
all Indemnified Parties. The Company, Parent and Sub agree that
all rights to indemnification, including provisions relating to
advances of expenses incurred in defense of any action or suit,
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existing in favor of the Indemnified Parties with respect to
matters occurring through the Effective Time, shall survive the
Merger and shall continue in full force and effect for a period
of not less than six years from the Effective Time; provided,
however, that all rights to indemnification in respect of any
Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
(b) The provisions of this Section 7.6 are intended to
be for the benefit of, and shall be enforceable by, each
Indemnified Party, his heirs and his personal representatives and
shall be binding on all successors and assigns of Parent, Sub,
the Company and the Surviving Corporation.
7.7 Publicity. The parties will consult with each other
and will mutually agree upon any press release or public
announcement pertaining to the Offer and the Merger and shall not
issue any such press release or make any such public announcement
prior to such consultation and agreement, except as may be
required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange, in which
case the party proposing to issue such press release or make such
public announcement shall use reasonable efforts to consult in
good faith with the other party before issuing any such press
release or making any such public announcement.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the
Merger shall be subject to the satisfaction prior to the Closing
Date of the following conditions:
(a) Stockholder Approval. This Agreement and the
Merger shall have been approved and adopted by the affirmative
vote of the holders of two-thirds of the Shares entitled to vote
thereon if such vote is required by applicable law; provided that
--------
the Parent and Sub shall vote all Shares purchased pursuant to
the Offer or the Stockholders Agreement in favor of the Merger.
(b) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have
been terminated or shall have expired.
(c) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other
legal restraint or prohibition or other order issued by any
Governmental Entity having competent jurisdiction (an
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"Injunction") preventing the consummation of the Merger shall be
in effect; provided, however, that prior to invoking this
condition, each party shall use all commercially reasonable
efforts to have any such decree, ruling, injunction or order
vacated.
8.2 Conditions of Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are subject to
the satisfaction of the following conditions, any or all of which
may be waived in whole or in part by Parent and Sub:
(a) Payment for Shares. Prior to the Expiration Date
of the Offer, Sub shall have accepted for payment and paid for
the shares of Company Common Stock validly tendered and not
withdrawn in the Offer such that, after such acceptance and
payment, Parent and its affiliates shall own, at consummation of
the Offer, two-thirds of the outstanding shares of the Company
Common Stock on a fully diluted basis; provided, however, that
------------------
this condition shall be deemed satisfied if Sub fails to purchase
the shares of Company Common Stock pursuant to the Offer in
violation of the terms thereof.
(b) Representations and Warranties. The
representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and Parent shall have received a
certificate signed on behalf of the Company by the chief
executive officer and by the chief financial officer of the
Company to such effect.
(c) Performance of Obligations of the Company. The
Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement
at or prior to the Closing Date, and Parent shall have received a
certificate signed on behalf of the Company by the chief
executive officer and by the chief financial officer of the
Company to such effect.
(d) Consents, etc. All licenses, permits, consents,
approvals, authorizations, qualifications and orders of
Governmental Entities and other third parties referred to in
Sections 4.1(c), 5.1(b), or disclosed on Schedule 4.1(c) and
marked with an asterisk thereon.
8.3 Conditions of Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the
satisfaction of the following conditions, any or all of which may
be waived in whole or in part by the Company:
(a) Representations and Warranties. The
37
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representations and warranties of Parent and Sub set forth in
this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of
the Closing Date, except as otherwise contemplated by this
Agreement, and the Company shall have received a certificate
signed on behalf of Parent by the chief executive officer and by
the chief financial officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and the Company shall have
received a certificate signed on behalf of Parent by the chief
executive officer and by the chief financial officer of Parent to
such effect.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time,
whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company or
Parent:
(a) by mutual written consent of the Company and
Parent, or by mutual action of their respective Boards of
Directors;
(b) by either the Company or Parent (i) if there has
been a material breach of any representation, warranty, covenant
or agreement on the part of the other set forth in this Agreement
which breach has not been cured within three business days
following receipt by the breaching party of notice of such
breach, provided that the failure to provide such notice shall
not be deemed to be a waiver of any breach, or (ii) if any
permanent injunction or other order of a court or other competent
authority preventing the consummation of the Merger shall have
become final and non-appealable, provided that Parent and Company
shall have used all commercially reasonable efforts to cause any
such injunction or order to be vacated or lifted;
(c) by either the Company or Parent, so long as such
party has not breached its obligations hereunder, if the Merger
shall not have been consummated on or before March 31, 1996,
unless the Offer has expired and shares of common stock were
purchased thereto prior to March 31, 1996, in which event not
earlier than 120 days from such expiration date; provided, that
the right to terminate this Agreement under this Section 8.1(c)
shall not be available to any party whose failure to fulfill any
38
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obligation under this Agreement has been the cause of or resulted
in the failure of the Merger to occur on or before such date;
(d) by the Company if an Acquisition Proposal has been
made and, in the good faith judgment of the Board of Directors of
the Company, based upon the advice of counsel, the Board of
Directors of the Company determines in good faith that as a
result of such Acquisition Proposal termination is required under
applicable law in the exercise of the Board of Directors'
fiduciary duties; provided, however, that if this Agreement is
terminated pursuant to this Section 9.1(d), the Company shall
reimburse Parent and Sub for all of its fees (including, without
limitation, legal fees) and expenses in connection with the
transactions contemplated hereby (but not in excess of
$1,000,000), plus all fees (including, without limitation, legal
fees) incurred by Parent and Sub in connection with enforcing
their rights hereunder and, if within 12 months of such
termination, the Company shall thereafter consummate or approve
any Acquisition Proposal, the Company shall pay Parent the sum of
$1,500,000 promptly upon the consummation of such transaction, in
each case not as a penalty or forfeiture but to compensate Parent
adequately for its time, effort, expense and loss of opportunity
in connection with the transactions contemplated by this
Agreement.
(e) by the Company, if Sub shall have failed to
commence the Offer within five business days following the date
of the initial public announcement of the Offer;
(f) by Parent, if the Offer terminates, is withdrawn,
abandoned or expires by reason of the failure to satisfy any
condition set forth in Exhibit A hereto; or
(g) by the Company, if the Offer shall have expired or
have been withdrawn, abandoned or terminated without any shares
of Company Common Stock being purchased by Sub thereunder on or
prior to the Expiration Date as it may be extended pursuant to
Section 1.2 hereof.
9.2 Effect of Termination. The termination of this
Agreement by either the Company or Parent as provided in Section
8.1, shall not relieve either party from any liability it may
have hereunder as a result of any breach of this Agreement or
otherwise.
9.3 Amendment. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written
agreement of Parent, Sub and the Company at any time prior to the
Effective Date with respect to any of the terms contained herein;
provided, however, that, after this Agreement is approved by the
Company's stockholders, no such amendment or modification shall
reduce the amount or change the form of consideration to be
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<PAGE>
delivered to the stockholders of the Company.
9.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally
allowed: (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (ii) waive
any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party. The failure
of any party hereto to assert any of its rights hereunder shall
not constitute a waiver of such rights.
ARTICLE X
GENERAL PROVISIONS
10.1 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties and
agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time,
except for the agreements contained in Article III, and Sections
7.6 and 9.1(d) hereof. The Confidentiality Agreement shall
survive the execution and delivery of this Agreement, and the
provisions of the Confidentiality Agreement shall apply to all
information and material delivered by any party hereunder.
10.2 Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered
personally, telegraphed or telecopied or sent by certified or
registered mail, postage prepaid, and shall be deemed to be
given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after
the date of mailing to the following address or telecopy number,
or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent or Sub, to:
G-I Holdings Inc.
1361 Alps Road
Wayne, New Jersey 07470
Attn: James P. Rogers
Telephone: 201/628-3904
Telecopy: 201/628-3326
with a copy to:
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General Counsel
(b) if to Company, to:
U.S. Intec, Inc.
1212 Brai Drive
Port Arthur, TX 77643
Attn: Danny Adair
Telephone: 800/231-4631
Telecopy: 409/724-2348
with a copy to:
Michael Dillard, P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, TX 75201
Telephone: 214/969-2876
Telepcopy: 214/969-4343
10.3 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the word "include", "includes" or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". The phrase "made
available" in this Agreement shall mean that the information
referred to has been made available if requested by the party to
whom such information is to be made available.
10.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the
same agreement and shall become effective when two or more
counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.5 Entire Agreement; No Third Party Beneficiaries; Rights
of Ownership. This Agreement (together with the Confidentiality
Agreement, the Stockholders Agreement and any other documents and
instruments referred to herein) constitutes the entire agreement
and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject
matter hereto and, except as provided in Section 7.6, is not
intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
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10.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York,
without giving effect to the principles of conflicts of law
thereof.
10.7 No Remedy in Certain Circumstances. Each party agrees
that, should any court or other competent authority hold any
provision of this Agreement or part hereof to be null, void or
unenforceable, or order any party to take any action inconsistent
herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth
herein shall not in any way be affected or impaired thereby,
unless the foregoing inconsistent action or the failure to take
an action constitutes a material breach of this Agreement or
makes the Agreement impossible to perform in which case this
Agreement shall terminate pursuant to Article IX hereof. Except
as otherwise contemplated by this Agreement, to the extent that a
party hereto took an action inconsistent herewith or failed to
take action consistent herewith or required hereby pursuant to an
order or judgment of a court or other competent authority, such
party shall incur no liability or obligation unless such party
42
<PAGE>
did not in good faith seek to resist or object to the imposition
or entering of such order or judgment.
10.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other
parties, except that Sub may assign, in its sole discretion, any
or all of its rights, interests and obligations hereunder to any
newly-formed wholly-owned Subsidiary of Parent. Subject to the
preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their
respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first written above.
G-I HOLDINGS INC.
----------------------------------
By:
USI ACQUISITION COMPANY
----------------------------------
By:
U. S. INTEC, INC.
----------------------------------
By:
43
<PAGE>
EXHIBIT A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub
shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Sub's obligation to
pay for or return tendered Shares promptly after expiration or
termination of the Offer), to pay for any Shares tendered, and
may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered,
and, subject to the terms of this Merger Agreement, may amend or
terminate the Offer, if, before acceptance for payment of such
Shares (whether or not any Shares have theretofore been purchased
or paid for), (i) there have not been validly tendered and not
withdrawn prior to the time the Offer shall otherwise expire a
number of Shares which constitutes two-thirds of the Shares
outstanding on a fully-diluted basis on the date of purchase ("on
a fully-diluted basis" having the meaning, as of any date: the
number of Shares outstanding, together with Shares the Company is
then required to issue pursuant to obligations outstanding at
that date under employee stock option or other benefit plans or
otherwise) or (ii) all material regulatory and related approvals
have not been obtained or made on terms reasonably satisfactory
to Sub and the Company shall have obtained all consents marked
with an asterisk on Schedule 4.1(c) to the Merger Agreement on
terms reasonably satisfactory to Sub; (iii) any applicable
waiting periods under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer or (iv) at any
time on or after the date of the Merger Agreement and before
acceptance for payment of, or payment for, such Shares any of the
following events shall occur:
(a) any governmental entity or federal or state court
of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other
order which is in effect and which (1) materially restricts,
prevents or prohibits consummation of the Offer, the Merger
or any transaction contemplated by the Merger Agreement, (2)
prohibits or limits materially the ownership or operation by
the Company, Parent or any of their subsidiaries of all or
any material portion of the business or assets of the
Company and its subsidiaries taken as a whole, or compels
the Company, Parent, or any of their subsidiaries to dispose
of or hold separate all or any material portion of the
business or assets of the Company and its subsidiaries taken
44
<PAGE>
as a whole, (3) imposes limitations on the ability of
Parent, Sub or any other subsidiary of Parent to exercise
effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares
acquired by Sub pursuant to the Offer or otherwise on all
matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of
the Merger Agreement and the transactions contemplated
thereby or (4) requires divestitures by Parent, Sub or any
other affiliate of Parent of any Shares; provided that
Parent shall have used all commercially reasonable efforts
to cause any such decree, judgment, injunction or other
order to be vacated or lifted;
(b) any action, suit or proceeding before any court or
any Governmental Authority shall be pending, or shall have
been threatened, seeking to restrain, prevent, enjoin or
change the transactions contemplated hereby, or questioning
the validity or legality of any such transactions or seeking
damages in connection with such transactions;
(c) the representations and warranties of the Company
contained in the Merger Agreement shall not be true and
correct in all material respects as of the date of
consummation of the Offer as though made on and as of such
date;
(d) the Company shall not have performed or complied
in all material respects with its obligations under the
Merger Agreement to be performed or complied with by it;
(e) the Merger Agreement shall have been terminated in
accordance with its terms;
(f) prior to the purchase of Shares pursuant to the
Offer, an Acquisition Proposal for the Company exists and
the Board shall have withdrawn or materially modified or
changed (including by amendment of the Schedule 14D-9) in a
manner adverse to Sub its recommendation of the Offer, the
Merger Agreement or the Merger;
(g) (1) it shall have been publicly disclosed or Sub
shall have otherwise learned that, except as contemplated by
the Stockholders Agreement, any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act), other than
Parent, its affiliates or any group of which any of them is
a member or any stockholder which is a party to the
Stockholders Agreement, shall have acquired beneficial
45
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ownership (determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of more than 7% of any class or
series of capital stock of the Company (including the
Shares) (or in the case of any holder of shares identified
in the Company's most recent Proxy Statement which has not
executed a Stockholders Agreement ("Other Shareholder"),
such Other Shareholder shall have increased its holding of
shares by more than 1% of the outsting Shares), through the
acquisition of stock, the formation of a group or otherwise,
or shall have been granted an option, right or warrant,
conditional or otherwise ("Option"), to acquire beneficial
ownership of more than 7% of any class or series of capital
stock of the Company (including the Shares) (or in the case
of an Other Shareholder, such Other Shareholder shall have
been granted an Option to acquire an additional 1% of the
Outstanding Shares); or (2) any person or group shall have
entered into a definitive agreement or agreement in
principle with the Company with respect to a merger,
consolidation or other business combination with the
Company;
(h) the Company shall not have terminated its coal tar
operations on terms satisfactory to Parent; or
(i) the Employment Agreement between the Company and
Danny Adair, dated the date of the Merger Agreement, shall
have been terminated and shall not be in full force and
effect; or
(j) the Company shall not own nor have the right under
the lease currently in effect with Armco Inc. to acquire the
warehouse located in Greenport Industrial Park, Houston,
Texas
which, in the judgment of Sub in any such case, and regardless of
the circumstances (including any action or omission by Sub)
giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of
Sub and its affiliates and may be asserted by Sub regardless of
the circumstances (including, without limitation, any action or
inaction by Sub or any of its affiliates) giving rise to any such
condition or may be waived by Sub, in whole or in part, from time
to time in its sole discretion, except as otherwise provided in
the Agreement. The failure by Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such
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<PAGE>
right and each such right shall be deemed an ongoing right and
may be asserted at any time and from time to time. Any
determination by Sub concerning any of the events described
herein shall be final and binding. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings
ascribed to them in the Agreement and Plan of Merger among the
Parent, Sub and the Company to which this Exhibit A is attached
(the "Agreement").
