<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) OCTOBER 31, 1995
-----------------------------
AMRE, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-9632 75-2041737
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8585 N. STEMMONS FREEWAY, SOUTH TOWER, DALLAS, TX 75247
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including are code: (214) 658-6300
--------------------------
- -----------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On October 31, 1995, AMRE, Inc., a Delaware corporation ("AMRE"), AMRE
Acquisition, Inc., a Delaware corporation ("Merger Sub"), Facelifters Home
Systems, Inc., a New York corporation ("Facelifters"), and Facelifters Home
Systems, Inc., a Delaware corporation ("Facelifters Delaware"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Merger
Sub will merge with and into Facelifters or, if the reincorporation of
Facelifters into Facelifters Delaware is consummated prior to the consummation
of the merger (the "Reincorporation"), Facelifters Delaware (the "Merger").
Facelifters has advised AMRE that it intends to effect the Reincorporation when
it reconvenes its annual meeting of stockholders, previously held on August 9,
1995 and adjourned as to the proposal for the Reincorporation. The following
is a brief summary of the principal terms and conditions contained in the
Merger Agreement and assumes the completion of the Reincorporation prior to the
consummation of the Merger:
Conversion of Facelifters' Common Stock
Under the terms of the Merger Agreement, each outstanding share of the
common stock of Facelifters, par value $.01 per share ("Facelifters Common
Stock"), will be converted into the right to receive 1.41 shares of the common
stock, par value $.01 per share, of AMRE ("AMRE Common Stock"), subject to
adjustment as described in the Merger Agreement. The Merger Agreement provides
that before the definitive proxy materials are mailed, the final common stock
equivalent value will be determined by the average closing price of AMRE Common
Stock on the New York Stock Exchange during a specified period and will be
proportionately higher or lower to the extent the average price exceeds $9.50
per share or is under $6.50 per share. No fractional shares of AMRE Common
Stock will be issued and cash will be paid in lieu of any such fractional
shares. It is anticipated that the transaction will not be taxable to
stockholders.
Conditions to the Merger
Consummation of the Merger at the Effective Time is subject to the
satisfaction of a number of conditions, including, without limitation, (i)
obtaining requisite approvals from the stockholders of Facelifters and AMRE;
(ii) receipt of fairness opinions from the respective financial advisors of
each of AMRE and Facelifters; (iii) the continued accuracy of the
representations and warranties made by each of AMRE and Facelifters in the
Merger Agreement; (iv) the election of a designee of Facelifters to the Board
of Directors of AMRE as of the Effective Time; and (v) the consummation of the
Merger as a tax-free reorganization pursuant to Section 368(a) of the Internal
Revenue Code of 1986. The Merger will become effective upon the issuance of a
certificate of merger by the Secretary of State of Delaware. Assuming all
conditions to the Merger contained in the Merger Agreement are satisfied or
waived prior thereto, it is anticipated that the Effective Time of the Merger
will occur as soon as practicable following the special meetings of the
stockholders of AMRE and Facelifters.
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Termination of the Merger Agreement
The Merger Agreement is subject to termination in certain events,
including but not limited to termination (i) at the option of either AMRE or
Facelifters if the Merger is not consummated on or before April 1, 1996, or
(ii) by the Board of Directors of Facelifters in the event that a third party
makes a bona fide proposal to acquire Facelifters that exceeds $11.28 per share
of Facelifters Common Stock (a "Third Party Proposal"). In the event the
Merger Agreement is terminated by Facelifters in connection with the acceptance
of a Third Party Proposal, Facelifters shall pay AMRE a termination fee of
$2,000,000.
The preceding description of the Merger Agreement is not complete and
is qualified in its entirety by the full text of the Merger Agreement, a copy
of which is filed as Exhibit 7.1 hereto.
ITEM 7(C). EXHIBITS
EXHIBIT 7.1 Agreement and Plan of Merger dated as of October
31, 1995, among AMRE, Inc., AMRE Acquisition, Inc.,
a Delaware corporation, Facelifters Home Systems,
Inc., a New York corporation, and Facelifters Home
Systems, Inc., a Delaware corporation, together
with all exhibits thereto.
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SIGNATURES
AMRE, INC.
Date: November 2, 1995 By: /s/ C. CURTIS EVERETT
----------------------------
C. Curtis Everett
Vice President-Law
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INDEX TO EXHIBITS
Exhibit Description
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EXHIBIT 7.1 Agreement and Plan of Merger dated as of
October 31, 1995, among AMRE, Inc., AMRE
Acquisition, Inc., a Delaware corporation,
Facelifters Home Systems, Inc., a New York
corporation, and Facelifters Home Systems,
Inc., a Delaware corporation, together with
all exhibits thereto.
<PAGE> 1
EXHIBIT 7.1
Agreement and Plan of Merger dated October 31, 1995, among AMRE, Inc.,
AMRE Acquisition, Inc., a Delaware corporation, Facelifters Home Systems, Inc.,
a New York corporation, and Facelifters Home Systems, Inc., a Delaware
corporation, together with all exhibits thereto.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
dated as of October 31, 1995,
among
AMRE, Inc.
AMRE Acquisition, Inc.,
Facelifters Home Systems, Inc., a Delaware corporation
and Facelifters Home Systems, Inc., a New York corporation
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TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1
THE MERGER, EFFECTIVE TIME, EXCHANGE RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation; Bylaws; Directors and Officers . . . . . . . . . . . . . . . . . . . . 2
1.5 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Exchange of Certificates Representing Company Common Stock . . . . . . . . . . . . . . . . . . . . . 6
1.7 Adjustment of Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 Director Nominee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF AMRE AND MERGER SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Organization, Good Standing, Power, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Authorized Capitalization of AMRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Other Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 Patents, Trademarks, Franchises, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.13 Stockholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.15 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.16 Historic Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND COMPANY SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Organization, Good Standing, Power, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Authorized Capitalization of the Company and Company Sub . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.4 Other Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.5 Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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3.6 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.15 Patents, Trademarks, Franchises, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.17 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.19 Transactions with Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.20 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.21 Stockholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.22 Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.23 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Conduct of Business by the Company Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Interim Operations of AMRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 5
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Registration Statement and Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2 Letter to the Company's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Letters of AMRE's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.4 Company Board Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5 AMRE Board Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.6 Consent of Stockholders of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.7 Consent of Stockholders of AMRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.9 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.10 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.11 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.12 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.13 Information for Other Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.14 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.15 Sub-License Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.16 Company Reincorporation in Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.17 Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.18 Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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5.19 Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.20 Documentation; Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.21 Director and Officer Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.22 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.23 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.24 Tax Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.25 Lease Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.26 Home Financial Acceptance Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 6
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Conditions to Obligation of Each Party to Effect the Merger . . . . . . . . . . . . . . . . . . . . 37
6.2 Additional Conditions to the Obligation of the Company . . . . . . . . . . . . . . . . . . . . . . . 39
6.3 Additional Conditions to the Obligations of AMRE and Merger Sub . . . . . . . . . . . . . . . . . . 40
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 8
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.1 Nonsurvival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . 43
8.2 Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
EXHIBITS
A. Honigsfeld Employment Agreement
B. Gross Employment Agreement
C. Sub-License Agreement
D-1. Company Affiliate Letter
D-2 AMRE Affiliate Letter
E. Stockholders Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of
October 31, 1995, by and among AMRE, Inc., a Delaware corporation ("AMRE"),
AMRE Acquisition, Inc., a Delaware corporation and a newly formed, wholly owned
subsidiary of AMRE ("MERGER SUB"), Facelifters Home Systems, Inc., a New York
corporation (the "COMPANY"), and Facelifters Home Systems, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company ("COMPANY SUB"). The
Company, Company Sub and Merger Sub are hereinafter collectively referred to as
the "CONSTITUENT CORPORATIONS".
PRELIMINARY STATEMENTS
A. AMRE, as the sole stockholder of Merger Sub, and the
respective Boards of Directors of Merger Sub, and the Company and Company Sub,
have each approved the merger of Merger Sub into the Company in accordance with
the Delaware General Corporation Law (the "DELAWARE LAW"), the New York
Business Corporation Law ("NEW YORK LAW") and the provisions of this Agreement.
The Boards of Directors of AMRE, the Company and Company Sub have directed that
the Merger, as hereinafter defined, be submitted for approval by their
respective stockholders.
B. It is intended that for federal income tax purposes the merger
provided for herein shall qualify as a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "CODE").
C. Provided that it will not prevent, delay or in any manner
adversely effect the ability of the parties to consummate the Merger, the
Company intends to reconvene its annual meeting of stockholders on or before
November 30, 1995 in order to effect, prior to the mailing of the Joint Proxy
Statement/Prospectus referred to in Section 5.1 below, the reincorporation (the
"REINCORPORATION") of the Company from the State of New York to the State of
Delaware through the merger of the Company with and into Company Sub, as
contemplated in the Company's proxy materials for its annual meeting of
stockholders held August 9, 1995 and adjourned as to that proposal.
D. If the Reincorporation is effected, then all references in
this Agreement to the "Company" shall for all purposes be deemed to be the
constituent corporation participating in the Merger that is the surviving
corporation under Delaware Law. If the Reincorporation is not effected, then
all references to the "Company" shall be references to the corporation defined
as such in the first paragraph of this Agreement.
E. If the Reincorporation is effected, all references hereafter
to "APPLICABLE LAW" shall mean the Delaware Law, and otherwise such reference
shall be to New York Law.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good, valid and binding consideration,
the receipt and sufficiency
1
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of which are hereby acknowledged, AMRE, Merger Sub, the Company and Company Sub
hereby agree as follows:
STATEMENT OF AGREEMENT
ARTICLE 1
THE MERGER, EFFECTIVE TIME, EXCHANGE RATIO
1.1 The Merger. At the Effective Time (as defined in Section 1.3
hereof), in accordance with this Agreement and Applicable Law, Merger Sub shall
be merged (such merger being herein referred to as the "MERGER") with and into
the Company, the separate existence of Merger Sub shall cease, and the Company
shall continue as the surviving corporation. The Company hereinafter sometimes
is referred to as the "SURVIVING CORPORATION."