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Schedule 1.3 - Directors, Officers and Stockholders who intend to tender stock
- ------------ ---------------------------------------------------------------
First Southwest Company
Umphrey Family Limited Partnership
490 Park Joint Venture
Danny J. Adair
Albert E. Brammer
Austin W. Gonsoulin
Robert G. Hoag
Ken D. Latiolais
S. Craig Noble
Richard Earl Purkey, Sr.
J. Roane Ruddy
Hillel A. Feinberg
Debra J. Feinberg
Utley Group II
Paul M. Bass, Jr.
Michael J. Marz
<PAGE>
Schedule 4.1(a) - Subsidiaries
- --------------- ------------
1. The Company owns 100% of the outstanding capital stock of Exterior
Technologies Corporation, a Texas corporation.
2. The company owns 100% of the outstanding capital stock of Intec Marine,
Inc., a Texas corporation.
<PAGE>
Schedule 4.1(b) - Capital Structure
- --------------- -----------------
1. There are no liens, charges, encumbrances, claims and options on the
capital stock of the Subsidiaries of the Company.
2. The Company owns a 40% limited partnership interest in Tharmo Manufacturing
Company, L.P., a Delaware limited partnership.
3. The following agreements provide certain rights to shareholders of the
Company:
(a) Registration Rights Agreements dated January 12, 1995, between the
Company and Robert Hoag.
(b) Registration Agreement dated January 12, 1995, between the Company,
Danny Adair, First Southwest Company, 490 Park Joint Venture and the Umphrey
Family Limited Partnership.
(c) Global Modification Agreement, dated September 28, 1990, between Danny
Adair and the Company, as such agreement pertains to Mr. Adair's rights in
connection with the common stock pledged to the Company.
4. Attached is a list of all outstanding options to purchase common stock of
the Company as of August 31, 1995.
5. The Company's 1994 Long Term Incentive Plan provides for automatic grants
of 10,000 shares of Restricted Stock to non-employee directors of the Company
who do not own or control as many as 100,000 shares of the Company's common
stock. The shares vest at a rate of 25% per year for each full year of service
as a director, and become fully vested upon a change in control. A list of
Restricted Stock grants is attached.
<PAGE>
<TABLE><CAPTION>
RESTRICTED STOCK (S)
TOTAL VESTED UNVESTED VESTING
OUTSIDE DIRECTORS SHARES SHARES SHARES DATE
- -------------------- --------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
ALBERT E. BRAMMER 10,000 5,000 5,000 5/88
AUSTIN BONBOULIN 10,000 5,000 6,000 5/88
RICHARD EARL
PURKEY, SR. 10,000 5,000 5,000 5/88
--------- ---------- ------------
30,000 15,000 16,000
========= ========== ============
</TABLE>
(A) - EMPLOYMENT TERMINATION 2 WITH OPTIONS EXPIRING 5/27/03
(B) - SHARES VEST OVER FOUR YEARS
<TABLE><CAPTION>
VESTING SCHEDULES OPTIONS % VESTED
- ---------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
#1 4/24/89 25% 0 100 0
4/24/90 25%
4/24/91 25%
4/24/92 25%
#2 1/13/88 25% 108,250 100 108,250
1/13/89 25%
1/13/90 25%
1/13/91 25%
#3 5/8/90 25% 52,000 100 52,000
1/1/91 25%
1/1/92 25%
1/1/93 25%
OUTSIDE DIRECTORS 0
----------
EXERCISEABLE 01/14/95 160,250
==========
</TABLE>
EXPIRATION DATE SUMMARY
- ---------------------------
3/31/96 0
1/13/96 80,000
4/6/96 70,250
---------
150,250
=========
08/14/95
<PAGE>
<TABLE><CAPTION>
U.S. INTEC, INC.
STOCK OPTION GRANTS
LOANS
BEG VESTING
EMPLOYEES NUMBER EXERCISED DATE PRICE TYPE SCHEDULE
- ------------------------- -------- --------- ---------- ------------ ------ -------- -
<S> <C> <C> <C> <C> <C> <C>
KEN LATIOLAIS 10,000 4.80 I 2
30,000 8.75 N 2
JAMES BRADFORD POYNTER 12,400 12,000 08/24/83 4.80 I 1
50,000 10,000 08/01/84 7.375 N 1
40,000 EXPIRED
CRAIG NOBLE 10,000 4.80 I 2
24,000 9.75 N 2
GLENN WALLENUK 1,258 4.80 I 2
6,000 9.75 N 2
RICH RUSSBACK 5,000 4.80 I 2
7,500 9.75 N 2
PAUL GRAHAM 10,000 10,000 01/14/86 4.80 I 2
7,500 9.75 N 2
LACY (IKE) BRYAN 1,260 1,260 08/08/84 4.80 I 2
6,000 9.75 N 2
BRAD BURNETT 4,000 4.80 I 3
MIKE SPENCE 5,000 4.80 I 3
KENT FRANCOM 5,000 4.80 I 3
PAUL TURNER 5,000 4.80 I 3
ROANE RUDDY 15,000 4.80 I 3
WAYNE MILLER 2,000 4.80 I 3
ROBERT SOLIS 4,000 4.80 I 3
SHAWN WALKER 5,000 5,000 02/07/94 4.80 I 3
KIM GOODSON 2,000 4.80 I 3
GARY BAILEY 2,000 4.80 I 3
JODY YOUNG 3,000 3,000 08/13/83 4.80 I 3
DOMENIC MORELLI 10,000 10,000 EXPIRED A) 4.80 I 3
JOYCE CARTNER 2,000 4.80 I 3
GERALD SANDERS 10,000 10,000 EXPIRED A) 4.80 I 3
GREGG CONWAY 4,000 4.80 I 3
GARY RATHELL 2,000 4.80 I 3
-------- --------
280,000 101,750
======== ========
<PAGE>
<CAPTION>
U.S. INTEC, INC.
STOCK OPTION GRANTS
LOANS
DATE DATE END
EMPLOYEES GRANTED EXPIRED NUMBER
- ------------------------- ------- --------- --------
<S> <C> <C> <C>
KEN LATIOLAIS 4/8/86 4/8/86 10,000
8/3/87 1/13/88 30,000
JAMES BRADFORD POYNTER 0
4/24/86 8/31/96 0
3/31/96 0
CRAIG NOBLE 4/6/80 4/8/90 10,000
5/3/87 1/13/90 25,000
GLENN WALLENUK 4/6/86 4/6/90 1,280
8/3/87 1/13/88 6,000
RICH RUSSBACK 4/8/86 4/6/89 5,000
8/4/87 1/13/90 7,500
PAUL GRAHAM 4/8/89 4/8/90 0
8/3/87 1/13/90 7,500
LACY (IKE) BRYAN 0
8/3/87 1/13/90 5,000
BRAD BURNETT 4/8/86 4/8/90 4,000
MIKE SPENCE 4/8/86 4/8/90 5,000
KENT FRANCOM 4/8/86 4/8/90 5,000
PAUL TURNER 4/8/86 4/8/90 5,000
ROANE RUDDY 4/8/86 4/8/90 15,000
WAYNE MILLER 4/8/86 4/8/90 2,000
ROBERT SOLIS 4/8/86 4/8/90 4,000
SHAWN WALKER 4/8/86 4/8/90 0
KIM GOODSON 4/8/86 4/8/90 2,000
GARY BAILEY 4/8/86 4/8/90 2,000
JODY YOUNG 4/8/86 4/8/90 0
DOMENIC MORELLI 4/8/86 4/8/90 0
JOYCE CARTNER 4/8/86 4/8/90 2,000
GERALD SANDERS 4/8/86 4/8/90 0
GREGG CONWAY 4/8/86 4/8/90 4,000
GARY RATHELL 4/8/86 4/8/90 2,000
--------
184,250
========
</TABLE>
<PAGE>
Schedule 4.1(c)(ii) - Potential Violations/Comments Required
- ------------------- --------------------------------------
1. Consent of Somerset Trust Company, pursuant to that certain Promissory
Note, dated November 18, 1986, made by the Company is favor of Somerset Trust
Company (now known as Summit Bank), in the original principal amount of
$1,260,000, which provides that the holder of the note may declare it
immediately due and payable in full in the event there is a change of ownership
of the corporate borrower, unless the holder gives its prior written consent.
2. Consent of LaSalle National Bank, pursuant to that certain Security
Agreement, dated January 17, 1990, between The Exchange National Bank of Chicago
(now known as LaSalle National Bank) and the Company, which provides that the
Company will not enter into any merger or consolidation or sell, lease or
otherwise dispose of all or substantially all of its assets or enter into any
other transaction outside the ordinary course of business.
3. Consent of Community Bank, pursuant to that certain Commercial Real
Estate Lien Note, dated May 11, 1995, made by the Company in favor of Community
Bank, in the original principal amount of $1,000,000, which provides that the
holder of the note may declare it immediately due and payable in full in the
event the Company is a party to any merger or consolidation without obtaining
the holder's prior written consent.
4. Consents of Valley Recycling Works, Inc. and Thermo Manufacturing
Company, L.P., pursuant to that certain Sublease Agreement dated August 1, 1994,
between the Company and Thermo Materials, a division of Thermo Manufacturing
Company, L.P., which provides that the Company cannot assign the sublease
without Thermo's prior written consent or in violation of primary lease
agreement between Thermo and Valley Recycling Works, Inc., which provides that
the transfer of more than 25% of the voting control of the leasee constitutes an
assignment requiring the lessor's consent.
5. Pursuant to an Amendment, dated January 30, 1995, to the Security
Agreement dated January 17, 1990, between The Exchange National Bank of Chicago
(now known as LaSalle National Bank) and the Company, the Company has agreed to
grant to LaSalle National Bank as additional security for existing loans, a Deed
of Trust, Security Agreement, Assignment of Rents and Fixture Filing, relating
to the Company's real property located in Hoffman Estates, Illinois, Stockton,
California, North Branch, New Jersey, Corvallis, Oregon, Monroe, Georgia, and
Houston, Texas, which, when executed will prohibit the Company from selling,
conveying, transferring or assigning any beneficial interest in the Company or
in any corporation which owns all or part of the property.
6. Consent of MetLife Capital Corporation pursuant to that certain Loan
Security Agreement, dated September 29, 1993, which provides that the Company
may not enter into any merger that MetLife reasonably believes would adversely
affect the Company's ability to perform its obligations thereunder.
7. Consent of The CIT Group/ Equipment Financing, Inc. pursuant to those
certain Equipment Leases dated September 12, 1994 and January 6, 1995 and that
certain Cross-Collateral Security Agreement dated January 6, 1995.
<PAGE>
*8. The Company is required pursuant to the Industrial Site Recovery Act
to obtain the approval of the New Jersey Department of Environmental Protection
before transferring ownership of the Company's manufacturing plant located at
106 Meister Avenue, North Branch, New Jersey (including a transfer that is the
result of a change of control of the Company).
*Condition to Sub's closing of Offer
<PAGE>
Schedule 4.1 (g) - Litigation/Potential Liabilities
- ---------------- --------------------------------
1. See attached for a list of pending and settled litigation of the Company.
2. The Company received a notice, dated June 6, 1995, from the Texas Attorney
General relating to a warranty claim under the Deceptive Trade Practices Act.
3. For a description of the Company's OSHA noncompliance, see Schedule 4.1(n).
4. Warranties are provided with respect to the Company's products and claims
under such warranties may be made against the Company.
5. The wife and minor children of Ron Nicols, a former employee of the
Company, are receiving workers' compensation benefits, and have filed suit (or
indicated that they intend to file suit) against the treating physician,
anesthesiologist, and hospital in connection with Mr. Nicol's death. Mrs.
Nicols has not indicated any intention to bring suit against the Company;
however, the possibility remains that she could bring an action against the
Company.
6. The Company has informed Alridge, Incorporated that it does not intend to
proceed with the condition of a warehouse on the Company's property located at
193 Leroy Anderson Road, Monroe, Georgia. The Company expects that it will be
required to pay approximately $12,000 in connection with this contract but has
not received an invoice from Aldridge at this time.
7. S & S Roofing has joined the Company as a third-party defendant in a
counterclaim against Bradco Supply, alleging that products manufactured by the
Company and sold to S&S Roofing by Bradco Supply were defective. S&S Roofing is
seeking approximately $500,000 in damages. In connection with this claim,
Bradco Supply is currently withholding approximately $250,000 that it owes to
the Company.
8. On March 9, 1995, Leroy Thornton, an employee of H.L. Donnelly, was injured
while unloading asphalt at the Company's Houston plant. Mr. Thornton filed a
claim under his employer's workers' compensation insurance. The insurance
carrier notified the Company that it is subrogating the claim against the
Company. The subrogation, which will be handled by the Company's general
liability insurer, is expected to cost between approximately $10,000 and
$11,000. In addition, the Company has received a subpoena for information
concerning this claim which suggest additional legal action has been taken by
Mr. Thornton.
9. On June 28, 1995 the Company canceled the Master Agreement for InfoWork
Interactive Voice Services, dated September 19, 1994, between the Company and
AT&T Communications, Inc. The Company has agreed to pay $8,400 to At&T as
consideration for a full release of all of the Company's obligations under the
agreement.
10. According to California law, vacation pay accrues on a daily basis.
Despite the Company's 15-month wait for vacation policy, the Company has been
required to provide two of its employees in California with their accrued
vacation time and may have to provide the same to other of its employees in
California in the future.
<PAGE>
Schedule 4.1 (g)
PENDING LITIGATION
------------------
(1) No. 2089/86; J. Raymond Concklin, Ardelle K. Concklin, Peter R. Concklin,
Richard E. Concklin, Linda Hill and Douglas X. Kayer, d/b/a The Orchard of
Concklin, vs. Jeff Whiting, d/b/a Expert Roofing Company and Pat Rohan,
d/b/a All Type Roofing and U.S. Intec, Inc., pending in the Supreme Court
of the State of New York. Fire Loss - Alleged damages are $402,803.75;
however settlement value is $250,000.
(2) No. 154,157; Rapides Parish Airport Authority Vs. Dixie Roofing and
Sheetmetal Company, Inc., U.S. Intec, and Aetna Life and Casualty Insurance
Company is pending in the Ninth Judicial District Court, Parish of
Rapides, State of Louisiana. Warranty Claim - Alleged damages are
$58,977.50; however, settlement value is $8,500 in material.
(3) Hartford Insurance Company, as Subrogee for Alden Town Food Mart, Inc. Vs.
Philip H. Robmann, d/b/a Robmann Roofing Company, Wayne Robmann, U.S.
Intec, Inc. and B&L Wholesale, Inc., currently pending in the Superior
Court for Erie County, New York. Fire Loss - Alleged damages are $198,915.
(4) Cause No. 043-140588-92; Volunteers of America Housing Corporation and
Sierra Manor, Inc. vs. U.S. Intec, Inc., pending in Tarrant County, Texas.
Warranty Claim - Alleged damages are $124,000.
(5) Cause No. 92-01966; Pennswood Condominium Association Vs. U.S. Intec, Inc.
and Kaar-McFaddin, Inc., pending in Court of Common Pleas of Montgomery
County, Pennsylvania. Warranty Claim - Damages are unknown.
(6) Cause No. CPM-L-14-92; United Methodist Homes of New Jersey Vs. U.S.
Intec, Inc. and George Mahrer & Sons, Inc., pending in the Cape May County
Superior Court of New Jersey. Warranty Claim - Damages are unknown.
(7) Cause No. C-92-7447; Freeman Roofing & Storage, Inc., James W. Freeman and
Norma J. Freeman Vs. Atlas Roofing, Inc. and U.S. Intec, Inc. pending in
the District Court of Oklahoma County, Oklahoma. Warranty Claim - Damages
are estimated to be $180,000.
(8) Cause No. C-92-7432; Comrand Aviation Services, Ltd. Vs. U.S. Intec, Inc.,
Triplex Roofing & Coatings, Ltd., Rainer Maas, Paul G. Walker and Elite
Insurance Company, pending in the Supreme Court or British Columbia,
Canada. Warranty Claim - Damages are $73,036.45, excluding consequentials.
(9) Cause No. 92-18626; St. Mary's Roman Catholic Church Vs. Goreski
Construction Company, Alfred Panepinto, F.A.R.A, Paul A Kopf, Inc.,Charles
O. Muscheck, Mymar Roofing Company, Inc., Skyline Construction, Bouck &
Company, Inc., DeFlavis Contractor, Inc., Coppers Company, Inc., Bradco
Supply Corporation, U.S. Intec, Inc. Owen Associates, LTD., Glen-Gary
Corporation, Devido Ranier Stone & Marble Company and Cal Consulting,
pending in the Court of Common Pleas of Montgomery County, Pennsylvania.
Warranty Claim - Damages are unknown.
<PAGE>
Pending Litigation
Page 2
(10) Cause No. 93-000933; Bayon Bend Towers Council of Co-Owners Vs. U.S. Intec,
Inc., pending in the 61st Judicial District Court of Harris County, Texas.
Warranty Claim - Damages are alleged in excess of $200,000.
(11) Cause No. 534-1993; May Ron, Inc. Vs. Bradley S. Daniels, d/b/a Bradley's
Roofing and Home Improvements Vs. U.S. Intec, Inc., Pending in the Court of
Common Pleas of Beaver County, Pennsylvania. Warranty Claim - Damages are
estimated at $35,000.
(12) Cause No. 93-6127; William Baggett, Jr. and Cindy Baggett Vs. U.S. Intec,
Inc., J&G Products, Inc. and Professional Single-Ply Roofing Company,
Inc., In the 14th Judicial District Court of the Parish of Calcasieu,
Louisiana. Warranty Claim - Damages are unknown; however a settlement has
been tendered to Plaintiff at $3,500.
(13) Cause No. 9365090; William E. Joer, III and Rose Ann Medlin Vs. Ba-Cor
Enterprises, Inc. and U.S. Intec, Inc., pending in the 21st Judicial
District court of Harris County, Texas. Warranty Claim - Damages are
unknown.
(14) Cause No. CV93-105; Hines Realty Company, Inc. Vs. U.S. Intec, Inc., Eagle
Supply, Inc., Buford Strength, et al, pending in the Circuit Court in and
for Escambia County, Alabama. Warranty Claim - Alleged damages are
$93,000.
(15) Cause No. 93-CI-2207; St. Joseph Offion Park Association, Inc. Vs. Roger
Crank Construction Company, Inc., Roger Crank and U.S. Intec, Inc. pending
in the Fayette Circuit Court, First Division, Commonwealth of Kentucky.
Warranty Claim - Alleged damages are $53,474.
(16) Case No.95X1134064 1304; Callan Manor Condominium Association Vs. Damiano
Roofing Company, Bone Roofing Supply, Inc. and U.S. Intec, Inc., pending in
the Circuit Court of Cook County, Illinois, Municipal Department - First
District. Warranty Complaint - Seeks damages in $29,300.
(17) Cause No. 450-05-000656-906; Les Residences De Carrefour, Inc. Vs. Georges
Nadeau Inc., U.S. Intec, Inc., Les Couvreurs Barnard, Inc., S.B.C.S.
Experts-Conseils Inc. and Raymond Owen, pending in the Superior Court of
the Provence of Quebec, District of St. Francois, Canada. Warranty
Claim - Damages alleged are in the approximate sum of 120,000.
(18) Cause No; 03001-9210-CT-1339; RZSO Neat Company, Incorporated Vs. Tim
Medaris, Individually and d/b/a Tim & Daughters Construction, Reese
Wholesale Supply, Inc., and U.S. Intec, Inc., pending in the Bartholomew
Circuit Court in and for the State of Indiana. Fire Loss - Damages are in
excess of $3,000,000.
<PAGE>
Pending Litigation
Page 3
(19) No. 619250; Steve Shevack and Lynn Shevack Vs. Carter Elize, d/b/a Quality
Property Services, ICN Cooper, d/b/a New Dawn Enterprises, Houston Gutter
Service, U.S. Intec, Inc. and The Estate of Elizabeth Shapera, pending in
the County Court at Law Number 4 of Harris County, Texas. Warranty Claim -
Damages are alleged to be in the sum of approximately $39,000.
(20) No. 1072/94; Spoleta Construction & Development Vs. W. Kenneth Rose, Jr.,
d/b/a W. Kenneth Rose Sheet Metal Products and Ken Rose Sheet Metal &
Roofing, U.S. Intec, Inc., d/b/a Tri-Fly Roofing Products, pending in the
Supreme Court for the County of Monroe, State of New York. Warranty
Claim - Damages are unknown.
(21) No. 94-00312; Don Nelson and Nevis Buck Vs. U.S. Intec, Inc., pending in
the 261st Judicial District Court of Travis County, Texas. Warranty
Claim - Damages are $49,270.
(22) No. 124158-94; The Board of Managers of the 130 Barrow Street Condominium
Vs. Braxton Engineering, P.C., summit Waterproofing & Restoration Corp. and
U.S. Intec, Inc., pending in the Supreme Court of New York County, State of
New York. Warranty Claim - Damages alleged to be in excess of $250,000.
(23) No. LX636; First Unitarian Church of Richmond, Virginia Vs. Built-Up Roofs,
Inc. and U.S. Intec, Inc., pending in the Circuit Court of the City of
Richmond, Virginia. Warranty Claim - Damages are alleged to be
$214,005.50.
(24) No. 94-C-4292; All Products Automotive, Inc. Vs. U.S. Intec, Inc., pending
in the United States District Court for the Northern District of Illinois,
Eastern Division. Warranty Claim - Damages are unknown.
(25) Faxon Corporation Vs. U.S. Intec, Inc., pending in the district Court of
Harris County, Texas. Warranty Claim - Damages are alleged to be in excess
of the sum of $400,000.
(26) No. CI-94-8023; Bradco Supply Corporation Vs. S & S Roofing South, Inc., et
el Vs. Bradco Supply Corporation and U.S. Intec, Inc., pending in
the Circuit Court in and for the Ninth Judicial Circuit of Orange County,
Florida. Warranty Claim - Damages are unknown.
(27) No. 94-01366; Devon Medical Building partnership Vs. U.S. Intec, Inc. and
Sugartown Construction Company, Inc., in the Court of Common Pleas of
Chester County, Pennsylvania. Warranty Claim - Damages are unknown.
<PAGE>
Pending Litigation
Page 4
(28) No. 95190D-D; R & S Real Estate Management, Inc., Roland Thomas Ross,
Cheryl Roslyn Inslar Ross, John D. Smith and Carolyn Marie Ross Smith Vs.
Robert C. Moseley, d/b/a Bob Moseley Vinyl and U.S. Intec, Inc., pending
in the 16th Judicial District Court of St. Mary Parish in the State of
Louisiana. Warranty Claim - Damages alleged are below the sum of $50,000.
(29) No. 80-031-090; Katrina Heller, et al Vs. Kaminiar Family Trust, 12130 Ohio
Homeowners Association and Court Management Company Vs. Coordinated
Construction, Inc., pending in the Superior Court in and for Los Angeles
County, California. Intec is not actually a defendant in this lawsuit, but
has received demands for contribution and indemnity from Coordinated
Construction, Inc. Damages are unknown.
(30) No. 94-CP-26-391; Holiday Towers Condominiums Property Owners Association,
Inc. Vs. Otho S. Pool, Jr., individually, and d/b/a Custom Roofing, a/k/a
Otho S. Pool, Jr. and Company and U.S. Intec, Inc., pending in the Court of
Common Pleas, Fifteenth Judicial Circuit, Harry County, South Carolina.
Warranty Claim - Damages are unknown.
(31) No. L-3599-93; Adam Boren and Claire Boren Vs. Hall Building Corp.,
Consolidated Construction Management, Inc., U.S. Intec, Inc., Bradco-
Lakewood, Kowalski Roofing Corp., Jack Purvis, John Does 1-5, ABC
Corporation and KFI Company, pending in the Superior Court of New Jersey,
Monmouth County. Warranty Claim - Damages alleged are $43,826.
(32) No. 616279; Iome Young Gray Vs. U.S. Intec, Inc. and Alamo Contractors Co.,
Inc., d/b/a Alamo Roofing Company, pending in the County Civil Court at Law
Number 2, Harris County, Texas. Warranty Claim - Damages are unknown.
(33) no. 1995CV00710; Glenn E. Miller, Jr., dba The Harleigh Inn Vs. U.S. Intec,
Inc.; in the Court of Common Pleas of Stark County, Ohio. Warranty Claim -
Damages are unknown.
(34) Case No. 969278; Montgomery-Jackson Partners Vs. Exterior Building
Services, Inc., dba DFA Building Services, Ben David Day, dba Urban
Renaissance, U.S. Intec, Inc., Frontier Pacific Insurance Co., Surety
Company of the Pacific and Does 1-50, inclusive, In the Superior Court of
California in and for the County of San Francisco. Warranty Complaint -
Damages Unknown.
(35) Case No. 30-199-00106-95; Partek Insulations, Inc. Vs. U.S. Intec, Inc.,
pending before the American Arbitration Association. Demand for
Arbitration - Damages are alleged to $176,601.34; Counterclaim filed by
Intec for complete offset plus recovery of additional expenses/damages as
authorized under the Private Label Sales Agreement entered into between
the parties.
<PAGE>
Pending Litigation
Page 5
(36) Index No. 5093/95; George W. Long, Inc., d/b/a Seabreeze Amusement Park Vs.