1.2 Effect of the Merger. When the Merger has been effected, the
Surviving Corporation shall thereupon and thereafter possess all the rights,
privileges, powers and franchises as well of a public as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations; and all and singular, the rights, privileges, powers
and franchises of each of the Constituent Corporations and all property, real,
personal and mixed, and all debts due to either of the Constituent Corporations
on whatever account, as well for stock subscriptions as all other things in
action or belonging to each of such corporations shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the respective
Constituent Corporations, and the title to any real estate vested by deed or
otherwise, in any of such Constituent Corporations, shall not revert or be in
any way impaired by reason of the Merger; but all rights of creditors and all
liens upon any property of any of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of the respective
Constituent Corporations shall thenceforth attach to the Surviving Corporation,
and may be enforced against it to the same extent as if such debts, liabilities
and duties had been incurred or contracted by it.
1.3 Consummation of the Merger. As soon as is practicable after
the satisfaction or waiver of the conditions set forth in Article 6 hereof and
provided that this Agreement shall not have been terminated as provided in
Article 7, the parties hereto will cause the Merger to be consummated by filing
with the Secretary of State of the appropriate state(s) a certificate of merger
in such form as required by, and executed in accordance with, the relevant
provisions of the Applicable Law (the later of the time of such filings or the
effective time set forth in such certificate of merger being the "EFFECTIVE
TIME" and the date of such filings being the "EFFECTIVE DATE").
1.4 Certificate of Incorporation; Bylaws; Directors and Officers.
The Certificate of Incorporation and bylaws of the Surviving Corporation shall
be identical with the Certificate of Incorporation and bylaws of the Company as
in effect immediately prior to the Effective Time.
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Such documents shall be amended and restated immediately after the Effective
Time. The directors of Merger Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation and shall serve
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 Certificate of Incorporation and bylaws and the
Applicable Law. The officers of Merger Sub immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall serve
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 Certificate of Incorporation and bylaws and Applicable
Law.
1.5 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of AMRE, Merger Sub, the Company
or the holder of any of the shares (the "SHARES") of common stock, par value
$0.01 per share, of the Company (the "COMPANY COMMON STOCK"):
(a) Each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of
the Company) shall be canceled and retired and be converted as follows
into that number of validly issued, fully paid and non-assessable
shares of $0.01 par value common stock of AMRE (the "AMRE COMMON
STOCK") determined as follows (the "EXCHANGE RATIO"):
(i) If the Average Price (as hereafter
defined) of the AMRE Common Stock is $9.50 or less but not
less than $6.50, then each of the Shares shall be converted
into 1.41 shares of AMRE Common Stock.
(ii) If the Average Price of the AMRE Common
Stock is more than $9.50, then each of the Shares shall be
converted into that number of shares of AMRE Common Stock
determined by multiplying by the following formula:
11.28
-----------------------
8.00 + (N - 9.50)
Where: N = the Average Price of the
AMRE Common Stock
(iii) If the Average Price of the AMRE Common
Stock is less than $6.50 but not less than $5.00, then each of
the Shares shall be converted into that number of shares of
AMRE Common Stock determined by multiplying by the following
formula:
11.28
-----------------------
8.00 - (6.50 - N)
Where: N = the Average Price of the
AMRE Common Stock
3
<PAGE> 9
(iv) If the Average Price of the AMRE Common
Stock is less than $5.00, then on the date the Average Price
is determined AMRE may (A) terminate this Agreement by giving
the Company a notice of termination (an "AMRE TERMINATION
NOTICE"); or (B) give the Company a notice stating that AMRE
elects to proceed with the transactions contemplated by this
Agreement (the "LOW PRICE CLOSING NOTICE"). If AMRE gives the
Low Price Closing Notice, then each of the Shares shall be
converted into the number of shares of AMRE Common Stock
determined by multiplying by the following formula:
8.20
------------
N
Where: N = the Average Price of the
AMRE Common Stock
If AMRE elects to give the AMRE Termination Notice, then this
Agreement shall immediately terminate, and neither party
hereto shall have any further liability or obligation to the
other under or as a result of this Agreement other than the
obligation to enter into the sub-license agreement referred to
in Section 5.15 below. AMRE shall give the AMRE Termination
Notice or the Low Price Closing Notice by telecopy as provided
in Section 8.3 below at the telephone facsimile number
indicated therein. In the event that AMRE shall not have
given either the AMRE Termination Notice or the Low Price
Closing Notice within five business days after the date the
Average Price is determined to be less than $5.00, then AMRE
shall be deemed to have given the AMRE Termination Notice.
(v) As used herein, "AVERAGE PRICE" means the
average closing price per share of AMRE Common Stock on the
New York Stock Exchange for the fifteen trading days prior to
the day three trading days before AMRE requests acceleration
of effectiveness of the Registration Statement containing the
Joint Proxy Statement/Prospectus referred to in Section 5.1
below. AMRE shall promptly give the Company notice (the
"AVERAGE PRICE NOTICE") of the amount of the Average Price of
the AMRE Common Stock. The Average Price Notice shall be
delivered by telecopy as provided in Section 8.3 below at the
telephone facsimile number indicated therein.
(b) Each Share which is issued and outstanding
immediately prior to the Effective Time and which is held in the
treasury of the Company shall be canceled and retired, and no payment
shall be made with respect thereto.
(c) As a result of the Merger and without action on
the part of the holder thereof, all Shares shall cease to be
outstanding and shall be cancelled and returned and shall cease to
exist, and each holder of a certificate (a "CERTIFICATE") formerly
representing any Shares shall thereafter cease to have any rights with
respect to such Shares, except the right to receive, without interest,
certificates representing AMRE
4
<PAGE> 10
Common Stock and cash for fractional interests of the AMRE Common Stock in
accordance with Section 1.5(d) upon the surrender of such Certificate.
(d) Notwithstanding Section 1.5 hereof, in lieu of
the issuance of fractional shares of AMRE Common Stock, each holder of
record of issued and outstanding Shares as of the Effective Time shall
be entitled to receive a cash payment (without interest) equal to the
fair market value of a fraction of a share of AMRE Common Stock to
which such holder would be entitled but for this provision. The cash
payment in lieu of a fractional share shall represent such holder's
proportionate interest in the net proceeds from the sale by the
Exchange Agent (as hereinafter defined) on behalf of all such holders
of the aggregate fractional shares of AMRE Common Stock that such
holders would be entitled to receive but for this Section 1.5(d). Any
such sale shall be made by the Exchange Agent within ten (10) business
days after the date upon which the Certificates (as hereinafter
defined) that would otherwise result in the issuance of shares of AMRE
Common Stock have been received by the Exchange Agent.
(e) At the Effective Time, all options (individually
a "Company Option" or collectively, the "Company Options") then
outstanding under the Company's stock option plans (collectively, the
"Company Stock Option Plans") shall remain outstanding following the
Effective Time and shall remain exercisable pursuant to the terms of
such plans (subject to the waiver of rights under the reload feature
of such Company Stock Option Plans reflected in the Stockholders
Agreement in the form of Exhibit E attached hereto). At the Effective
Time, such Company Options shall, by virtue of the Merger and without
any further action on the part of the Company or the holder of any
such Company Options, be assumed by AMRE in such manner that AMRE (i)
is a corporation "assuming a stock option in a transaction to which
Section 424(a) applies" within the meaning of Section 424 of the Code,
or (ii) to the extent that Section 424(a) of the Code does not apply
to any such Company Option, would be such a corporation were Section
424(a) applicable to such option. Each Company Option assumed by AMRE
shall be exercisable upon the same terms and conditions as under the
applicable Company Stock Option Plan and the applicable option
agreement issued thereunder, except that (A) each such Company Option
shall be exercisable for that whole number of shares of AMRE Common
Stock (to the nearer whole share) into which the number of Shares
subject to such Option immediately prior to the Effective Time would
be converted under this Section 1.5, and (B) the option exercise price
per share of AMRE Common Stock shall be an amount equal to the option
price per Share subject to such Company Option in effect prior to the
Effective Time divided by the Exchange Ratio (the price per share, as
so determined, being rounded upward to the nearest full cent).
(f) At the Effective Time, each share of Common
Stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time as a result of the Merger
shall be converted in exchange for one newly and validly issued, fully
paid and nonassessable share of Common Stock of the Surviving
Corporation.
5
<PAGE> 11
1.6 Exchange of Certificates Representing Company Common Stock.
(a) As of the Effective Time, AMRE shall deposit, or
shall cause to be deposited, with an exchange agent selected by AMRE,
which shall be AMRE's Transfer Agent or such other party reasonably
satisfactory to Company (the "EXCHANGE AGENT") for the benefit of the
holders of the Shares, for exchange in accordance with this Article 1,
certificates representing the shares of AMRE's Common Stock issued in
exchange for the Shares.
(b) Promptly after the Effective Time, AMRE shall
cause the Exchange Agent to mail to each holder of record of Shares
(i) a letter of transmittal which shall specify that delivery shall be
effective, and risk of loss and title to such Shares shall pass, only
upon delivery of the certificates formerly representing such Shares to
the Exchange Agent in accordance with the instructions specified in
clause (ii) of this sentence and which shall be in such form and have
such other provisions as AMRE and the Exchange Agent may reasonably
specify and (ii) instructions for use in affecting the surrender of
such certificates in exchange for certificates representing shares of
AMRE Common Stock. Upon surrender of a Certificate for cancellation
to the Exchange Agent together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto,
the holder of the shares formerly represented by such Certificate
shall be entitled to receive in exchange therefor a certificate
representing that number of shares of AMRE Common Stock determined
pursuant to Section 1.5(a) above and unpaid dividends and
distributions, if any, which such holder has the right to receive in
respect of the Certificates surrendered pursuant to the provisions of
this Article 1, after giving effect to any required tax withholdings,
and the Certificates so surrendered shall forthwith be cancelled. In
the event of a transfer of ownership of Company Common Stock which is
not registered in the transfer records of the Company, a certificate
representing the proper number of shares of AMRE Common Stock may be
issued to such a transferee if the certificate formerly representing
such Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have
been paid.
(c) Notwithstanding any other provisions of this
Agreement, no dividends or other distributions declared after the
Effective Time on AMRE Common Stock shall be paid with respect any of
the Shares until such certificate formerly representing the Shares is
surrendered for exchange as provided herein. Subject to the effect of
applicable laws, following surrender of any such certificate, there
shall be paid to the holder of the certificates representing whole
shares of AMRE Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends
or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of AMRE Common
Stock and not paid, less the amount of any withholding taxes which may
be required thereon, and (ii) at the appropriate payment date, the
amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and with a payment date
subsequent to surrender, payable
6
<PAGE> 12
with respect to such whole shares of AMRE Common Stock, less the
amount of any withholding taxes which may be required thereon.
(d) At or after the Effective Time, there shall be no
transfers on the stock transfer books of Company of the Shares which
were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Company, they
shall be cancelled and exchanged for certificates of shares of AMRE
Common Stock deliverable in respect thereof pursuant to this Agreement
in accordance with the procedures set forth in this Section 1.6.
Certificates surrendered for exchange by any person constituting an
"affiliate" of Company for purposes of Rule 145(c) under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), shall not
be exchanged until AMRE has received the executed letter from such
person as provided in Section 5.17 below.
(e) None of AMRE, the Company, the Exchange Agent or
any other person shall be liable to any former holder of Shares for
any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) In the event any certificate representing Shares
of Company Common Stock shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed and, if required by
AMRE, the posting by such person of a bond in such reasonable amount
as AMRE may direct as indemnity against any claim that may be made
against it with respect to such certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed certificate the
shares of AMRE Common Stock and unpaid dividends and distributions on
shares of AMRE Common Stock deliverable in respect thereof pursuant to
this Agreement.
1.7 Adjustment of Exchange Ratio. In the event that, subsequent
to the date of this Agreement but prior to the Effective Time, the outstanding
shares of AMRE Common Stock or Company Common Stock, respectively, shall have
been changed into a different number of shares or a different class as a result
of a stock split, reverse stock split, stock dividend, subdivision,
reclassification, split, combination, exchange, recapitalization or other
similar transaction, the Exchange Ratio shall be appropriately adjusted.
1.8 Director Nominee. At the Effective Time, AMRE shall take such
action as is necessary in order to enable one individual designated by the
Company to be elected to AMRE's Board of Directors (the "DESIGNEE"). The
Company has selected as the Designee Murray Gross.
7
<PAGE> 13
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
AMRE AND MERGER SUB
Except as set forth in the disclosure letter delivered herewith (the
"AMRE DISCLOSURE LETTER") and the AMRE Reports (as defined herein), AMRE and
Merger Sub jointly and severally represent and warrant to the Company and
Company Sub the following:
2.1 Organization, Good Standing, Power, etc.
(a) Each of AMRE and Merger Sub is a corporation
duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has the requisite corporate power
and authority to carry on its business as now conducted. Each of AMRE
and Merger Sub is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on
AMRE or Merger Sub. As used in this Agreement, the term "material
adverse effect" means, with respect to any entity, a material adverse
effect on the financial condition, properties, business or results of
operations of such entity and its subsidiaries taken as a whole, or on
the ability of such entity to perform its obligations hereunder or to
consummate the transactions contemplated hereby, whether or not caused
by management of such entity. Copies of the Certificate of
Incorporation and bylaws of each of AMRE and Merger Sub heretofore
delivered to the Company or its representatives by AMRE are true and
complete as of the date hereof. Each of such Certificate of
Incorporation and bylaws is in full-force and effect, and neither AMRE
nor Merger Sub is in violation or breach of any of the provisions of
its Certificate of Incorporation or bylaws.
(b) Each of AMRE and Merger Sub has the requisite
corporate power and authority to enter into this Agreement and,
subject to obtaining stockholder approval of the Merger, to perform
its obligations hereunder. The execution and delivery of this
Agreement by AMRE and Merger Sub and the consummation by AMRE and
Merger Sub of the transactions contemplated hereby have been duly
authorized by the Board of Directors of each of AMRE and Merger Sub
and no other corporate proceedings on the part of AMRE or Merger Sub
are necessary for the execution and delivery of this Agreement by AMRE
or Merger Sub, and, subject to obtaining stockholder approval of the
Merger and an increase in the number of AMRE's authorized shares, the
consummation by AMRE and Merger Sub of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by AMRE
and Merger Sub and, subject to obtaining stockholder approval of the
Merger and assuming that it has been duly executed and delivered by
the Company, constitutes a legal, valid and binding obligation of each
of AMRE and Merger Sub, enforceable against AMRE and Merger Sub in
accordance with its terms except as enforcement thereof may be limited
by liquidation, conservatorship, bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
8
<PAGE> 14
enforcement of creditor's rights generally from time to time in effect
and except that equitable remedies are subject to judicial discretion.
2.2 Authorized Capitalization of AMRE. The authorized capital
stock of AMRE consists of 20,000,000 shares of AMRE Common Stock and 1,000,000
shares of preferred stock, par value $0.10 per share (the "AMRE PREFERRED
STOCK"). As of October 31, 1995, there were 13,049,822 shares of AMRE Common
Stock and no shares of AMRE Preferred Stock issued and outstanding. AMRE has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of AMRE on any
matter. All issued and outstanding shares of AMRE Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except as disclosed in the AMRE Reports (as hereinafter defined), (i)
there are no outstanding or authorized subscriptions, options, warrants, calls,
rights (including any preemptive rights), commitments, or other agreements of
any character whatsoever which obligate or may obligate AMRE to issue or sell
any additional shares of its capital stock or any securities convertible into
or evidencing the right to subscribe for any shares of its capital stock or
securities convertible into or exchangeable for such shares, (ii) there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar plans or contracts or rights with respect to AMRE or
any of its subsidiaries which are effective as of the date hereof or which have
been executed or agreed to as of the date hereof with an effective date after
the date hereof, and (iii) there are no stockholders' agreements, voting
trusts, proxies or other agreements or understandings with respect to the
voting of the capital stock of AMRE or any of its subsidiaries to which AMRE or
any of its subsidiaries is or are a party which are presently effective or have
been executed or agreed to as of the date hereof and provide for an effective
date after the date hereof or to which any officer or director of AMRE or any
stockholder owned or controlled by such officer or director is or will be a
party in accordance with the terms hereof.
2.3 Subsidiaries. AMRE owns directly or indirectly each of the
outstanding shares of capital stock of each of AMRE's direct or indirect
subsidiaries (each an "AMRE SUBSIDIARY"). Each of the outstanding shares of
capital stock of each of the AMRE Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and all such outstanding shares or other
ownership interests are owned, directly or indirectly, by AMRE free and clear
of all liens, pledges, security interests, claims or other encumbrances other
than liens imposed by local law which are not material.
2.4 Other Interests. Except for interests in AMRE Subsidiaries,
neither AMRE nor any AMRE Subsidiary owns, directly or indirectly, any interest
or investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity other than investments in short term
investment securities.
2.5 Effect of Agreement. The execution, delivery and performance
of this Agreement by AMRE and the consummation by AMRE of the transactions
contemplated hereby will not require any notice to, filing with, or the
consent, approval or authorization of any person or governmental authority,
except for filings required under the Hart- Scott-Rodino Act, the Securities
Act, the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
state
9
<PAGE> 15
"Blue Sky" filings. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in the
acceleration or termination of, or the creation in any party of the right to
accelerate, terminate, modify or cancel, any material indenture, contract,
lease, sublease, loan agreement, note or other obligation or liability to which
AMRE is a party or is bound or to which any of its assets are subject which
would have a material adverse effect on AMRE, (ii) conflict with, violate or
result in a breach of any provision of the charter documents or bylaws of AMRE,
(iii) conflict with or violate any law, rule, regulation, ordinance, order,
writ, injunction or decree applicable to AMRE or by which any of its properties
or assets is bound or affected which conflict or violation would result in a
material adverse effect on AMRE or (iv) conflict with or result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or result in the creation of any lien,
charge or encumbrance on any of the properties or assets of AMRE pursuant to
any of the terms, conditions or provisions of any indenture, contract, lease,
sublease, loan agreement, note, permit, license, franchise, agreement or other
instrument, obligation or liability to which AMRE is a party or by which AMRE
or any of its assets is bound or affected which would have a material adverse
effect on AMRE.
2.6 SEC Documents. AMRE has filed each report, proxy statement or
information statement (as defined in Regulation 14C under the Exchange Act)
required of it since March 31, 1993, (including exhibits and any amendments
thereto) filed with the Securities and Exchange Commission (the "SEC")
(collectively, the "AMRE REPORTS"). As of their respective dates, (i) the AMRE
Reports complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder, and (ii) the AMRE Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of AMRE included in the AMRE Reports (including the
related notes and schedules) has been prepared in accordance with generally
accepted accounting principles consistently applied, or, if unaudited, in
accordance with applicable published accounting requirements of the SEC, and
fairly presents the consolidated financial position of AMRE and AMRE's
Subsidiaries as of its date, and each of the consolidated statements of income,
changes in stockholders' equity and cash flows of AMRE included in the AMRE
Reports (including any related notes and schedules, and together with the
consolidated balance sheets of AMRE, the "AMRE FINANCIAL STATEMENTS") has been
prepared in accordance with generally accepted accounting principles
consistently applied, or, if unaudited, in accordance with applicable published
accounting requirements of the SEC, and fairly presents the results of
operations, changes in stockholders' equity or cash flows, as the case may be,
of AMRE and AMRE's Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to normal year-end audit adjustments which
would not cause a material adverse effect on AMRE). Neither AMRE nor any of
the AMRE Subsidiaries has any material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of AMRE or in the
notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except liabilities arising in the ordinary
course of business since July 2, 1995 (the "BALANCE SHEET DATE"). The balance
sheet of AMRE for July 2, 1995 and the related consolidated statements of
income for the period ended July 2, 1995 are hereafter referred to as
10
<PAGE> 16
the "JULY AMRE FINANCIALS". All material agreements, contracts and other
documents required to be filed as exhibits to any of the AMRE Reports have been
so filed. AMRE has timely filed all reports and other filings required to be
filed with the SEC under the rules and regulations of the SEC. Any financial
statements prepared for filing with the SEC by AMRE subsequent to the date of
the July AMRE Financials or the date hereof, including but not limited to its
year ended December 31, 1995 audited financial statements (but only to the
extent the same are required to be filed with the SEC prior to the Effective
Time) (the "SUBSEQUENT AMRE FINANCIALS"), have been, or if not yet filed, will
be, prepared in accordance with generally accepted accounting principles
consistently applied (in the case of audited statements) and in accordance with
applicable published accounting requirements of the SEC (in the case of
unaudited statements), consistently applied, will fairly represent the
financial condition, and will accurately set forth in all material respects the
results of the combined operations, of AMRE and the AMRE Subsidiaries for the
periods covered thereby.