U.S. Intec, Inc. and BSL Wholesale Supply, Inc., pending in the Supreme
Court of the State of New York, county of Monroe. Fire Loss - Seeks
damages of $4,000,000 plus interest, attorney's fees and cost of suit.
(37) Cause No. 95-011061; State of Nevada Public Works Board Vs. Washoe
Roofings & Insulation Supply Co., Inc., d/b/a Van Dyne & Sons Roofing,
Intec Permaglas and Do 1 through 10; In the First Judicial District Court
of the State of Nevada-Carson City. Warranty Complaint - Seeks damages in
the amount of $145,000 for special damages, plus general damages,
consequential damages; attorney's fees and costs in an unknown amount.
(38) Docket No. 941-313; Pamida, Inc. Vs. U.S. Intec, Inc., pending in the
District Court of Douglas County, Nebraska. Warranty Complaint - Damages
are alleged in excess of $122,000.
(39) Civil Action No. 11289-1995; David T. DeLuco, et ux and Heritage Place
Gallery of Floors, Inc. Vs. Tri-Ply Company, pending in the Court of Common
Pleas of Beaver County, Pennsylvania. Warranty Complaint - This claim is
unliquidated and the amount of damages is not alleged in the pleadings.
(40) Cause No. 95-039325; Leroy Thornton Vs. U.S. Intec, Inc. et al, pending in
the 270th Judicial District Court of Harris County, Texas. Personal Injury
Claim arising out of the rupture of a hose during delivery of asphalt which
resulted in burn injuries to the driver of the asphalt truck. Total
damages are uncertain although indication has been received that the total
worker's compensation subrogation interest is approximately $11,000, which
gives some indication as to the exposure created by the claim.
<PAGE>
SETTLED CLAIMS SINCE JANUARY, 1995
----------------------------------
(1) Carl Martino's and Phil Martino's Westside Appliance & Furniture Corp. Vs.
U.S. Intec, Inc. and B & L Wholesale, Inc., pending in the Supreme Court
for the County of Erie, State of New York. This suite was settled for the
sum of $250,000 which was paid by U.S. Intec, Inc.
(2) Deston Green Housing Company, Inc. Vs. U.S. Intec, Inc. and D.M.E.
Contracting, Inc., d/b/a National Roofing System, pending in the Supreme
Court of the County of Nassau, State of New York. This suit was settled
for the total sum of $25,000. Amerisure Insurance Companies paid
$20,000, and U.S. Intec, Inc. paid $5,000.
(3) No. CV-91-398; M & E Valve Company, a Division of McWain, Inc., Vs. U.S.
Intec, Inc., Johnny Abney, Individually and d/b/a Abney Roofing and
Construction, and unknown John Does, pending in the Circuit Court of
Calhoun County, Alabama. This suit was settled for the total sum of
$90,000. National Union Fire Insurance Company paid $62,000, U.S. Intec,
Inc. paid $7,500 (representing its deductible) and the Texas Property &
Casualty Insurance Guaranty Association paid $20,000.
(4) Cause No. ATL-L-006073-92; Benoit New York Avenue Associates, Ltd. Vs.
U.S. Intec, Inc., Abraham & Addison Construction Company, Inc. and Abraham
& Addison Construction Company, Inc., d/b/a Abraham & Addison Roofing,
pending in the Superior Court of Atlantic County, New Jersey. This suit
was settled for $70,000, of which U.S. Intec, Inc. paid the sum of $23,330.
(5) Cause No. 92-C-206; Unified School District 490 Vs. Transamerica Premier
Insurance Company, Inc. and Mid-America Roofing, Construction & Supply
Company, Inc. Vs. U.S. Intec, Inc. and Midwest Sales Company of Iowa, Inc.,
pending in the 13th Judicial District of Butler County, Kansas. This suite
was settled for the total sum of $50,000, of which Amerisure Insurance
Companies paid $18,500.
(6) No. 93CV-1242; Mercury Manor Homeowners' Association, Inc. Vs. U.S. Intec,
In., pending in the Chancery Court for Rutherford County, Tennessee. This
suit was settled for $13,276.50. Amerisure Insurance Companies paid
$4,776.50 and U. S. Intec, Inc. paid $3,444.
(7) No. 94CV-00684; Woodmen of the World, Thomasville Lodge #206 Vs. U. S.
Intec, Inc., pending in the General Court of Justice, Superior Court
Division, Davidson County, North Carolina. This suit was settled for the
sum of $9,163. Amerisure Insurance Companies and U. S. Intec, Inc. split
the cost of settlement, each paying $4,581.50
(8) Case No. CL94-61; Kathleen Bell Collett Vs. U.S. Intec/Brai and Wall
Keating and Air Conditioning, pending in the Circuit Court of the City of
Colonial Heights, Virginia. This suit was settled for $7,500. Amerisure
Insurance Companies paid $3,750, and U.S. Intec, Inc. paid $3,750.
<PAGE>
(9) Case No. 93-CV-438; White Lakes Plaza Associates, L.P. Vs. U.S. Intec,
Inc., Exterior Technologies Corp. and Professional Roof Inspectors, pending
in the District Court of Shawnee County, Kansas, Division 13. This suit
was settled for the sum of $200,000 paid by National Union Fire Insurance
Company.
(10) Cause No. 820; Trustee of Metropolitan Council United Brother of Carpenters
and Joiners of America Vs. Highway Mission Tabernacle Vs. J.A. Miller, Inc.
and Daniel Iannone Vs. Fred R. Wallace & Son and Thomas Holmes, et al Vs.
U.S. Intec, Inc., pending in the Court of Common Pleas of Philadelphia
County, Pennsylvania. Settled by contribution made by Texas Property &
Casualty Insurance Guaranty Association (due to receivership of Employers
Casualty Company) on behalf of U.S. Intec, Inc.
(11) Cause No. 92-07856; Chris Patterson Vs. U.S. Intec, Inc. and River City
Roofing Company, Inc., currently pending in the District Court of Travis
County, Texas. This suit was settled for the sum of $12,000, $4,000 of
which was paid by U.S. Intec.
(12) No. 94M2-1343; Center for Respiratory Therapy, Inc. Vs. U.S. Intec, Inc.,
pending in the Circuit Court of Cook County, Illinois. This suit was
settled for the sum of $6,000 paid by U.S. Intec, Inc.
(13) No. CV94-26084; Hydraulic Power Systems, Inc. Vs. U.S. Intec, Inc., pending
in the Circuit Court of Jackson County, Missouri. This suit was settled
from the sum of $4,500 paid by U.S. Intec, Inc.
In addition to the above-referenced litigation, the following violations over
$25,000 have been resolved during the last five years:
1. North Branch - 1992 - NJDEP settlement, penalty $17,000 on log nos.
A880205, A880206, A880207 (totalling $15,000) and log no. 893133 ($2,000)
1994 - OSHA citation and penalties, penalty $5,425
1994 - NJDEP stack no. 1 permit violation, penalty $9,500
2. Port Arthur - 1993 - OSHA citations and penalties $10,250
3. Stockton - 1993 - SJVUACD NOV - operations of process equipment during
period of emission control equipment failure, penalty $30,000
Various audits by the IRS and various state agencies have resulted in certain
non-material payments over the past five years.
<PAGE>
Schedule 4.1(i) -- Employee Benefits
--------------- -----------------
1. U.S. Intec, Inc. 401(k) Plan
2. U.S. Intec, Inc. 1994 Executive Annual Cash Incentive Plan
3. U.S. Intec, Inc. 1985 Stock Option Plan
4. U.S. Intec, Inc. 1994 Long-term Incentive Plan
5. U.S. Intec, Inc. Short Term Disability Plan
6. U.S. Intec, Inc. Long Term Disability Plan
7. U.S. Intec, Inc. Section 125 (Cafeteria) Plan
8. U.S. Intec, Inc. Employee Health Care Plan
9. U.S. Intec, Inc. Life Insurance Plan
10. U.S. Intec, Inc. Supplemental Life Insurance Plan
11. All of the participant's in the Company's 401(k) Plan are entitled to
receive benefits after termination of employment. The 401(k) Plan is a
funded plan.
12. The Company's Employee Policy and Procedure Manual provides for the
payment of specified severance benefits to full-time employees who are laid
off (or, in the case of salaried exempt employees, terminated for reasons
other than gross misconduct).
13. The Company has entered into Key Employee Severance Agreements with
each of Danny J. Adair, Ken Latiolais, J. Roane Ruddy and S. Craig Noble,
providing for the payment of specified benefits after termination of
employment.
14. The Company's Employee Policy Manual provides for the payment of
certain severance benefits to full-time hourly employees and full-time non-
exempt salaried employed who have been employed for a minimum of one year
and whose employment is terminated.
15. The Merger Agreement provides that each outstanding option to purchase
Common Stock of the Company shall represent the right to receive the Option
Consideration, as defined therein.
16. Pursuant to the terms of the Company's 1994 Long-Term Incentive Plan,
all of the restricted stock granted to the Company's Independent Directors
will vest immediately upon consummation of the transactions contemplated by
the Merger Agreement.
<PAGE>
Schedule 4.1(j) -- Material Changes
--------------- ----------------
1. The Company intends to close its Chicago office and sublease the space
by December 31, 1995. In connection therewith, the Company will incur the
costs of transferring its employees from Chicago to Georgia.
2. The Company subleases a portion of the warehouse located at 3601 N.
Navone Road, Stockton, California to Hoechst-Celanese for $4,375 per month
pursuant to a verbal agreement. In June 1995, Hoechst-Celanese notified
the Company that it intends to terminate this arrangement in October 1995.
3. On July 1, 1995, the Company entered into a Lease Agreement with
Armco, Inc. for premises consisting of approximately 35,000 square feet
located at Complex 19 within Greens Port Industrial Park. The lease is for
a period of three months, terminating September 30, 1995, with a 30-day
written notice cancellation.
4. Agreements between the Company and Thermo Manufacturing Company, L.P.,
dated September 1, 1995 relating to consignment, private label sales and
confidentiality.
5. The Company currently is negotiating the renewal of its Licensing
Agreement with Asphalti Breitner, which is due to expire on December 31,
1995, provided that the terms of such renewal shall be satisfactory to
Parent.
6. Asphalti Breitner has expressed interest in having the Company supply
certain raw materials to it. The Company has provided Asphalti Breitner
samples of certain materials to determine whether future purchases are
possible.
7. The Company has settled certain litigation matters, as referenced on
Schedule 4.1(g).
8. The Company entered into a premium finance agreement with Imperial IPF
on July 1, 1995 for $240,000 which represents the insurance premium for
property located at its Houston, Texas facility for the period June 13,
1995 through 1996.
9. The Company entered into a sublease for warehouse space, dated
September 1, 1995, with Thermo Manufacturing Company, L.P. for a period of
one year.
<PAGE>
Schedule 4.1(m) -- Intangible Property
--------------- -------------------
1. A list of all of the Company's registered patents and trademarks
is attached hereto.
2. Pursuant to a License Agreement dated as of January 1, 1986,
between the Company and Asphalti Breitner S.p.A., the Company has the right
to use certain proprietary technology owned by Asphalti Breitner to produce
products for sale anywhere in world except Europe, and the right to use the
registered trademark "Brai" in the United States. This Agreement is
scheduled to expire on December 31, 1995. The Company is currently
negotiating with Asphalti Breitner regarding the renewal of the agreement,
provided that the terms of such renewal shall be satisfactory to Parent.
3. Pursuant to a Licensing Agreement dated as of February 1, 1993
between the Company and Thunderhawk Manufacturing Company, L.P., the
Company granted to Thunderhawk the right to use certain proprietary
technology located at the Company's Monroe, Georgia plant to produce built-
up roofing products, and the exclusive right to use the registered
trademark "Tri-Ply and Design." If Thunderhawk fully performs its
obligations under the Licensing Agreement, the Company has agreed to
transfer ownership of the "Tri-Ply and Design" trademark to Thunderhawk
upon the expiration of the Licensing Agreement on February 1, 2003.
4. Pursuant to a Trademark License Agreement dated May 3, 1995
between the Company and Minnesota Mining and Manufacturing Company, the
Company has the right to use the registered trademarks "3TM Algae BlockTM"
in connection with the sale of shingles that have been manufactured with
the 3M Algae Block Copper Roofing Granule System. In connection with this
agreement, the parties entered into a Limited Warranty Agreement, pursuant
to which Minnesota Mining and Manufacturing agreed to provide a 10-year
warranty for the 3M Algae Block Copper Roofing Granule System.
5. The rights to the patent issued for an "Apparatus for Cutting of
Roofing Membrane" was assigned to MWeld by Marshall McLeod, the owner of
the patent, in 1990. In 1993, Mr. McLeod requested that the patent be
returned to him; however, MWeld still has the original patent, and there
has been so correspondence regarding this matter since July 1993.
6. The Company has orally granted to Centrotex S.A. de C.V. the
right to use the name "Amerival" in connection with the sale in Mexico of
products manufactured by the Company.
7. The Company has granted to Ogura Industries the right to use the
name "Elite" in connection with the resale in Japan of products
manufactured by the Company.
<PAGE>
<TABLE><CAPTION>
U.S. INTEC, INC.
Registered Patents and Trademarks
TYPE
Patent(P)/ FILING
FILE NO. Trademark(T) COUNTRY TITLE DATE SERIAL NO.
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Intec-2* P U.S. Solubilized Polymers in Coal 02-14-94 08/195,621
Tar Pitch
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-2-A* P U.S. Solubilized Polymers in Coal 08-15-94 PCT/U894/10526
Tar Pitch
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-2-B* P Mexico Solubilized Polymers in Coal 02-19-95 960905
Tar Pitch
U.S. Intec-8** T U.S. Majestic 03-04-94 74/498,783
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-10** T U.S. Sundance 03-04-94 74/496,782
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-11** T U.S. Legend 03-04-94 74/497,188
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-13** T U.S. Rio Grande 03-04-94 74/497,183
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-14** T U.S. Timeshield 03-04-94 74/496,752
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-17** T U.S. Pinnole 03-28-94 74/805,410
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-18 T Texas SP4
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-19 T T_______ BRAI
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-21 P U.S. Method and Means for Producing 10-01-84 08/656,514
Waterproofing Membranes
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-22 T U.S. Quickpitch 04-13-90 74/048,580
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-23 T U.S. Quickpitch 06-17-90 74/070,759
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-24 T U.S. Permaglas 10-03-90 73/755,625
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-25 T U.S. USICAD 11-19-90 74/118,788
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-26 of 6 T U.S. MWELD 04-03-90 74/045,446
- -------------------------------------------------------------------------------------------------------------
U.S. Intec-27 of 7 T U.S. MWELD 03-23-90 74/041,334
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
ISSUE PATENT NO./ EXPIRATIONDATE/
FILE NO. DATE REG. NO. RENEWAL DATE
- -------------------- --------------------------------------
<S> <C> <C> <C>
U.S. Intec-2* Pending
- -------------------- ----------------------------------
U.S. Intec-2-A* Pending
- -------------------- ----------------------------------
U.S. Intec-2-B* Pending
U.S. Intec-8** Pending
- -------------------- ----------------------------------
U.S. Intec-10** Pending
- -------------------- ----------------------------------
U.S. Intec-11** Pending
- -------------------- ----------------------------------
U.S. Intec-13** Pending
- -------------------- ----------------------------------
U.S. Intec-14** Pending
- -------------------- ----------------------------------
U.S. Intec-17** Pending
- -------------------- ----------------------------------
U.S. Intec-18 43483 09-06-94
- -------------------- ----------------------------------
U.S. Intec-19 43982 09-06-94
- -------------------- ----------------------------------
U.S. Intec-21 04-22-86 4,584,210 10-01-04
- -------------------- ----------------------------------
U.S. Intec-22 07-02-91 1,649,487 07-02-01
- -------------------- ----------------------------------
U.S. Intec-23 07-09-91 1,650,157 07-09-01
- -------------------- ----------------------------------
U.S. Intec-24 01-22-91 1,632,352 01-22-01
- -------------------- ----------------------------------
U.S. Intec-25 06-23-92 1,696,865 06-28-92
- -------------------- ----------------------------------
U.S. Intec-26 of 6 01-15-91 1,631,290 01-15-91
- -------------------- ----------------------------------
U.S. Intec-27 of 7 12-25-90 1,628,932 12-25-00
- -------------------- ----------------------------------
</TABLE>
<PAGE>
<TABLE><CAPTION>
TYPE
Patent(P)/ FILING
FILE NO. Trademark(T) COUNTRY TITLE DATE SERIAL NO.
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Intec-28 T U.S. M & Design 06-03-90 73/818,869
- --------------------------------------------------------------------------------------------------------
U.S. Intec-30 T U.S. M Design for Metallic Vent 08-14-90 73/819,112
Covers for Roof Deck Protrusions
- --------------------------------------------------------------------------------------------------------
U.S. Intec-31 P U.S. Speed Control for Roof Welding 03-06-90 07/349,542
Apparatus
- --------------------------------------------------------------------------------------------------------
U.S. Intec-32 P U.S. Improved Single Ply Roofing 10-28-84 06/885,920
Base Sheet Adherence Method
- --------------------------------------------------------------------------------------------------------
U.S. Intec-33 T U.S. Rabbit Design Mark 05-17-90 74/069,713
- --------------------------------------------------------------------------------------------------------
U.S. Intec-34** T U.S. Royalwood 03-28-94 74/505,914
- --------------------------------------------------------------------------------------------------------
U.S. Intec-50 of 19 T Texas Rabbit Design
- --------------------------------------------------------------------------------------------------------
P Apparatus for Cutting Roofing
Membrane***
- --------------------------------------------------------------------------------------------------------
P Vent Cover, Pitch Pan and Roof
Drain: Process for Making Roof
Deck Accessories and Product
Thereof
- --------------------------------------------------------------------------------------------------------
P Hot Plate Welding Device***
- --------------------------------------------------------------------------------------------------------
P Combined Sheet Metal Flashing 06/740,620
and Bitumen Membrane Strip
- --------------------------------------------------------------------------------------------------------
U.S. Intec BRAI 7-31-80
- --------------------------------------------------------------------------------------------------------
<CAPTION>
ISSUE PATENT NO./ EXPIRATIONDATE/
FILE NO. DATE REG. NO. RENEWAL DATE
- --------------------- --------------------------------------
<S> <C> <C> <C>
U.S. Intec-28 09-11-90 1,612,666 09-11-00
- --------------------------------------------------------------------------------------------------------
U.S. Intec-30 03-20-90 1,567,442 03-20-00
- --------------------------------------------------------------------------------------------------------
U.S. Intec-31 12-10-01 5,072,097 03-06-00
- --------------------------------------------------------------------------------------------------------
U.S. Intec-32 05-13-88 4,588,458 10-26-04
- --------------------------------------------------------------------------------------------------------
U.S. Intec-33 06-11-91 1,647,455 08-11-91
- --------------------------------------------------------------------------------------------------------
U.S. Intec-34** Pending
- --------------------------------------------------------------------------------------------------------
U.S. Intec-50 of 19 11-20-94 44243
- --------------------------------------------------------------------------------------------------------
12-18-90 4,997,673
- --------------------------------------------------------------------------------------------------------
12-24-91 DBS 318,101
- --------------------------------------------------------------------------------------------------------
7-31-86 4,743,332
- --------------------------------------------------------------------------------------------------------
8-30-88 DBS 297,465
- --------------------------------------------------------------------------------------------------------
U.S. Intec 5-17-83 1237857
</TABLE>
*Subject to the Coal Tar Assets Sale
**Subject to the Houston Assets Sale
***Abandoned/lapsed
<PAGE>
4.1(n) Disclosure
4.1(n)(ii)
1. North Branch Facility, Branchburg, NJ
-------------------------------------
U.S. Intec letter, Case Nos. 95-5-23-1753-58,95-5-23-1801-26, dated
5/30/95, regarding reporting of Weston groundwater and soil samples
detecting VOC's, metals and petroleum hydrocarbons; NJDEP letter,
Incident #95-5-23-1801-26, dated 5/30/95, regarding suspected release of
hazardous substances.
2. Port Arthur Plant, Port Arthur, TX
----------------------------------
Texas Water, Commission ("TWC") letter, dated 3/1/93, regarding
violations of the solid waste rules, including unauthorized discharges.
3. Fannett Warehouse, Port Arthur, TX
----------------------------------
Texas Water Commission ("TWC") letter, dated 3/1/93, regarding violations
of the solid waste rules, including unauthorized discharges.
4. Corvallis Plant, Corvallis, OR
------------------------------
ODEQ letter, dated 5/25/95, approving sampling plan to determine if
contaminated soil remains in vicinity of the former UST excavations.
5. Thermo Plant, Chandler, AZ
--------------------------
The Thermo Plan is required to connect each mixing vessel to the central
dust collection system.
<PAGE>
4.1(n)(v)
1. The southwestern portion of the North Branch facility historically may
have been used for the storage and/or disposal of solid waste.
2. Port Arthur Plant, Port Arthur, TX
----------------------------------
Raw materials such as polymer product historically were stored at various
outdoor locations at the Port Arthur Plant. Some of this material has
deteriorated and become solid waste. Such disposal currently requires a
solid waste permit.
3. Fannett Warehouse, Port Arthur, TX
----------------------------------
Solid waste historically was disposed of on-site. Such disposal
currently requires a solid waste permit.
4. MWeld Plant, Nederland, TX
--------------------------
Solid waste historically was disposed of on-site. Such disposal
currently requires a solid waste permit.
5. Houston Plant, Houston, TX
--------------------------
Approximately 120 drums, 13,000 rolls of off-spec premium coal tar, 200
cubic yards of associated soil and a refuse file containing concrete,
soil and miscellaneous wastes are stored at the Houston Plan without a
permit.
<PAGE>
4.1(n)(vii)
1. North Branch Facility, Branchburg, NJ
--------------------------------------
The North Branch Facility is required to obtain a stormwater permit. A
Request for Authorization under NJPDES Industrial General Permit No.
NJ008315 was submitted on 6/15/95. Public notice was issued on 06/29/95.
2. Houston Plant, Houston, TX
--------------------------
The Houston Plant applied for wastewater discharge permits from EPA and
TNRCC on April 12, 1995. As of July 20, 1995, neither EPA nor TNRCC have
issued a response. Currently, the Houston Plant's wastewater is
discharged under permits held by ARMCO Steel.
<PAGE>
4.1(n)(viii)
North Branch Facility, Branchburg, NJ
- -------------------------------------
The North Branch Facility is required to comply with the New Jersey
Industrial Site Recovery Act prior to a change in ownership.
<PAGE>
4.1(n)(ix)
1. North Branch Facility, Branchburg, NJ
-------------------------------------
OSHA Citation and Notification of Penalty, Inspection No. 109913236,
dated 7/13/94.
2. Port Arthur Plant, Port Arthur, TX
----------------------------------
OSHA Citation and Notification of Penalty, Inspection No. 107488413,
dated 9/28/93.
3. Houston Plant, Houston, TX
--------------------------
Several environmental reports prepared by Dames & Moore consultants
documented the historical release of Hazardous Materials at the Houston
Plant and surrounding properties prior to the Company's ownership of the
Houston Plant. The Houston Plant has been investigated by EPA and TNRCC
and is located within the 800-acre Armco Houston Works property, which is
listed on the Comprehensive Environmental Response and Liability
Information System ("CERCLIS"), No. TXD00802942.
4. Corvallis Plant, Corvallis, OR
------------------------------
OSHA Citation and Notification of Penalty, Inspection No. 124812389,
dated 5/16/95.
5. Monroe Plant, Monroe, GA
------------------------
OSHA Citation and Notification of Penalty, Inspection No. 107183923,
dated 9/13/93.
<PAGE>
Schedule 4.1(o)-Material Contracts
- --------------- ------------------
Key Employee Severance Agreements, dated as of May 9, 1995, between the
Company and each of Danny J. Adair, Ken D. Latiolais, J. Roane Ruddy and
S. Craig Noble.
Sales Representative Agreements as listed on Annex A attached hereto.
The Company occasionally makes advances to employees and sales
representatives, which generally are repaid through payroll or commission
deductions.
Employment Contract dated June 3, 1983, between U.S. Intec, Inc. and Jeff
Hughes.
Debt Restructuring and Non-Competition Agreement, dated September 28, 1990,
between the Company and Danny J. Adair.
Pursuant to the standard employment agreement entered into between the
Company and its employees, each employee covenants not to compete with the
Company during the term of such employee's employment and for three years
thereafter.
Promissory Notes, dated September 28, 1990 and December 31, 1993, made by Danny
J. Adair in favor of the Company in the original principal amount of $2,803,000,
and related Global Modification and Restructuring Agreement.
Registration Rights Agreement, dated January 12, 1995, between the Company and
Robert G. Hoag.
Registration Agreement dated January 12, 1995, between the Company, Danny Adair,
First Southwest Company, 490 Park Joint Venture and the Umphrey Family
Partnership.
Consignment Agreement dated July 31, 1989, between the Company and Geo
Industries, a Division of Henry Company, terminable within 60 days without
penalty.
Lease Agreement, dated July 1, 1994, between the Company and Frontier
Development, Ltd., for premises located at 704 Highway 365, Port Arthur, Texas.
Lease Agreement dated May 1, 1995, between the Company and Frontier Development,
Ltd., for premises located at 202 S. Garden Drive, Beauxart Gardens, Texas.
Lease Agreement, dated May 11, 1994, between the Company and L&P Realty for the
premises located at 18 Culnen Drive, Branchburg, New Jersey.
Lease Agreement dated September 16, 1992, between Intec-Permaglass, a division
of the Company, and Thomas Hodges, for premises located at 785 Adamson Drive,
Monroe, Georgia (now on month-to-month basis).
Lease Agreement, dated January 9, 1992, between the Company and Armor Investment
Co., for premises located at 3601 North Navone Road, Stockton, California.
<PAGE>
Sublease Agreement, dated September 1, 1995 between the Company and Thermo
Materials, a Division of Thermo Manufacturing Company, L.P., for a portion
of the Premises located at 401 E. Ray Road, Chandler, Arizona.
Lease Agreement dated as of March 14, 1994, between the Company and Armco, Inc.,
d/b/a Greensport Industrial Park, for the premises located at 13609 Industrial
Boulevard, Houston, Texas.
On July 1, 1995, the Company entered into a Lease Agreement with Armco, Inc. for
premises consisting of approximately 35,000 square feet located at Complex 19
within Greens Port Industrial Park. The lease is for a period of three months,
terminating September 30, 1995, with a 30-day written notice of cancellation.
Cross-Collateral Security Agreement, dated January 26, 1995, between the Company
and CIT Group/Equipment Financing, Inc.
Master Lease Agreement, dated September 28, 1994, between the Company and Yale
Financial Services, Inc.
Equipment Rental Agreement, dated April 15, 1993, between the Company and First
Source Financial Services.
Consignment Agreement, dated March 2, 1994, between the Company and Thermo
Materials, a Division of Thunderhawk Manufacturing Co., L.P., terminable within
60 days without penalty.