2.7 Absence of Certain Changes or Events. Except as disclosed in
the AMRE Reports and, and except for changes arising from the public
announcement of the transactions contemplated by this Agreement, since June 30,
1995, AMRE has conducted its business only in the ordinary course of business
and there has not been (i) any material change in AMRE or any development or
combination of developments of which any of its executive officers has actual
knowledge which has resulted or is reasonably likely to result in a material
adverse effect on AMRE; (ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to its capital stock, except for
dividends paid and to be paid in accordance with AMRE's past practice and at a
level no greater than $0.03/per share per quarter; (iii) any material change in
its accounting principles, practices or methods; (iv) any termination by AMRE
of the employment of any department head or officer of AMRE or entered into (A)
any written employment agreement or (B) any oral employment agreement not
terminable without penalty by any party thereto upon 60 days notice; (v) any
material increase in the rate of compensation or bonus payments payable or to
become payable to any of AMRE's officers or directors (including, without
limitation, any payment of or promise to pay any bonus or special
compensation); (vi) any purchase, redemption, issuance, sale or other
acquisition or disposition of any of its shares of capital stock or other
equity securities, or agreement to do so, or any grant of any options, warrants
or other rights to purchase or convert any obligation into any shares of AMRE's
capital stock or any evidence of indebtedness or other securities; (vii) any
transaction between AMRE and any Affiliate (as defined in Rule 12b-2 under the
Exchange Act) of AMRE; and (viii) any agreement entered into by AMRE to do any
of the things set out in (i)-(vii) above.
2.8 Taxes. AMRE has timely filed or caused to be timely filed
(including allowable extensions) all federal, state, local, foreign and other
tax returns for income taxes, sales taxes, withholding taxes, employment taxes,
property taxes, franchise taxes and all other taxes of every kind whatsoever
which are required by law to have been filed for its tax years ended prior to
the date of this Agreement or requests for extensions have been timely filed.
All of the tax returns that have been filed accurately reflect in all material
respects the facts regarding the income, deductions, credits, assets,
operations, activities and all other matters and information required to be
shown thereon. AMRE has paid or caused to be paid all taxes, assessments,
fees, penalties and other governmental charges which have become due pursuant
to said returns and
11
<PAGE> 17
all other taxes, assessments, fees, penalties and other governmental charges
which have become due and payable. AMRE has not filed or entered into any
election, consent or extension agreement that extends the applicable statute of
limitations with respect to its liability for taxes, except as set forth in the
AMRE Reports. The provisions for income and other taxes reflected in the
balance sheet included in the AMRE Reports make adequate provision for all
accrued and unpaid taxes of AMRE, whether or not disputed, and AMRE has made
and will continue to make adequate provision for such taxes on its books and
records until the Effective Time, including any taxes arising from the
transactions contemplated by this Agreement; provided, however, no provision
has been made or will be made in the AMRE Financial Statements or the
Subsequent AMRE Financials for any taxes resulting from any tax election made
by the Surviving Corporation subsequent to the Effective Time. AMRE is not
party to any action or proceeding pending or, to its knowledge, threatened by
any governmental authority for assessment or collection of taxes; no unresolved
claim for assessment or collection of such taxes has been asserted against
either of them, and no audit or investigation by state or local government
authorities is under way. There is and will be no further liability for any
such taxes, whether by future deficiency assessments or otherwise, and no
material interest or penalties accrued or accruing with respect thereto.
2.9 Legal Proceedings. Except as set forth in the AMRE Reports,
there are no claims, actions, suits, arbitrations, grievances, proceedings or
investigations pending or, to the best knowledge of AMRE and Merger Sub,
threatened against AMRE or Merger Sub, at law, in equity, or before any
federal, state, municipal or other governmental or nongovernmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and
there are no outstanding or unsatisfied judgments, orders, decrees or
stipulations to which AMRE or Merger Sub is a party, which involve the
transactions contemplated herein or which would have a material adverse effect
upon AMRE or Merger Sub. Neither AMRE nor Merger Sub is currently engaged in
or contemplating any legal action to recover moneys due to them or damages
sustained by them. Neither AMRE nor Merger Sub is in violation of or in
default with respect to any applicable judgment, order, writ, injunction or
decree, which would have a material adverse effect upon AMRE or Merger Sub.
2.10 Labor Matters. Neither AMRE nor any of the AMRE Subsidiaries
is a party to, or bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization. To
the knowledge of AMRE, there is no unfair labor practice or labor arbitration
proceeding pending. To the knowledge of AMRE, there are no organizational
efforts with respect to the formation of a collective bargaining unit presently
being made or threatened involving employees of AMRE or any of the AMRE
Subsidiaries.
2.11 Patents, Trademarks, Franchises, etc. All agreements related
to patents, trademarks, franchises and other similar rights listed in the AMRE
Disclosure Letter are valid and enforceable, AMRE has performed all obligations
imposed upon it thereunder, and AMRE is not in default thereunder, nor is there
any event which with notice or lapse of time, or both, would constitute a
default thereunder by AMRE or, to the knowledge of AMRE, any other party
thereto. Except as set forth in the AMRE Disclosure Letter, AMRE has not
received notice that any party to any such agreement intends to cancel,
terminate or refuse to renew the same or to exercise or decline to exercise any
option or other right thereunder.
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<PAGE> 18
2.12 Employee Benefit Plans. All material employee benefit plans,
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), all arrangements providing compensation, severance
or other benefits to any employee or director or former employee or director of
AMRE, the AMRE Subsidiaries or ERISA Affiliate (as defined below) of AMRE (the
"AMRE BENEFIT PLANS") are set forth in the AMRE Disclosure Letter or in the
AMRE Reports. Unless otherwise disclosed in the AMRE Disclosure Letter, to the
extent applicable, AMRE Benefit Plans comply, in all material respects, with
the requirements of ERISA and the Code, and any AMRE Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service (the "IRS") to be so qualified or AMRE has submitted
or is in the process of submitting a timely determination letter request to the
IRS with respect to any such AMRE Benefit Plan. Neither AMRE nor any ERISA
Affiliate of AMRE (during the period of its affiliated status and prior
thereto, to its knowledge) maintains, contributes to or has in the past
maintained or contributed to any benefit plan which is covered by Title IV of
ERISA or Section 412 of the Code. Neither any AMRE Benefit Plan nor AMRE has
incurred any liability or penalty under Section 4975 of the Code or Section
502(i) of ERISA. Each AMRE Benefit Plan has been maintained and administered
in all material respects in compliance with its terms and with ERISA and the
Code to the extent applicable thereto. There are no pending or anticipated
claims against or otherwise involving any of AMRE Benefit Plans and no suit,
action or other liability (excluding claims for benefits incurred in the
ordinary course of AMRE Benefit Plan activities) has been brought against or
with respect to any such AMRE Benefit Plan, except for any of the foregoing
which would not have a material adverse effect on AMRE. All contributions
required to be made as of the date hereof to AMRE Benefit Plans have been made
or provided for. All required contributions to AMRE Benefit Plans have been
timely made. Neither AMRE nor any ERISA Affiliate of AMRE has contributed to,
or been required to contribute to, any "multiemployer plan" (as defined in
Sections 3(37) and 4001(a)(3) of ERISA). Except for benefits as may be
required to be provided under applicable provisions of federal or state law,
there are no plans or arrangements which provides or has any liability to
provide life insurance or medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment.
The execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any AMRE Benefit Plan that will or
may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee. The only
severance agreements or severance policies applicable to AMRE or any of the
AMRE Subsidiaries are the agreements and policies specifically referred to in
the AMRE Disclosure Letter (and, in the case of such agreements, the form of
which is attached to the AMRE Disclosure Letter).
For purposes of this Agreement "ERISA AFFILIATE" means any business or
entity which is a member of the same "controlled group of corporations," is
under "common control" or is a member of an "affiliated service group" with an
entity within the meanings of Sections 414(b), (c) or (m) of the Code, or
required to be aggregated with the entity under Section 414(o) of the Code, or
is under "common control" with the entity, within the meaning of Section
4001(a)(14) of ERISA, or any regulations promulgated or proposed under any of
the foregoing Sections.
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2.13 Stockholder Information. None of the information to be
distributed to stockholders of AMRE and the Company in connection with the
Merger nor any amendments or supplements of or to any of the foregoing which is
provided by AMRE (collectively, the "AMRE STOCKHOLDER INFORMATION"), will
between the date the AMRE Stockholder Information is first mailed to
stockholders and the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it is made, will be false or
misleading with respect to any fact, or will omit to state any fact necessary
in order to make the statements therein not false or misleading.
2.14 Full Disclosure. No information furnished, or to be
furnished, by either AMRE or Merger Sub or their representatives in connection
with this Agreement (including, but not limited to, the AMRE Reports and all
information in the Schedules hereto) is, or will be, false or misleading and
such information includes all facts required to be stated therein or necessary
to make the statements therein not misleading. No representation or warranty
by or on behalf of AMRE or the AMRE Subsidiaries contained in this Agreement,
and no statement contained in any certificate, list, exhibit, or other
instrument furnished or to be furnished to AMRE pursuant hereto contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material facts which are necessary in order to make the statement
contained herein or therein, in light of the circumstances under which they are
made, not misleading.
2.15 Capital Stock. The shares of Common Stock of Merger Sub are
validly issued, fully paid and nonassessable and are owned directly by AMRE,
free and clear of all liens, claims and encumbrances. The issuance and
delivery by AMRE of shares of AMRE Common Stock in connection with the Merger
have been duly and validly authorized by all necessary corporate action on the
part of AMRE except for approval of its stockholders contemplated by this
Agreement.