Vehicle Lease Service Agreement, dated May 19, 1992, between the Company and
Penske Truck Leasing Co., L.P.
Equipment Leases, dated May 24, 1994, between the Company and Canon Financial
Services.
Lease Agreement, dated June 2, 1995, between the Company and Toyota Lift of
Houston.
Equipment Leases between the Company and Pitney Bowes Credit Corporation.
Equipment Lease dated March 2, 1992, between the Company and Apple Unit Leasing,
Inc.
Interests of Mirex Corporation in certain equipment leased to MWeld pursuant to
Lease Agreement, dated September 11, 1995.
Consulting Agreement dated December 9, 1991, between the Company and Elmore
Nelson.
First Southwest engagement Letter in connection with the Merger Agreement and
transactions contemplated therein.
<PAGE>
Agreement, dated as of January 1, 1995,between the Company and Air Recon, a
division of Recon Environmental Corp., for the provision of continuous
environmental services at the Company's New Jersey manufacturing facility.
Various Services and Maintenance Agreements between the Company and AT&T
Communications, Inc.
Gas Transportation Agreement, dated March 23, 1994, between the Company and
Southern Union Gas Company, relating to the supply of natural gas to the
Company's Port Arthur facilities.
Standard Membrance Supply Agreement, dated February 10, 1995, between the
Company and Liquid America Corporation, relating to the supply of nitrogen.
Agreement, dated February 17, 1995, between the Company and Exxon Company,
U.S.A., relating to the purchase of asphalt by the Company.
Gas Sales Contract, dated as of October 1, 1994, and letter agreement, dated
February 5, 1995, between the Company and Entex, a division of Noram Energy
Corporation.
Letter Agreement, dated February 10, 1995, between the Company and Minnesota
Mining and Manufacturing Company, for the purchase of roofing granules.
The Company issues purchase orders for long-term commitments for delivery of
polymers.
Natural Gas Sales Agreement dated April 1, 1995, between the Company and KCS
Energy Marketing, Inc. related to supply of natural gas to the New Jersey
facility.
In order to repay the cost of certain equipment purchased by Luzenac America,
Inc., the Company has agreed to purchase talc from Luzernac America, Inc., at an
increased price until the full amount is repaid, with the excess charge
($10.00/ton) to be applied against the original $53,840 purchase price of the
equipment.
The Company has entered into Re-Label Agreements with other manufacturers which
provide that the Company shall purchase manufactured products at specified
prices for resale by the Company under its own label. The Company has Re-Label
Agreements with the following manufacturers:
- Apache Products Company
- Thermo Manufacturing Company, L.P., d/b/a Thermo Materials
- Nestle Oil Services, Inc.
- Gulf States Asphalt Company
- Southeastern Asphalt Products, Inc.
- Tru-Fax Corporation
- Danse Corporation
- United Asphalts, Inc.
<PAGE>
- SIBO Incorporated
- RMax, Inc.
- NRG Barriers, Inc.
- Schuller Roofing Systems
- FR, Inc.
- Continental Materials, Inc.
- Koch Materials Company
- RawPing Company, Inc.
- Cast Strip of America Corporation
- Cast Products, Inc.
- Atlas Energy Products
- Partek Insulation, Inc.
- International Permalite, Inc. (now knows as BMCA Insulation)
- National Varnish Company (now knows as ALCO-NVC, Inc.)
- Four Star Roofing
- Cryson Refining, Inc.
- Eagle Asphalt Products
- Trunball
- ChemRex, Inc.
Agreement, dated February 8, 1995, between the Company and Apollo Environmental
Strategies, Inc. for the removal of an underground storage tank at the Company's
Houston facility.
Agreement between the Company and Automated Data Processing, Inc., for payroll
processing.
Brokerage Service Agreement, dated October 10, 1994, between the Company and
Marsh & McLennan, Incorporated, for insurance brokerage services.
Gas Purchase and Sales Agreement dated October 10, 1994, between the Company and
Redwood Resources, Inc., relating to the supply of natural gas to the Company's
Stockton, California facility (gas supply and interstate transportation).
Administration Agreement, dated June 1, 1995, between the Company and Top
Priority Administration, Inc.
Consignment Agreement, dated March 27, 1992, between the Company and National
Varnish Co., terminable within 60 days without penalty.
Gas Sales Agreement between the Company and Mercado Gas Services, Inc. dated
March 15, 1988 and Letter Agreement, dated June 1, 1995 for purchase of natural
gas at Port Arthur, Texas facility.
Natural Gas Transportation Agreement, dated September 1, 1995, between the
Company and PG&E for supply of natural gas to Stockton, California facility.
<PAGE>
Agreements exist which extend the trade payables of the Company to the
following suppliers of materials: Minnesota Mining and Manufacturer,
Riechel & Drews, Hoechst Celanese and Polytex.
Agreement between the Company and Thermo Manufacturing Company, L.P. as to
that certain consignment agreement dated September 1, 1995.
Agreement between the Company and Thermo Manufacturing Company, L.P.
regarding private label sales, dated September 1, 1995.
Agreements listed on Schedule 4.1(m).
Guaranty, dated March 25, 1995, of indebtedness of Thermo Manufacturing
Company, L.P., made by the Company in favor of Community Bank.
Guaranty Agreement, dated November 18, 1994, of indebtedness of
Thunderhawk Manufacturing Company, L.P., (now Thermo Manufacturing
Company, L.P.) made by the Company in favor of Neste Oil Services, Inc.
Asset Purchase Agreement, dated February 4, 1994, among Neste Thermo, and
Neste Oil Services, Inc., as Sellers, Thunderhawk Manufacturing, L.P., as
Buyer, joined by the Company, as Guarantor.
The Company has entered into a Corporate Business Travel Account Agreement
with American Express Travel Related Services Company, Inc. The terms of
this agreement required the Company to pay all amounts charged to the
Business Travel Account which are not paid promptly by the Company's
employees.
Indemnification Agreements, dated as of May 1, 1995, between the Company
and each of Danny J. Adair, Ken D. Latiolais, J. Roane Ruddy, S. Craig
Noble, Albert E. Brammer, Richard E. Purkey, Sr., Robert G. Hoag and
Austin W. Gonsoulin.
Insurance Premium Finance Agreement dated December 5, 1994, between the
Company and AFCO Credit Corporation.
Standard rebate agreements entered into with distributors of the Company
on an annual basis.
Memorandum of Understanding (undated), between Asahi Corporation, the
Company, Keet Trading Company and Ogura Industries relating to the
marketing and distribution of the Company's products in Japan.
Guaranty, dated May 11, 1995, of indebtedness of the Company, made by
Exterior Technologies Corporation in favor of Community Bank.
The Company has provided an irrevocable standby letter of credit, in the
face amount of $325,000, by LaSalle National Bank in favor of Traveler's
Insurance Group.
<PAGE>
Lease Agreement, dated March 15, 1994, between the Company and Stonegate
Properties, Inc. for premises located at Tollway Centre, 2200 N.
Stonington, Hoffman Estates, Illinois.
Security Agreement, dated January 17, 1990, between the Company and The
Exchange National Bank of Chicago (now known as LaSalle National Bank), as
amended, and related promissory note, dated March 5, 1990, made by the
Company in favor of LaSalle National Bank, in the original principal
amount of $29,400,000.
Promissory Note and Mortgage, dated November 18, 1986, between the Company
and Somerset Trust Company, in the original principal amount of
$1,260,000.
Commercial Real Estate Lien Note, dated May 11, 1995, made by the Company
in favor of Community Bank.
Loan and Security Agreement, dated September 29, 1993, between the Company
and MetLife Capital Corporation, as amended, and related promissory notes.
The proceeds of this loan were used to purchase equipment which is part of
the Distribution Assets, and the notes are secured solely by such
equipment.
Promissory Note, dated September 28, 1990, made by Danny J. Adair in favor
of the Company, in the original principal amount of $2,803,000.
Master Revolving Credit Note, dated December 31, 1987, made by MWeld,
Inc. (now Exterior Technologies Corporation) in favor of the Company in the
original principal amount of $5,000,000.
Promissory Note, dated November 30, 1994, made by Star, Inc., in favor of
the Company, in the original principal amount of $500,000.
Commercial Real Estate Lien Note, dated April 16, 1993, made by Troutman-
Trust, Inc. in favor of the Company, in the original principal amount of
$75,000.
Pursuant to an Amendment dated January 30, 1995, to the Security
Agreement, the Company has agreed to grant to LaSalle National Bank, as
additional security for existing loans, a Deed of Trust, Security
Agreement, Assignment of Rents and Fixture Filing relating to the
Company's real properties located in Hoffman Estates, Illinois, Stockton,
California, North Branch, New Jersey, Corvallis, Oregon, Monroe, Georgia
and Houston, Texas.
Agreement of Limited Partnership of Thunderhawk (Thermo) Manufacturing
Company, L.P., between Thunderhawk, Inc. (Eagle Ventures), as general
partner, and the Company, as limited partner.
Exclusive Manufacturing Agreement between the Company and Allied Signal,
Inc., dated March 31, 1994.
<PAGE>
PermaGlas Roofing Contractor Promotion Program whereby contractors earn
premiums for products purchases.
Joint Development Agreement, dated May 19, 1993, between the Company and
Allied Signal Inc.
Arrangement with Ernst & Young pursuant to which such company consults
with U.S. Intec, Inc. in order to minimize its ad valorem tax liabilities.
The Company has purchased two life insurance policies with the Company
names as beneficiary, on Danny J. Adair, with an aggregate death benefit
of $1,500,000.
Agreement between the Company and Thermo Manufacturing Company, L.P. as to
confidentiality, dated September 1, 1995.
Confidentiality Agreement, dated December 20, 1994 between Danny Adair and
Allied Signal, Inc.
Interests of Imperial IPF in Company's unearned premiums, dividends and
loss payments under specified insurance policies pursuant to certain
Premium Finance Agreement, dated June 13, 1995.
Annex A
-------
SALESMAN CONTRACT LIST WITH DATES
U.S. INTEC, INC.
NAME LOCATION SALESMAN REP
---- -------- -------- ---
Rich Russack (Sales Mgr.) Eastern Region 2/85
Gary Rathell MD, DC 1/93
Dennis Fullerton VA, NC 4/87
Steve Manning NY City 11/86
Rich Weaver (ASR Assoc.) FL, SE GA 1/95
Allen Jones (ASR Assoc.) FL, SE GA
Mike Briggs (ASR Assoc.) FL, SE GA
George Allaster (ASR Assoc.) W. Coast FL
Bob White New England 5/88
Mark Day W. PA, NW VA None
Alex Cifelli (Cifelli, So. J, Phil. PA, DE 12/92
Wolfarth & Assoc.)
Bob Wolfarth (Cifelli, E. PA 12/92
Wolfarth & Assoc.)
Doug Quinn (Division 7 E. NY State 4/92
Sales)
Jim Gyle (Division 7 Sales) W. NY State 4/92
Jason Gladfelter (Equinox NO Jersey None
Building Materials)
Larry Swann Atlanta, GA 3/94
Don Latham (Thermo) 1/95
Tim Kokolus (Cifelli E. PA
Wolfarth)
Jeff King SC, E, TN, NC None
Mike Spence (Sales Mgr.) NC Region, IL 2/85
Bill Machener MI 2/87
Paul Scheafbauer (Specified WI, MN 1/92
Sales)
Jim Koch (Specified Sales) WI, MN 1/92
Larry Villers OH, WV 1/90
Paul Hincke (Elmslie & Manitoba-E. None
Assoc.)
Dan Durkin IL None
Jim Durkin, Sr. (J.D. Sales IL None
and Mktg.)
John Elmslie (Elmslie & E. Canada 1/92
Assoc.)
Doug Ruffner (Conspec 7 IN 1/95
and Mktg.)
Timothy Manning (Metro Mktg. KY 1/95
Company)
Joe Ross (Phoenix Rfg. & TN (Knox) 1/95
Metal Supply)
Paul Turner (Sales Mgr.) N.W. Region, Alaska 7/89
G. Scott Fairchild (Thermo) 3/95
Bill Maddux Bay Area, S.F., CA 1/87
Bob Marcipan MO, CA, NV 2/85
Kirk Barbour (Aqua Seal) BC, ALBT,SASK 1/92
David Mansfield OR, SO. ID 1/92
<PAGE>
SALESMAN CONTRACT LIST WITH DATES
NAME LOCATION SALESMAN REP
---- -------- -------- ---
Chris Maddux Bay Area, S.F., CA 1/87
Gene Hlavaty NO, California None
Will Maddux Bay Area, S.F., CA 1/87
Chad Vesperman W. WA 1/93
Joe Tavares Tacoma, WA 4/94
Bill Graham BC, ALBT, SASK None
David Ciani (Sales Mgr.) SC Region TX 10/93
Tom Trahan Houston, SE TX None
Lee Moore Dallas/Ft. Worth None
Sam Adair Austin, El Paso 2/85
Tim Lacy LA None
Troutman-Truster (Troutman, MO, KS, IA, NE, Swansen 1/92
Truster)
John McGloughlin (Olympic 3/95
Supply)
Tom Owens (Infra Red West Texas 8/93
Enterprises)
Graham Gregory AL, W. Panama City, FL
John Kovacs (John Kovacs San Antonio 9/93
& Assoc.)
Fred Kunz (John Kovacs & C. Christi & Valley 9/93
Assoc.)
Ken Kay (K & K Sales) OK, N.M., AR 3/94
Meredith Escue (M.W. Escue TN
& Assoc.)
Lance Escue (M.W. Escue & W. TN
& Assoc.)