2.16 Historic Business. In the Merger, Merger Sub will transfer
"substantially all" of its assets (within the meaning of Revenue Procedure
77-37, Section 3.01, 1977-2 C.B. 568) to the Surviving Corporation. AMRE has
no plan or intention to (i) cause or permit the Surviving Corporation to issue
any additional shares of stock, (ii) reacquire any of the shares of AMRE Common
Stock issued in the Merger, (iii) liquidate the Surviving Corporation, (iv)
cause or permit the merger of the Surviving Corporation with another
corporation, (v) sell or otherwise dispose of the stock of the Surviving
Corporation, or (vi) cause or permit the Surviving Corporation to sell or
otherwise dispose of any of its assets (except for dispositions of assets made
in the ordinary course of business and transfers of assets or shares of the
Surviving Corporation's stock permitted by the provisions of Treasury
Regulation Section 1.368-2(j)(4). Following the Merger, the Surviving
Corporation will continue the Company's and Merger Sub's historic business or
use a significant portion of their historic business assets in a business
(within the meaning of Treasury Regulation Section 1.368-1(d)).
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND COMPANY SUB
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof (the "COMPANY DISCLOSURE LETTER") or the Company Reports
(as hereinafter defined), each of the Company and Company Sub represents and
warrants to AMRE and Merger Sub as follows in Section 3.1 through Section 3.23,
inclusive:
3.1 Organization, Good Standing, Power, etc.
(a) The Company and Company Sub are corporations duly
organized, validly existing and in good standing under the laws of
their respective states of incorporation, and have the requisite
corporate power and authority to carry on their businesses as now
conducted. The Company and Company Sub are each duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of their respective properties owned
or leased or the nature of their activities makes such qualification
necessary except where the failure to be so qualified would not have a
material adverse effect on the Company or Company Sub. Copies of the
Certificate of Incorporation and bylaws of the Company and Company Sub
heretofore delivered to AMRE and Merger Sub or their representatives
by the Company and Company Sub are true and complete as of the date
hereof. Each of such Certificate of Incorporation and bylaws is in
full-force and effect, and neither the Company nor Company Sub is in
violation or breach of any of the provisions of its respective
Certificate of Incorporation or bylaws.
(b) The Company and Company Sub have the requisite
corporate power and authority to enter into this Agreement and,
subject to obtaining stockholder approval of the Merger, to perform
their respective obligations hereunder. The execution and delivery of
this Agreement by each of the Company and Company Sub and the
consummation by each of the Company and Company Sub of the
transactions contemplated hereby have been duly authorized by the
Board of Directors of the Company and Company Sub and no other
corporate proceedings on the part of the Company are necessary for the
execution and delivery of this Agreement by the Company or Company
Sub, and, subject to obtaining stockholder approval of the Merger, the
consummation by the Company and Company Sub of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by each of the Company and Company Sub and, subject to
obtaining any necessary stockholder approval of the Merger and
assuming that it has been duly executed and delivered by AMRE and
Merger Sub, constitutes a legal, valid and binding obligation of each
of the Company and Company Sub, enforceable against the Company and
Company Sub in accordance with its terms except as enforcement thereof
may be limited by liquidation, conservatorship, bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally from time to time in effect
and except that equitable remedies are subject to judicial discretion.
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3.2 Authorized Capitalization of the Company and Company Sub.
(a) The authorized capital stock of the Company
consists of 15,000,000 shares of Company Common Stock, par value $0.01
per share, and 1,000,000 shares of preferred stock, par value $0.01
per share (the "COMPANY PREFERRED STOCK"). As of October 15, 1995,
there were 3,396,572 shares of Company Common Stock and no shares of
Company Preferred Stock issued and outstanding. The Company has no
outstanding bonds, debentures, notes or other obligations the holders
of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the
stockholders of the Company on any matter. All issued and outstanding
shares of Common Stock are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights. Except as
disclosed in the Company Reports or the Company Disclosure Letter, (i)
there are no outstanding or authorized subscriptions, options,
warrants, calls, rights (including any preemptive rights),
commitments, or other agreements of any character whatsoever which
obligate or may obligate the Company to issue or sell any additional
shares of its capital stock or any securities convertible into or
evidencing the right to subscribe for any shares of its capital stock
or securities convertible into or exchangeable for such shares, (ii)
there are no outstanding or authorized stock appreciation, phantom
stock, profit participation or similar plans or contracts or rights
with respect to the Company or any of its subsidiaries which are
effective as of the date hereof or which have been executed or agreed
to as of the date hereof with an effective date after the date hereof,
and (iii) there are no stockholders' agreements, voting trusts,
proxies or other agreements or understandings with respect to the
voting of the capital stock of the Company or any of its subsidiaries
to which the Company or any of its subsidiaries is or are a party
which are presently effective or have been executed or agreed to as of
the date hereof and provide for an effective date after the date
hereof or to which any officer or director of the Company or any
stockholder owned or controlled by such officer or director is or will
be a party in accordance with the terms hereof.
(b) The authorized capital stock of Company Sub
consists of 19,000,000 shares of common stock, par value $0.01 per
share ("COMPANY SUB COMMON STOCK"), and 1,000,000 shares of preferred
stock, par value $0.01 per share (the "COMPANY SUB PREFERRED STOCK").
As of October 31, 1995, there were 1,000 shares of Company Sub Common
Stock and no shares of Company Sub Preferred Stock issued and
outstanding. Company Sub has no outstanding bonds, debentures, notes
or other obligations the holders of which have the right to vote (or
which are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company Sub on any matter.
All issued and outstanding shares of Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive
rights. Except as disclosed in the Company Sub Disclosure Letter, (i)
there are no outstanding or authorized subscriptions, options,
warrants, calls, rights (including any preemptive rights),
commitments, or other agreements of any character whatsoever which
obligate or may obligate the Company Sub to issue or sell any
additional shares of its capital stock or any securities convertible
into or evidencing the right to subscribe for any shares of its
capital stock or securities convertible into or exchangeable for such
shares, (ii) there are no
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outstanding or authorized stock appreciation, phantom stock, profit
participation or similar plans or contracts or rights with respect to
the Company Sub or any of its subsidiaries which are effective as of
the date hereof or which have been executed or agreed to as of the
date hereof with an effective date after the date hereof, and (iii)
there are no stockholders' agreements, voting trusts, proxies or other
agreements or understandings with respect to the voting of the capital
stock of the Company Sub or any of its subsidiaries to which the
Company Sub or any of its subsidiaries is or are a party which are
presently effective or have been executed or agreed to as of the date
hereof and provide for an effective date after the date hereof or to
which any officer or director of the Company Sub or any stockholder
owned or controlled by such officer or director is or will be a party
in accordance with the terms hereof.
3.3 Subsidiaries. Except as set forth in the Company Disclosure
Letter, the Company owns directly or indirectly each of the outstanding shares
of capital stock (or other ownership interests having by their terms ordinary
voting power to elect a majority of directors or others performing similar
functions with respect to such subsidiary of the Company) of each of the
Company's direct or indirect subsidiaries (each a "COMPANY SUBSIDIARY"). Each
of the outstanding shares of capital stock of each of the Company Subsidiaries
(that are corporations) is duly authorized, validly issued, fully paid and
nonassessable, and all such outstanding shares or other ownership interests are
owned, directly or indirectly, by the Company free and clear of all liens,
pledges, security interests, claims or other encumbrances other than liens
imposed by local law which are not material.
3.4 Other Interests. Except for interests in the Company
Subsidiaries, neither the Company nor any Company Subsidiary owns, directly or
indirectly, any material interest or investment (whether equity or debt) in any
corporation (including but not limited to AMRE), partnership, joint venture,
business, trust or entity other than investments in short term investment
securities.
3.5 Effect of Agreement. The execution, delivery and performance
of this Agreement by the Company and Company Sub and the consummation by each
of the Company and Company Sub of the transactions contemplated hereby will not
require any notice to, filing with, or the consent, approval or authorization
of any person or governmental authority, except for filings required under the
Hart-Scott-Rodino Act and the Exchange Act. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) except as set forth in the Company Disclosure Letter, result in the
acceleration or termination of, or the creation in any party of the right to
accelerate, terminate, modify or cancel, any indenture, contract, lease,
sublease, loan agreement, note or other obligation or liability to which the
Company or Company Sub is a party or is bound or to which any of their
respective assets are subject which event would have a material adverse effect
on the Company or Company Sub, (ii) conflict with, violate or result in a
breach of any provision of the charter documents or bylaws of the Company or
Company Sub, (iii) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction or decree applicable to the Company or to
Company Sub or by which any of their respective properties or assets is bound
or affected which conflict or violation would result in a material adverse
effect on the Company or Company Sub or (iv) conflict with or result in any
breach of or constitute a default (or an event which with
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notice or lapse of time or both would become a default) under, or result in the
creation of any lien, charge or encumbrance on any of the properties or assets
of the Company or Company Sub pursuant to any of the terms, conditions or
provisions of any indenture, contract, lease, sublease, loan agreement, note,
permit, license, franchise, agreement or other instrument, obligation or
liability to which the Company or Company Sub is a party or by which the
Company, Company Sub or any of their respective assets is bound or affected
which would have a material adverse effect on the Company.
3.6 SEC Documents. The Company has delivered to AMRE each
registration statement, report, proxy statement or information statement (as
defined in Regulation 14C under the Exchange Act) prepared by it since March
31, 1993, (including exhibits and any amendments thereto) filed with the SEC
(collectively, the "COMPANY REPORTS"). As of their respective dates, (i) the
Company Reports complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder, and (ii) the Company Reports and any Private
Placement Memorandums of Company did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of Company included in the Company Reports
(including the related notes and schedules) has been prepared in accordance
with generally accepted accounting principles consistently applied, or, if
unaudited, in accordance with applicable published accounting requirements of
the SEC, and fairly presents the consolidated financial position of Company and
the Company's Subsidiaries as of its date, and each of the consolidated
statements of income, changes in stockholders' equity and cash flows of Company
included the Company Reports (including any related notes and schedules, and
together with the consolidated balance sheets of the Company, the "COMPANY
FINANCIAL STATEMENTS") has been prepared in accordance with generally accepted
accounting principles consistently applied, or, if unaudited, in accordance
with applicable published accounting requirements of the SEC, and fairly
presents the results of operations, changes in stockholders' equity or cash
flows, as the case may be, of the Company and the Company's Subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments which would not cause a material adverse
effect on the financial condition, business, operations, liquidity, property,
or assets of the Company and the Company Subsidiaries considered as a single
enterprise). Neither the Company nor any of the Company Subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of the Company or in the notes thereto, prepared in
accordance with generally accepted accounting principles consistently applied,
except liabilities arising in the ordinary course of business since June 30,
1995 (the "BALANCE SHEET DATE"). The balance sheet of the Company for March
31, 1995 and the related consolidated statements of income for the period ended
March 31, 1995 are hereafter referred to as the "MARCH COMPANY FINANCIALS".