Thomas Mayberry (M.W. Escue W. TN
& Assoc.)
Matt Alborn TX 9/94
Darren Houk TX 2/95
Kent Francom (Sales Mgr.) SW Region, AZ 2/85
Glen Hurtado Orange, Ventura LA None
Victor Szczepanski (Roofing HI None
Solutions)
John Francom (Francom & UT, SW, Wyoming, SE ID 1/92
Assoc.)
Paul Hatch San Bern, Riverdale None
Bill Max So. NV 12/92
Brad Max So. NV 12/92
Tom Wanser NM 10/90
Rod Walker AZ None
Bill McCracken (B.R. CO, Wyoming 12/92
McCracken Co.)
C. D. Govan, III (B.R. CO, Wyoming 12/92
McCracken Co.)
Richard Sealey (B.R. CO, Wyoming 12/92
McCracken Co.)
Doug Stewart Tucson/So. AZ 2/94
Chuck Andrews So. CA 3/94
Dala Cisco Orange, Ventura, LA None
<PAGE>
Schedule 4.1(p) - Related Party Transactions
- --------------- --------------------------
Lease Agreement, dated July 1, 1994, between the Company and
Frontier Development, Ltd., for premises located at 702 Highway 365, Port
Arthur, Texas.
Lease Agreement, dated May 1, 1995, between the Company and
Frontier Development, Ltd., for premises located at 202 S. Garden Drive,
Beauxart Gardens, Texas.
Promissory Notes, dated September 28, 1990 and December 31,
1993, made by Danny J. Adair in favor of the Company in the original principal
amount of $2,803,000, and related Global Modification and Restructuring
Agreement.
Debt Restructuring and Non-Competetion Agreement, dated
September 28, 1990, between the Company and Danny J. Adair.
Indemnification Agreements, dated as of May 1, 1995, between
the Company and each of Danny J. Adair, Ken D. Latiolais, J. Roane Ruddy, S.
Craig Noble, Albert E. Brammer, Richard E. Purkey, Sr., Robert G. Hoag and
Austin W. Gonsoulin.
Registration Agreement, dated January 12, 1995, between the
Company, Danny Adair, First Southwest Company, 490 Park Joint Venture and the
Umphrey Family Partnership.
Consulting Agreement, dated December 9, 1991, between the
Company and Elmore Nelson.
The Company periodically makes advances to employees and
sales representatives, which are paid through payroll or commission deductions.
The Company has entered into a Corporate Business Travel
Account Agreement with American Express Travel Related Services Company, Inc.
The terms of this agreement require the Company to pay all amounts charged to
the Business Travel Account which are not paid promptly by the Company's
employees.
The Company has purchased two life insurance policies with
the Company named as beneficiary on Danny J. Adair, having an aggregate death
benefit of $1,500,000.
<PAGE>
Schedule 4.1(p) - Liens
- --------------- -----
The following sets forth encumbrances that exist on the
Company's properties and assets.
1. Liens in favor of La Salle National Bank on all of the
Company's accounts and inventory and on all of the Company's deposits, cash and
other property which is in the possession of La Salle National Bank.
2. Commitment to La Salle National Bank to grant a lien on the
Company's real property located in Houston, Texas; Stockholm, California;
Corvallis, Oregon; and Monroe, Georgia; pursuant to Amendment to Security
Agreement, dated January 30, 1995, of Security Agreement, dated January 17,
1990, between the Company and La Salle.
3. Mortgage in favor of Somerset Trust Company on the real
property owned by the Company and located at 106 Meister Ave., North Branch, New
Jersey, pursuant to that certain Promissory Note dated as of November 18, 1986,
in the original amount of $1,260,000.
4. The interest of Geo Industries, a Division of Heary Company,
in certain personal property delivered to the Company pursuant to that certain
Consignment Agreement, dated July 31, 1989, between the Company and Geo
Industries.
5. The interest of National Varnish Co. (now known as ALCO-NVC,
Inc.) in certain personal property delivered to the Company pursuant to that
certain Consignment Agreement, dated March 27, 1992, between the Company and
National Varnish Co.
6. The interest of Thermo Materials, a Division of Thunderhawk
Manufacturing Company, L.P., in certain personal property delivered to the
Company pursuant to that certain Consignment Agreement, dated March 2, 1994,
between the Company and Thermo Materials.
7. The interest of Penske Truck Leasing Co., L.P. in certain
vehicles leased to the Company pursuant to that certain Vehicle Lease Service
Agreement, dated May 19, 1992, between the Company and Penske Truck Leasing
Co., L.P.
8. The interest of Canon Financial Services in certain
equipment leased to the Company pursuant to those certain Equipment Leases dated
May 24, 1994, between the Company and Cannon Financial Services.
9. The interest of Yale Financial Services in certain equipment
leased to the Company pursuant to that certain Master Lease Agreement dated
September 28, 1994 between the Company and Yale Financial Services.
10. The interest of First Source Financial Services in certain
equipment leased to the Company pursuant to that certain Equipment Rental
Agreement dated April 15, 1993, between the Company and First Source Financial
Services.
<PAGE>
11. The interest of Community Bank in the Company's real
property (and improvements and fixtures to the real property operation) located
in Jefferson County, Texas, pursuant to that certain Deed of Trust dated as of
May 11, 1995, between the Company and James M. Roberson, as Trustee for
Community Bank.
12. The interest of Pitney Bowes Credit Corporation in certain
equipment leased to the Company pursuant to Equipment Lease Agreements between
the Company and Pitney Bowes Credit Corporation.
13. The Security Interest of MetLife Capital Corporations is
certain equipment owned by the Company, pursuant to that certain Loan and
Security Agreement, dated September 29, 1993, as supplemented by Supplemental
Security Agreement No. 1, dated March 10, 1994, and Supplemental Security
Agreement No. Three, dated March 30, 1995.
14. The interest of The CIT Group/Equipment Financing, Inc. in
certain equipment leased to the Company pursuant to those certain Equipment
Leases between the Company and The CIT Group/Equipment Financing, Inc.
15. The interest of Toyota Lift of Houston in certain equipment
leased to the Company pursuant to those certain Lease Agreements dated June 30,
1995.
16. The interest of Apple Unit Leasing, Inc., in certain
equipment leased to the Company pursuant to that certain Equipment Lease dated
March 2, 1992, between the Company and Apple Unit Leasing, Inc.
17. The interest of AFCO Credit Corporation in all of the
Company's unearned premiums, dividends and loss payments under specified
insurance policies pursuant to that certain Premiums Finance Agreement dated
December 5, 1994.
18. The interest of Corporation in certain equipment
leased to McWeid pursuant to that Lease Agreement dated September 11, 1995.
19. Interest of Imperial IPF in all of the Company's unearned
premiums, dividends, and loss payments under specified insurance policies
pursuant to that certain Premiums Finance Agreement, dated June 13, 1995.
EXHIBIT (c)(2)
<PAGE>
STOCKHOLDERS AGREEMENT
AGREEMENT dated September 14, 1995, among G-1 HOLDINGS, INC., a Delaware
corporation ("Parent"), USI ACQUISITION COMPANY, a Texas corporation and a
direct wholly-owned subsidiary of Parent ("Sub"), and the other parties
signatory hereto (each a "Stockholder", and collectively, the "Stockholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, councurrently herewith, Parent, Sub and U. S. Intec, Inc., a
Texas corporation (the "Company"), have been negotiating in good faith the
terms of an Agreement and Plan of Merger; and
WHEREAS, as an inducement and a condition to continuing such negotiations,
Parent has required that the Stockholders agree, and the Stockholders have
agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representation, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions. Fore purposes of this Agreement:
a. "Beneficially Own" or "Beneficially Ownership" with respect to any
securities (as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), including pursuant to any
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially owned by
all of the Persons with whom such person would constitute a "group" as within
the meanings of Section 13(d)(3) of the Exchange Act.
b. "Company Common Stock" shall mean at any time the common stock, $.02
par value, of the Company.
c. "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
2. Tender of Shares.
a. Each Stockholder hereby agrees to validly tender (and not to withdraw)
pursuant to and in accordance with the terms of such a tender offer (the
"Offer"), as may be commenced by Parent or Sub at a price not less than $9.05
per share (the "Price"), the number of shares of Company Common Stock set forth
opposite such Stockholder's name on Schedule I hereto (the "Existing Shares",
and together with any shares of Company Common Stock acquired by such
Stockholder after the date hereof and
<PAGE>
prior to the termination of this Agreement whether upon the exercise of
options, warrants or rights, the conversion of exchange of convertible
or exchangeable securities, or by means of purchase, dividend, distribution
or otherwise, the "Shares"), Beneficially Owned by him, her or it. Each
Stockholder hereby acknowledges and agrees the Parent's or Sub's obligation
to accept for payment and pay for Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, will be subject to the terms and
condition of the Offer.
b. The transfer by each Stockholder of his, her or its Shares to Sub in
the Offer shall pass to, and unconditionally vest in, Sub good and valid title
to the number of Shares set forth opposite such Stockholder's name on Schedule
I hereto, free and clear of all claims, liens, restrictions, security interest,
pledges, limitations and encumbrances whatsoever.
c. Each Stockholder hereby agrees to permit Parent and Sub to publish
and disclose in the offer documents relating to the Offer and his, her or its
identity and ownership of Company Common Stock and the nature of his, her or
its commitments, arrangements and understandings under this Agreement.
3. Provisions Concerning Company Common Stock. Each Stockholder hereby
agrees that during the period commencing on the date hereof and continuing
until the later of (x) 180 days from the date hereof or (y) if a Merger
Agreement (as hereinafter defined) is executed and delivered within such 180
day period, the first to occur of (i) the closing of any merger (the "Merger")
between Sub and Company providing for the shareholders of the Company to
receive the Price in exchange for each share of Company Common Stock or (ii)
the termination of any such merger agreement (the "Merger Agreement") related
thereto, (such date being herein referenced to as the "Termination Date") at
any meeting of the holders of Company Common Stock, however called, or in
connection with any written consent of the holders of Company Common Stock,
such Stockholder shall vote (or cause to be voted) the Shares of record or
Beneficially Owned by such Stockholder, whether issued, heretofore owned or
hereafter acquired, (I) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance thereof and hereof; (II)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement or this Agreement (after giving
effect to any materiality or similar qualifications contained therein); and
(III) except as otherwise agreed to in writing in advance by Parent, against
the following actions (other than the Merger and the transactions contemplated
by the Merger Agreement): (A) any extraordinary corporate transaction, such as
a merger, consolidation or other business combination involving the Company or
its Subsidiaries; (B) a sale,
<PAGE>
lease or transfer of a material amount of assets of the Company or its
Subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company of its Subsidiaries; (C) (1) any change in a
majority of the persons who constitute the board of directors of the Company;
(2) any change in the present capitalization of the Company or any amendment
of the Company's Articles of Incorporation or Bylaws; (3) any other material
change in the Company's corporate structure of business; or (4) any other
action which, in the case of each of the matters referred to in clause c(1),
(2), (3) or (4), is intended, or could reasonably be expected to, impede,
interfere with, delay, postpone, or materially adversely affect the Merger
and the transactions contemplated by this Agreement and the Merger Agreement.
Such Stockholder shall not enter into any agreement or understanding with any
person or entity of which would be inconsistent or violative or the
provisions and agreements contained in the Section 3.
4. Options. Each of the Stockholders hereby grants to Parent an irrevocable
option (each, a "Stock Option" and collectively, the "Stock Options") to
purchase the number of Shares set forth opposite such Stockholder's name on
Schedule I hereto (the "Option Shares") at purchase price per share equal to
the Price plus any additional per share price paid to any other stockholder of
the Company pursuant to the Offer or Merger, so long as: (i) all waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), required for the purchase of the Option Shares upon
such exercise shall have expired or been waived, and (ii) there shall not be in
effect any preliminary or final injunction or other order issued by any court
or governmental, administrative or regulatory agency or authority prohibiting
the exercise of the Stock Options under this Agreement, provided that such
Stock Option shall terminate on the Termination Date. In the event that the
Parent wishes to exercise Stock Options, Parent shall send a written notice
(the "Notice") to the Stockholders identifying the place and date (not less
than two nor more than 20 business days from the date of the Notice) for the
closing of such purchase, provided, however, that if Parent exercises any Stock
-----------------
Option, it must exercise all Stock Options.
Notwithstanding the foregoing, if Parent exercises the Stock Options
pursuant to this Section 4 and unless the Offer or Merger is terminated
pursuant to its terms, Parent shall, within 30 calendar days after the date of
such exercise, offer to all other stockholders of the Company the opportunity
to sell their shares of Company Common Stock to Parent upon the equivalent
terms and conditions provided with respect to exercise of the Stock Options in
this Section 4.