All material agreements, contracts and other documents required to be filed as
exhibits to any of the Company Reports have been so filed. The Company has
timely filed all reports, registration statements and other filings required to
be filed with the SEC under the rules and regulations of the SEC. Any
financial statements prepared for filing with the SEC by the Company subsequent
to the date of the March Company Financials or the date hereof, including but
not limited to its year ended March 31, 1996 audited financial statements (but
only to the
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extent the same are required to be filed with the SEC prior to the Effective
Time) (the "SUBSEQUENT COMPANY FINANCIALS"), have been, or if not yet filed,
will be, prepared in accordance with generally accepted accounting principles
consistently applied (in the case of audited statements) and in accordance with
applicable published accounting requirements of the SEC (in the case of
unaudited statements), consistently applied, will fairly represent the
financial condition, and will accurately set forth in all material respects the
results of the combined operations, of the Company and the Company Subsidiaries
for the periods covered thereby.
3.7 Absence of Certain Changes or Events. Except as disclosed in
the Company Reports, and the Company Financial Statements, the Company
Disclosure Letter or as required to effect the Reincorporation and except for
changes arising from the public announcement of the transactions contemplated
by this Agreement, since June 30, 1995, the Company has conducted its business
only in the ordinary course of business and there has not been (i) any material
change in the Company or any development or combination of developments of
which any of its executive officers has actual knowledge which has resulted or
is reasonably likely to result in a material adverse effect on the Company;
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock, except for quarterly dividends
paid and to be paid in accordance with the Company's past practice and at a
level no greater than $0.005 per share; (iii) any material change in its
accounting principles, practices or methods; (iv) any termination by the
Company of the employment of any department head or officer of the Company or
entered into (A) any written employment agreement or (B) any oral employment
agreement not terminable without penalty by any party thereto upon 60 days
notice; (v) any material increase in the rate of compensation or bonus payments
payable or to become payable to any of the Company's officers or directors
(including, without limitation, any payment of or promise to pay any bonus or
special compensation); (vi) any purchase, redemption, issuance, sale or other
acquisition or disposition of any of its shares of capital stock or other
equity securities, or agreement to do so, or any grant of any options, warrants
or other rights to purchase or convert any obligation into any shares of the
Company's capital stock or any evidence of indebtedness or other securities;
(vii) any transaction between the Company and any Affiliate (as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended) of the Company;
and (viii) any agreement entered into by the Company.
3.8 Taxes. Except as disclosed in the Company Disclosure Letter,
the Company has timely filed or caused to be timely filed (including allowable
extensions) all material federal, state, local, foreign and other tax returns
for income taxes, sales taxes, withholding taxes, employment taxes, property
taxes, franchise taxes and all other taxes of every kind whatsoever which are
required by law to have been filed for its tax years ended prior to the date of
this Agreement or requests for extensions have been timely filed. All of the
tax returns that have been filed accurately reflect in all material respects
the facts regarding the income, deductions, credits, assets, operations,
activities and all other matters and information required to be shown thereon.
The Company has paid or caused to be paid all taxes, assessments, fees,
penalties and other governmental charges which have become due pursuant to said
returns and all other taxes, assessments, fees, penalties and other
governmental charges which have become due and payable. The Company has not
filed or entered into any election, consent or extension agreement that extends
the applicable statute of limitations with respect to its liability for taxes,
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except as set forth in the Company Disclosure Letter or except as would not
have a material adverse effect on the Company.
3.9 Real Property.
(a) The Company Reports and the Company Disclosure
Letter contain a complete and accurate list of all real property owned
or, to the extent material, leased by the Company (the "SECTION 3.9
PROPERTY"). Except as otherwise disclosed in the Company Disclosure
Letter and except for liens for taxes not yet due and payable, the
Section 3.9 Property owned by the Company is free and clear of all
liens, mortgages, pledges, security interests, conditional sales
agreements, charges, encumbrances (except to the extent that the
existence of such encumbrance would not materially affect the
Company's use of such property) and other adverse claims or interests
of any nature whatsoever. All improvements on the Section 3.9
Property are in good condition and repair, reasonable wear and tear
excepted.
(b) Except as disclosed in the Company Reports or the
Company Disclosure Letter, there are no material existing leases,
subleases, tenancies, licenses, contracts or other agreements relating
to the Section 3.9 Property to which the Company is a party (the
"LEASES").
(c) Except as disclosed in the Company Reports or the
Company Disclosure Letter, (i) each of the Leases to the Company of
the Section 3.9 Property is valid, and neither the Company nor, to the
knowledge of the Company, any other party thereto is in default
thereunder, nor is there any event which with notice or lapse of time,
or both, would constitute a default thereunder by the Company or, to
the knowledge of the Company, any other party thereto except where
such default would not result in a material adverse effect on the
Company and (ii) the Company has not received notice that any party to
any Lease intends to cancel, terminate or refuse to renew the same or
to exercise or decline to exercise any option or other right
thereunder.
3.10 Environmental. Except for those matters that (i) would not
have a material adverse effect on the Company, (ii) are in compliance with
applicable law, or (iii) are disclosed in the Company Reports or the Company
Disclosure Schedule:
(a) The Company has not used, stored, treated,
transported, manufactured, handled, produced or disposed of any
Hazardous Materials (as defined hereafter) on, under, at, or from, any
of the owned, leased or operated properties or assets described in the
Company Disclosure Letter, or otherwise, in any manner which violated
any applicable Environmental Law (as defined hereafter) and to the
Company's knowledge no prior owner or operator of such property or
asset of any tenant, subtenant, prior tenant or prior subtenant
thereof has used Hazardous Materials on, from or affecting such
property or asset, or otherwise, in any manner which violated any
applicable Environmental Law.
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(b) There have been no Releases (as defined hereafter) of
any Hazardous Material on, under, at, or from any of the owned, leased
or operated properties or assets described in the Company Disclosure
Letter or otherwise.
(c) The Company does not have any liabilities assessed,
no written claims have been received by the Company and no currently
outstanding citations or notices of violation have been received by
the Company, which in the case of any of the foregoing have been or
are imposed by reason of or based upon any alleged violation of any
applicable Environmental Laws, including, but not limited to, any such
liabilities relating to or arising out of or attributable, in whole or
in part, to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, presence or handling of any Hazardous
Materials by the Company at any of the Section 3.9 Property or
otherwise.
(d) There are no actions by any governmental authority
or third party pending under any Environmental Laws to which the
Company is a party alleging a violation of Environmental Law, nor are
there any decrees, or orders, or other administrative or judicial
requirements, outstanding under any Environmental Law with respect to
the Company.
(e) The real property currently used, owned or leased by
the Company contains no regulated underground storage tanks, or
regulated underground piping associated with underground storage
tanks, used currently or in the past as such tanks are defined in RCRA
or comparable state law.
(f) The Company has obtained and is in compliance with
all material permits and licenses that are required under
Environmental Laws, and is in material compliance with all terms and
conditions of such permits and licenses.
(g) Definitions:
(1) as used herein, the term "HAZARDOUS MATERIALS"
means chemicals, materials or substances which are defined as
or included in the definition of "hazardous substances,"
"hazardous wastes," "toxic pollutants," "pollutants,"
"contaminants," or words of similar import under any
Environmental Law; or other chemical, material, substance or
waste, exposure to which is prohibited, limited or regulated
under any Environmental Law;
(2) the term "ENVIRONMENTAL LAWS" means all federal,
state and local laws, rules and regulations applicable to the
Company and its properties relating to pollution or protection
of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation,
laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use treatment, storage,
disposal, transport or handling of Hazardous Materials; and
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(3) the term "RELEASES" means any release, spill,
emission, leaking, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the atmosphere, soil
surface water, groundwater or property in violation of
Environmental Law.
3.11 Personal Property.
(a) Except as otherwise described in the Company Reports
or the Company Disclosure Letter, all of the Company's personal
property (the "SECTION 3.11 PROPERTY") is (i) free and clear of all
liens, other than liens for taxes not yet due and payable, mortgages,
pledges, security interests, conditional sales agreements, charges,
encumbrances and other adverse claims or interests of any nature
whatsoever, and (ii) is in good operating condition and repair,
reasonable wear and tear excepted. The Section 3.11 Property, taken
as a whole, is reasonably fit and usable for the purposes for which it
is being used, reasonably sufficient for all current operations and
business of the Company and conforms with all applicable ordinances,
regulations and laws except where the failure to conform would not
have a material adverse effect on the Company.
(b) The inventory of the Company as reflected by the
March Company Financials and the inventory as the same shall exist on
the date hereof, other than the reserve established for the inventory
reflected in the March Company Financials, consisted and will consist
of items which were and will be of the usual quality and quantity
necessary for the normal conduct of the business of the Company and is
reasonably expected to be usable or saleable within a reasonable
period of time in the ordinary course of the business of the Company.
With respect to inventory in the hands of suppliers for which the
Company is committed as of the date hereof, such inventory is
reasonably expected to be usable in the ordinary course of the
business of the Company as presently being conducted.
3.12 Contracts. Except as disclosed in the Company Reports or the
Company Disclosure Letter, all contracts and leases referred to in the Company
Disclosure Letter are valid and enforceable, the Company has performed all
obligations imposed upon them thereunder, and the Company nor, to the knowledge
of the Company, any other party thereto is in default thereunder, nor is there
any event which with notice or lapse of time, or both, would constitute a
default thereunder by the Company or, to the knowledge of the Company, any
other party thereto.
3.13 Legal Proceedings. Except as set forth in the Company Reports
or the Company Disclosure Letter, there are no claims, actions, suits,
arbitrations, grievances, proceedings or investigations pending or, to the best
knowledge of the Company, threatened against the Company, at law, in equity, or
before any federal, state, municipal or other governmental or nongovernmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and there are no outstanding or unsatisfied judgments, orders, decrees
or stipulations to which the Company is a party, which involve the transactions
contemplated herein or which would have a material adverse effect upon the
Company. Except as set forth in the Company Disclosure Letter, the Company is
not presently engaged in or contemplating any legal action
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to recover moneys due to them or damages sustained by them. The Company is not
in violation of or in default with respect to any applicable judgment, order,
writ, injunction or decree, which would have a material adverse effect upon the
Company.
3.14 Labor Matters. Except as set forth in the Company Reports or
the Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization. To the knowledge of the Company, there is no unfair labor
practice or labor arbitration proceeding pending. To the knowledge of the
Company and except as set forth in the Company Disclosure Letter, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of Company or any
of the Company Subsidiaries.
3.15 Patents, Trademarks, Franchises, etc. All patents and
trademarks owned by the Company and registered in the U.S. Patent and Trademark
Office have been duly issued or registered therein, all such registrations have
been validly issued and all are in full force and effect. The Company in its
operations does not infringe any valid patent, trademark, trade name, service
mark or copyright of any other person or entity. All agreements related to
patents, trademarks, franchises and other similar rights listed in the Company
Disclosure Letter are valid and enforceable, the Company has performed all
obligations imposed upon it thereunder, and the Company is not in default
thereunder, nor is there any event which with notice or lapse of time, or both,
would constitute a default thereunder by the Company or, to the knowledge of
the Company, any other party thereto. Except as set forth in the Company
Disclosure Letter, the Company has not received notice that any party to any
such agreement intends to cancel, terminate or refuse to renew the same or to
exercise or decline to exercise any option or other right thereunder.
3.16 Insurance. Since January 1, 1993 neither the Company nor any
of the Company Subsidiaries has been denied coverage by any insurance carrier
or has failed or currently fails to maintain any insurance coverage which may
be required by the laws of the states in which the Company or the Company
Subsidiaries do business. The premiums due on the insurance which covers
calendar year 1994 have been paid in full (or are not delinquent) and the
premiums due for the period from January 1, 1995 to the Effective Time have
been or will be paid in full as and when due. All such insurance complies in
all material respects with the terms of each of its leases and each of the
mortgages, deeds of trust, service agreements with third parties and/or loan
agreements to which Company or any of the Company Subsidiaries is a party.
3.17 Employees. Except as disclosed in the Company Reports and as
reflected in the Company Financial Statements, the Company is not a party to
any:
(i) management, employment or other contract
providing for the employment or rendition of executive
services;
(ii) contract for the employment of any
employee which is not terminable by the Company on 30 days'
notice;
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(iii) bonus, incentive, deferred compensation,
severance pay, pension, profit-sharing, retirement, stock
purchase, stock option, employee benefit or similar plan,
agreement or arrangement (including without limitation
Christmas bonuses and similar year end bonuses); or
(iv) any other employment contract or other
compensation agreement or arrangement affecting or relating to
current or former employees of the Company.
3.18 Employee Benefit Plans. All material employee benefit plans,
as defined in Section 3(3) of ERISA, all arrangements providing compensation,
severance or other benefits to any employee or director or former employee or
director of the Company, the Company Subsidiaries or ERISA Affiliate of the
Company (the "COMPANY BENEFIT PLANS") are listed in the Company Disclosure
Letter. Unless otherwise disclosed in the Company Disclosure Letter, to the
extent applicable, the Company Benefit Plans comply, in all material respects,
with the requirements of ERISA and the Code, and any Company Benefit Plan
intended to be qualified under Section 401(a) of the Code has been determined
by the IRS to be so qualified or the Company has submitted or is in the process
of submitting a timely determination letter request to the IRS with respect to
any such Company Benefit Plan. Except as set forth in the Company Disclosure
Letter, neither the Company nor any ERISA Affiliate of the Company (during the
period of its affiliated status and prior thereto, to its knowledge) maintains,
contributes to or has in the past maintained or contributed to any benefit plan
which is covered by Title IV of ERISA or Section 412 of the Code. Neither any
Company Benefit Plan nor the Company has incurred any liability or penalty
under Section 4975 of the Code or Section 502(i) of ERISA. Each Company
Benefit Plan has been maintained and administered in all material respects in
compliance with its terms and with ERISA and the Code to the extent applicable
thereto. There are no pending or anticipated claims against or otherwise
involving any of the Company Benefit Plans and no suit, action or other
liability (excluding claims for benefits incurred in the ordinary course of
Company Benefit Plan activities) has been brought against or with respect to
any such Company Benefit Plan, except for any of the foregoing which would not
have a material adverse effect on the Company. All contributions required to
be made as of the date hereof to Company Benefit Plans have been made or
provided for. All required contributions to Company Benefit Plans have been
timely made. Neither the Company nor any ERISA Affiliate of the Company has
contributed to, or been required to contribute to, any "multiemployer plan" (as
defined in Sections 3(37) and 4001(a)(3) of ERISA). Except for benefits as may
be required to be provided under applicable provisions of federal or state law
and except as set forth in the Company Disclosure Letter, there are no plans or
arrangements which provides or has any liability to provide life insurance or
medical or other employee welfare benefits to any employee or former employee
upon his retirement or termination of employment. The execution of, and
performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Company Benefit Plan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any employee. The only severance agreements or
severance policies applicable to the Company or any of the Company Subsidiaries
are the agreements and policies specifically referred to in the Company Reports
or in the Company Disclosure Letter.
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3.19 Transactions with Related Parties. Except for transactions
disclosed in the Company Disclosure Letter or in the Company Reports there have
been no loans or other transactions between the Company and any officer,
director or stockholder of the Company. Except as disclosed in the Company
Disclosure Letter or in the Company Reports, neither the Company, any officer
or director of the Company nor any spouse or child of any such person owns or
has any interest in, directly or indirectly, any real or personal property
owned by or leased to the Company or any copyrights, patents, trademarks,
service marks, trade names or trade secrets licensed by the Company.
3.20 Brokerage. Except as set forth in the Company Disclosure
Letter, the Company has not retained any broker or finder in connection with
the transactions contemplated by this Agreement.
3.21 Stockholder Information. None of the information to be
distributed to stockholders of the Company in connection with the Merger nor
any amendments or supplements of or to any of the foregoing which is provided
by the Company (collectively, the "STOCKHOLDER INFORMATION"), will between the
date the Stockholder Information is first mailed to stockholders and the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it is made, will be false or misleading with respect
to any fact, or will omit to state any fact necessary in order to make the
statements therein not false or misleading.
3.22 Laws. Except for environmental laws, which are covered in
Section 3.10 hereof, and as specifically set forth in the Company Disclosure
Letter, the Company has complied in all material respects with all laws, rules,
regulations, ordinances, codes, licenses, clearances, permits, franchises,
grants, authorizations, easements, consents, certificates and orders relating
to any of its properties or applicable to its business, including, but not
limited to, labor, equal employment opportunity, occupational safety and
health, consumer protection, environmental, securities and antitrust laws and
regulations except where the failure to be in compliance would not have a
material adverse effect on the Company. The Company has all contractors
licenses required for it to conduct its business except where the failure to be
in compliance would not have a material adverse effect on the Company. The
Company is not in material violation of any applicable zoning, building or
environmental regulation, ordinance or other law, order, regulation,
restriction or requirement relating to its operations or properties, whether
such properties are owned or leased, and no governmental body or other person
has claimed that any such violation exists, or called attention to the need for
any work, repairs, construction, alterations or installation on or in
connection with the properties of the Company, except for such violations that
would not have a material adverse effect on the Company. As of the date
hereof, the Board of Directors of the Company has approved the Merger pursuant
to the relevant provisions of Applicable Law.
3.23 Full Disclosure. No information furnished, or to be
furnished, by either the Company or any of the stockholders to AMRE or Merger
Sub or their representatives in connection with this Agreement (including, but
not limited to, the Company Reports and all information in the Schedules
hereto) is, or will be, false or misleading and such information includes all
facts required to be stated therein or necessary to make the statements therein
not
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misleading. No representation or warranty by or on behalf of Company or the
Company Subsidiaries contained in this Agreement, and no statement contained in
any certificate, list, exhibit, or other instrument furnished or to be
furnished to AMRE pursuant hereto contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material facts which are
necessary in order to make the statement contained herein or therein, in light
of the circumstances under which they are made, not misleading.