5. Other Covenants, Representations and Warranties. Each Stockholder hereby
represents and warrants to Parent as follows:
a. Ownership of Shares. Such Stockholder is either (i) the record and
Beneficial Owner of, or (ii) the Beneficial Owner but not the record holder of,
the number of shares set forth opposite
<PAGE>
such Stockholder's name of Schedule I hereto. On the date hereof, the Existing
Shares set forth opposite such Stockholder's name on Schedule I hereto
constitute all of the Shares owned of record or Beneficially Owned by such
Stockholder. Such Stockholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Section 2 and 3 hereof,
sole power of disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in
this Agreement, in each case with respect to all of the existing Shares set
forth opposite such Stockholder's name on Schedule I hereto, with
no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
b. Power; Binding Agreement. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by such Stockholder will not violate any other agreement to
which such Stockholder is a party including, without limitation, any voting
agreement, stockholders agreement or voting trust. This Agreement has been
duly and validly executed and delivered by such Stockholder and constitutes a
valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with it terms. There is no beneficiary or holder of
a voting trust certificate or other interest of any trust of which such
Stockholder is Trustee whose consent is required for the execution and delivery
of this Agreement or the consummation by such stockholder of the transactions
contemplated hereby. If such Stockholder is married and such Stockholder's
Shares constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
such Stockholder's spouse, enforceable against such person in accordance with
its terms. The failure of any Stockholder to honor it obligations hereunder
shall not relieve any other Stockholder from its obligations hereunder.
c. No Conflicts. Except for (i) filings under the HSR Act, if applicable,
(A) no filing with, and no permit, authorization, consent or approval of , any
state or federal public body or authority is necessary for the execution of
this Agreement by such Stockholder and the consummation by such Stockholder of
the transactions contemplated hereby and (B) none of the execution and delivery
of this Agreement by such Stockholder, the consummation by such Stockholder of
the transactions contemplated hereby or compliance by such Stockholder with any
of the provisions hereto shall (1) conflict with or result in any breach of any
applicable organizational document applicable to such Stockholder, (2) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions or any note, bond, mortgage, indenture, license,
contract commitment, arrangement, understanding, agreement or other instrument
or
<PAGE>
obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of such Stockholder's properties or assets may be bound, or
(3) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to such Stockholder or any of such Stockholder's
properties or assets.
d. No Encumbrances. Except as applicable in connection with the
transactions contemplated by Section 2 hereof, such Stockholder's Shares and
the certificates representing such Share are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all liens, claims, security
interest, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder and except that Mr. Adair's shares are pledged as
collateral for the Note (hereinafter defined).
e. No Finder's Fees. Except for fees payable to First Southwest Company
by the Company, no broker, investment banker, financial adviser or other person
is entitled to any broker's, finder's, financial adviser's or other similar fee
or commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of such Stockholder.
f. No Solicitation. No Stockholder shall, in his, her or its capacity as
such, directly or indirectly, solicit (including by way of furnishing
information) or respond to any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) with respect to
the Company that constitutes an Acquisition Proposal, except as may be
permitted by the Merger Agreement. If any Stockholder receives any such
inquiry or proposal, then such Stockholder shall promptly inform Parent of the
existence thereof. Each Stockholder will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
g. Restriction on Transfer, Proxies and Non-Interference. Except as
applicable in connection with the transactions contemplated by Section 2
hereof, no Stockholder shall, directly or indirectly: (i) offer for sale, sell
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of such Stockholder's Shares or
any interest therein; (ii) except as contemplated by this Agreement, grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares; or (iii) take any action
that would make any representation or warranty of such Stockholder contained
herein untrue or incorrect or have the effect of preventing or disabling such
Stockholder from performing such
<PAGE>
Stockholder's obligations under this Agreement.
h. Waiver of Appraisal Rights. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Stockholder
may have.
i. Reliance by Parent. Such Stockholder understands and acknowledges
that Parent is continuing to negotiate, and causing Sub to negotiate the terms
of the Merger Agreement in reliance upon such Stockholder's execution and
delivery of this Agreement.
j. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
k. Indemnification; Directors' and Officers' Insurance. (a) Parent
shall indemnify, defend and hold harmless each Stockholder, (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person executed this Agreement, other than as a result of, or relating to, any
claim of a Stockholder (and Parent will pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law). Without limiting the foregoing, in the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Parties, (i) the Indemnified Parties may retain counsel satisfactory
to them and Parent and Parent shall pay all fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefore are received; and
(ii) Parent will use all reasonable efforts to assist in the vigorous defense of
any such matter, provided that Parent shall not be liable for any settlement
effected without its prior written consent. Any Indemnified Party wishing to
claim indemnification under this Section 5.k, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify Parent. The Indemnified
Parties as a group may retain only one law firm to represent them with respect
to each such matter unless there is, under applicable standards of professional
conduct, a conflict in the written opinion of counsel to the Indemnified
Parties, on any significant issue between the positions of any two or more
Indemnified Parties, provided that in no event shall the Parent be obligated to
pay the fees and expenses of more than two law firms on behalf of all
Indemnified Parties.
The provisions of this Section 5.k. are intended to be for the benefit of,
and shall be enforceable by, each Indemnified Party,
<PAGE>
his heirs and his personal representatives and shall be binding on all
successors and assigns of Parent, Sub, the Company and the Surviving
Corporation. The provisions of this Section 5.k. shall terminate and shall be
of no force or effect following execution of the Merger Agreement or upon
Parent's delivery of notice to the Indemnified Party that it will immediately
upon the written request of such party terminate the Option relating to the
shares of Company Common Stock owned by such Indemnified Party.
6. Covenant of Danny J. Adair. Danny J. Adair, the President and Chief
Executive Officer of the Company, hereby acknowledges that pursuant to a Debt
Restructuring and Non-Competition Agreement dated as of September 28, 1990, as
amended December 31, 1993, the Company holds Mr. Adair's secured promissory note
(the "Note") in the principal amount of $2,803,000 (together with all accrued
and unpaid interest thereon, the "Loan Amount"). Mr. Adair agrees that any
amount to be paid to him in the Offer or pursuant to this Stock Option in
exchange for his Shares shall be net of the Loan Amount and that the Loan Amount
shall instead be paid to the Company in full satisfaction of his obligations
under the Note.
7. Stop transfer. Each Stockholder agrees with, and covenants to, Parent that
such Stockholder shall not request that the Company register the transfer (book-
entry or otherwise) of any certificate or uncertificated interest representing
any of such Stockholder's Shares, unless such transfer is made in compliance
with this Agreement (including the provisions of Section 2 hereof). In the
event of a stock dividend or distribution, or any change in the Company Common
Stock by reason of any stock dividend, split-up, recapitalization, combination,
exchange of shares or the like, the term "Shares" shall be deemed to refer to
and include the Shares as well as all such stock dividends and distributions and
any shares into which or for which any or all of the Shares amy be changed or
exchanged.
8. Termination. Except as otherwise provided herein, the covenants and
agreements contained herein with respect to the Shares shall terminate upon the
Termination Date.
9. Stockholder Capacity. No person executing this Agreement who is or becomes
during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. Each Stockholder
signs solely in his or her capacity as the record and beneficial owner of, or
the trustee of a trust whose beneficiaries are the beneficial owners of, such
Stockholder's Shares.
10. Confidentiality. The Stockholders recognize that successful consummation
of the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Stockholder hereby agrees
not to disclose or discuss such matters with anyone not a party to this
Agreement (other than
<PAGE>
such Stockholder's counsel and advisors, if any) without the prior written
consent of Parent, except for filings required pursuant to the Exchange Act and
the rules and regulations thereunder or disclosures such Stockholder's counsel
advises are necessary in order to fulfill such Stockholder's obligations imposed
by law, in which event such Stockholder shall give notice of such disclosure to
Parent as promptly as practicable so as to enable Parent to seek a protective
order from a court of competent jurisdiction with respect thereto.
11. Negotiating in Good Faith. In consideration of the Stockholders executing
and delivering this Agreement, Parent and Sub agree to negotiate in good faith
and use its commercially reasonable best efforts to execute and deliver a Merger
Agreement (which shall include an agreement to tender for the outstanding shares
of Company Common Stock) on terms mutually satisfactory to the parties thereto
as soon as practicable; provided that Parent and Sub's failure to execute such
agreement shall not relieve the stockholders from their obligations hereunder.
12. Miscellaneous.
a. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
b. Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
c. Assignment. This Agreement shall not be assigned by operation of law
or otherwise without the prior written consent of all the other parties thereof,
provided that Parent may assign, in its sole discretion, its rights hereunder to
any direct or indirect wholly owned subsidiary of Parent, but no such assignment
shall relieve Parent of its obligations hereunder if such assignee does not
perform such obligations.
d. Amendments, Waiver, Etc. This Agreement many not be amended, changed,
supplemented, waived or otherwise modified or terminated, with respect to any
one or more Stockholders, except upon the execution and delivery of a written
agreement executed by the relevant parties hereto; provided that Schedule I
hereto may be supplemented by Parent by adding the name and other relevant
information concerning any stockholder of the Company who agrees to
<PAGE>
be bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
e. Notices. All notices, requests, claims demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Stockholder: At the addresses set forth on the Company's
records
If to Parent G-I Holdings, Inc.
or Sub, to: 1361 Alps Road Wayne
Wayne, New Jersey 07470
(201) 628-3124 (telephone)
(201) 628-4118 (telecopier)
Attention: Chief Financial Officer
copy to: G-1 Holdings, Inc.
1361 Alps Road
Wayne, New Jersey 07470
(201) 628-3520 (telephone)
(201) 628-3196 (telecopier)
Attention: General Counsel
and
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
(212) 310-8000 (telephone)
(212) 310-8007 (telecopier)
Attention: Stephen E. Jacobs, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
f. Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion or any provision in such jurisdiction, and this
<PAGE>
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
g. Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
h. Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
i. No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
j. No Third Party Beneficiaries. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
k. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
l. Jurisdiction. Each party hereby irrevocably submits to the
jurisdiction of the Court of Chancery in the State of Delaware or the United
States District Court for the Southern District of New York or any court of the
State of New York located in the City of New York in any action, suit or
proceeding arising in connection with this Agreement, and agrees that any such
action, suit or proceeding may be brought in such court (and waives any
objection based on forum non conveniens or any other objection to venue
therein): provided, however, that such consent to jurisdiction is solely for
the purpose referred to in this paragraph (1) and shall not be deemed to be a
general submission to the jurisdiction of said Courts or in the States of
Delaware or New York other than for such purposes. Each party hereto hereby
waives any right to a trial by jury in connection with any such action, suit or
<PAGE>
proceeding.
m. Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
n. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together shall
constitute one and the same Agreement, provided that the failure of any
Stockholder identified on the signature page to execute this Agreement shall not
relieve the Stockholder parties hereto from their respective obligations
hereunder.
<PAGE>
IN WITNESS WHEREOF, Parent and each Stockholder have caused this
Agreement to be duly extended as of the day and year first above written.
G-I HOLDINGS, INC.
By: /s/ James P. Rogers
--------------------------------
Name: James P. Rogers
Title: S.V.P.
USI ACQUISITION COMPANY
By: /s/ James P. Rogers
--------------------------------
Name: James P. Rogers
Title:
FIRST SOUTHWEST COMPANY
By: /s/ Hillel A. Feinberg
--------------------------------
Name: Hillel A. Feinberg
Title: President and CEO
UMPHREY FAMILY LIMITED PARTNERS
By: /s/ Hillel A. Feinberg
--------------------------------
Name: Hillel A. Feinberg
Title: Attorney-in-Fact
490 PARK JOINT VENTURE
By: /s/ Hillel A. Feinberg
--------------------------------
Name: Hillel A. Feinberg
Title: Attorney-in-Fact
II-10
<PAGE>
/s/ Danny J. Adair
-----------------------------------
Danny J. Adiar
-----------------------------------
Albert E. Brammer
-----------------------------------
Austin W. Gonsoulin
-----------------------------------
Robert G. Hoag
-----------------------------------
Ken D. Latiolais
-----------------------------------
S. Craig Noble
/s/ Hillel A. Feinberg
-----------------------------------
Hillel A. Feinberg
DEBRA J. FEINBERG
By: /s/ Hillel A. Feinberg
--------------------------------
Name: Hillel A. Feinberg
Title: Attorney-in-Fact
UTLEY GROUP II
By: /s/ Hillel A. Feinberg
--------------------------------
Name: Hillel A. Feinberg
Title: Attorney-in-Fact
-----------------------------------
Paul Bass
-----------------------------------
Michael Marz
II-11
<PAGE>
-----------------------------------
Richard Burt Peachey, Jr.
/s/ J. Roane Ruddy
-----------------------------------
J. Roane Ruddy
II-12
<PAGE>
SCHEDULE I TO
STOCKHOLDERS AGREEMENT
----------------------
Name of Stockholder Number of Shares Owned
------------------- ----------------------
1. First Southwest Company 179,290
2. Umphrey Family Limited Partnership 65,311
3. 490 Park Joint Venture 81,189
4. Danny J. Adair 814,521
5. Albert E. Brammer 5,000
6. Austin W. Gonsoulin 5,600
7. Robert G. Hoag 512,000
8. Ken D. Latiolais 42,100
9. S. Craig Noble 35,800
10. Richard Earl Purkey, Sr. 14,500
11. J. Roane Ruddy 15,000
12. Hillel A. Feinberg 20,000
13. Debra J. Feinberg 7,500
14. Utley Group II 25,000
15. Paul M. Bass, Jr. 10,000
16. Michael J. Marz 3,000
EXHIBIT (c)(3)
<PAGE>
SCHEDULE 13D JOINT FILING AGREEMENT
-----------------------------------
In accordance with Rule 13d-1 (f) under the Securities Exchange Act of
1934, as amended, the persons named below agree to the joint filing on behalf of
each of them of a Statement on Schedule 13D (including amendments thereto) with
respect to the common stock of U.S. Intec, Inc. and further agree that this
Joint Filing Agreement be included as an Exhibit to such joint filings. In
evidence thereof the undersigned, being duly authorized, hereby execute this
Agreement this 21st day of September, 1995.
USI ACQUISITION COMPANY
G-I HOLDINGS INC.
GAF CORPORATION
By: /s/ James P. Rogers
------------------------------
Name: James P. Rogers
Title: Senior Vice President
/s/ Samuel J. Heyman
------------------------------
Samuel J. Heyman