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, prior to the Effective Time, unless AMRE and
Merger Sub shall otherwise agree in writing or as otherwise expressly
contemplated by this Agreement:
(a) To the extent reasonably practicable taking into
account any operational matters that may arise that are attributable
to the pendency of the Merger, the business of the Company shall be
conducted only in, and the Company shall not take any action except
in, the ordinary course of business and consistent with past
practices, and the Company shall use its commercially reasonable
efforts to maintain and preserve its business organization, assets,
prospects, employees and advantageous business relationships;
(b) The Company shall not, directly or indirectly, do any
of the following except as appropriate for the reincorporation of the
Company in the State of Delaware: (i) authorize for issuance, issue,
sell, pledge, deliver, or agree or commit to issue, sell, pledge or
deliver (whether through the issuance or grant of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any
capital stock of the Company or securities or rights convertible into
or exchangeable for, shares of capital stock or securities convertible
into or exchangeable for such shares; (ii) pledge, dispose of or
encumber, except in the ordinary course of business, any assets of the
Company (including any indebtedness owed to it or any claims held by
it); (iii) amend or propose to amend its Certificate of Incorporation
or bylaws or similar organizational documents; (iv) split, combine or
reclassify any shares of its capital stock or declare, set aside or
pay any dividend or distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock; (v) redeem,
purchase or otherwise acquire or offer to redeem, purchase or
otherwise acquire any capital stock of the Company; (vi) transfer any
assets or liabilities to any subsidiary; or (vii) authorize or propose
any of the foregoing or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing; provided, however, that
nothing in this Section 4.1(b) shall prohibit the Company from issuing
any capital stock of the Company upon the exercise of outstanding
options;
(c) The Company shall not, directly or indirectly, (i)
acquire (by merger, consolidation or acquisition of stock or assets)
any corporation, partnership or other business organization or
division thereof or make any investment either by purchase of stock
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or securities, contributions to capital, property transfer or purchase
of any amount of property or assets of any other individual or entity;
(ii) acquire any assets for a value in excess of $25,000 other than in
the ordinary course of business; (iii) dispose of any assets with a
value in excess of $25,000 other than in the ordinary course of
business; (iv) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any other
individual or entity, make any loans or advances or enter into any
other transaction, except in the ordinary course of business and
consistent with past practice; (v) authorize, recommend or propose any
change in its capitalization or any release or relinquishment of any
contract right; or (vi) authorize or propose any of the foregoing or
enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) The Company shall not enter into or adopt any new, or
amend any existing, severance or termination benefit arrangements,
consulting agreements, any employment benefit plans, or arrangement,
other than in the ordinary course of business and consistent with past
practices;
(e) Except (i) for arrangements existing prior to October
15, 1995, (ii) as required by law, or (iii) or as noted in the Company
Disclosure Letter or the Company Reports, the Company (except for
salary increases or other employee benefit arrangements in the
ordinary course of business) shall not adopt or amend any bonus,
profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any employee or increase or pay any benefit not required by
any existing plan and arrangement;
(f) The Company shall not pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved
against in the Company's Financial Statements or incurred in the
ordinary course of business and consistent with past practice;
(g) The Company shall not waive, release, grant or
transfer any franchises, franchise agreements, patents, patent rights,
trademarks, trademark rights, trade names, trade name rights,
copyrights or know-how or modify or change in any respect any existing
license, lease, contract franchise, franchise agreement or other
document, other than in the ordinary course of business and consistent
with past practice;
(h) The Company shall use its best efforts to preserve
its business organization intact, to keep available the services of
its current officers and key employees and to maintain satisfactory
relationships with licensors, licensees, suppliers, contractors,
distributors, customers and others having significant business
relationships with the Company;
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(i) The Company shall not make any capital expenditure in
excess of $50,000.
4.2 Interim Operations of AMRE. AMRE covenants and agrees as to
itself and the AMRE Subsidiaries that, from and after the date hereof and until
the Effective Time (except as the Company shall otherwise agree or except as
otherwise contemplated by this Agreement), neither AMRE nor Merger Sub shall
take or cause to be taken any action which would disqualify the Merger as a
tax-free "reorganization" within the meaning of Section 368(a)(1)(A) and
368(a)(2)(E) of the Code. AMRE and the Company shall each deliver customary
representations for purposes of the delivery of the opinions referenced in
Sections 6.2(g) and 6.3(g). Except as disclosed in the AMRE Reports, to the
extent reasonably practicable taking into account any operational matters that
may arise that are attributable to the pendency of the Merger, the business of
AMRE shall be conducted only in, and AMRE shall not take any action except in
the ordinary course of business, and AMRE shall use its commercially reasonable
efforts to maintain and preserve its business organization, assets, prospects,
employees and advantageous business relationships.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Registration Statement and Proxies. AMRE and the Company
shall cooperate and promptly prepare and AMRE shall file with the SEC as soon
as practicable a Joint Proxy and Registration Statement on Form S-4 (the "FORM
S-4") under the Securities Act, with respect to the AMRE Common Stock issuable
in the Merger, a portion of which Joint Proxy and Registration Statement shall
serve as the proxy statement with respect to the meetings of the stockholders
of AMRE and the Company in connection with the Merger (the "JOINT PROXY
STATEMENT/PROSPECTUS"). The respective parties will cause the Joint Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. AMRE shall use all reasonable
efforts, and the Company will cooperate with AMRE, to have the Form S-4
declared effective by the SEC as promptly as practicable. AMRE shall use its
best efforts to obtain, prior to the effective date of the Form S-4, all
necessary state securities law or "Blue Sky" permits or approvals required to
carry out the transactions contemplated by this Agreement and will pay all
expenses incident thereto. AMRE agrees that the Joint Proxy
Statement/Prospectus and each amendment or supplement thereto at the time of
mailing thereof and at the time of the meetings of stockholders of AMRE and the
Company, or, in the case of the Form S-4 and each amendment or supplement
thereto, at the time it is filed or becomes effective, will not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the foregoing shall not apply to the extent that any such untrue
statement of a material fact or omission to state a material fact was made by
AMRE in reliance upon and in conformity with written information concerning the
Company furnished to AMRE by the Company specifically for use in the Joint
Proxy Statement/Prospectus. The Company agrees that the written information
concerning the Company provided by it for inclusion in the Joint Proxy
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Statement/Prospectus and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the meetings of the stockholders of
AMRE and the Company, or, in the case of written information concerning the
Company provided by the Company for inclusion in the Form S-4 or any amendment
or supplement thereto, at the time it is filed or becomes effective, will not
including an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the Statements therein,
in light of the circumstances under which they were made, not misleading. No
amendment or supplement to the Joint Proxy Statement/Prospectus or the Form S-4
nor any request for acceleration thereof will be made by AMRE or the Company
without the approval of the other party, except as required by law. AMRE will
advise the Company, promptly after its receives notice, of the time when the
Form S-4 or any post effective supplement or amendment thereto has become
effective the issuance of any stop order, the suspension of the qualification
of the AMRE Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, any request by the SEC for amendment of the Joint
Proxy Statement/Prospectus or the Form S-4 or requests by the SEC for
additional information and will promptly provide the Company with copies of any
responses filed by AMRE to SEC comments on the Form S-4.
5.2 Letter to the Company's Accountants. The Company shall use
its best efforts to cause to be delivered to AMRE a letter of Grant Thornton &
Co., the Company's independent public accountants, dated a date within two
business days before the date on which the Form S-4 shall become effective and
addressed to AMRE and the Company, in form and substance reasonably
satisfactory to AMRE and customary in scope and substance of letters delivered
by independent public accountants in connection with registration statements
similar to the Form S-4.
5.3 Letters of AMRE's Accountants. AMRE shall use its best
efforts to cause to be delivered to the Company a letter of Arthur Andersen &
Co., AMRE's independent public accountants, dated a date within two business
days before the date on which the Form S-4 shall become effective and addressed
to AMRE and the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance of letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
5.4 Company Board Recommendation. Subject to Section 5.10 hereof,
the Stockholder Information shall contain the recommendation of the Board of
Directors of the Company in favor of the Merger and the Board of Directors
shall recommend that the stockholders of the Company adopt the Merger
Agreement, it being understood that the failure of the Board of Directors of
the Company to make such recommendations shall not be deemed a breach of this
Agreement if the Board determines, after consultation with and advice from
counsel, that it cannot, consistent with its fiduciary duties, make such
recommendations.
5.5 AMRE Board Recommendation. The Joint Proxy
Statement/Prospectus shall contain the recommendation of the Board of Directors
of AMRE in favor of the Merger, the proposed amendment to amend the Certificate
of Incorporation of AMRE to increase the number of AMRE's authorized shares and
the consummation of the transactions contemplated thereby and shall recommend
that the stockholders of AMRE approve and consent to such proposals and
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shall recommend that the stockholders of AMRE adopt the Merger Agreement, it
being understood that the failure of the Board of Directors of AMRE to make
such recommendations shall not be deemed a breach of this Agreement if the
Board of Directors of AMRE determines, after consultation with and advice from
counsel, that it cannot, consistent with its fiduciary duties, make such
recommendations.
5.6 Consent of Stockholders of the Company. Subject to Section
5.10 hereof, the Company shall use commercially reasonable efforts to take all
action necessary, in accordance with Applicable Law and its Certificate of
Incorporation and bylaws, to transmit the Joint Proxy Statement/Prospectus to
its stockholders and obtain its stockholders' approval of the Merger as
promptly as reasonably practicable. The Company shall use commercially
reasonable efforts to secure the consent of its stockholders required by law to
effect the Merger.
5.7 Consent of Stockholders of AMRE. AMRE shall transmit the
Joint Proxy Statement/Prospectus to its stockholders and shall use its best
efforts to take all action necessary to obtain its stockholders' approval to
the Merger and the proposal to amend it Certificate of Incorporation to
increase the authorized amount of shares of AMRE Common Stock issuable to 40
million (40,000,000) shares, as promptly as reasonably practicable.
5.8 Expenses. All expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses whether or not the Merger is consummated.
5.9 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees (i) to use all reasonable
efforts to take, or cause to be taken, all actions and (ii) to use all
reasonable efforts to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement and to cooperate with each other in
connection with the foregoing, (iii) to use all reasonable efforts to obtain
all necessary waivers, consents and approvals from other parties to material
loan agreements, leases and other contracts and to notify each of the other
parties hereto of any request for prepayment with respect thereto; provided
however, all reasonable efforts with respect to obtaining waivers, consents and
approvals under loan agreements does not obligate the parties hereto to make
any prepayment on any such loan, (iv) to use all reasonable efforts to obtain
all necessary consents, approvals and authorizations as are required to be
obtained under any federal, state, local or foreign law or regulations, (v) to
defend all lawsuits or other legal proceedings challenging this Agreement or
the consummation of the transactions contemplated hereby, (vi) to use all
reasonable efforts to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (vii) to use all reasonable efforts to effect
all necessary registrations and filings and submissions of information required
or requested by governmental authorities; and (viii) to use all reasonable
efforts to cause the Merger to be treated as a "pooling of interests."
5.10 No Solicitation. From and after the date hereof, the Company
will not, and will not permit any of its officers, directors, employees, agents
and other representatives or those of any Company Subsidiary (collectively, the
"COMPANY REPRESENTATIVES") to, directly or
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indirectly, solicit or initiate any prospective buyer or the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal (as defined herein) from any person; provided, however,
that, notwithstanding any other provision of this Agreement, (i) the Company
may engage in discussions or negotiations with a third party who (without any
solicitation or initiation, directly or indirectly, by or with the Company or
any Company Representatives after the date of this Agreement) seeks to initiate
such discussions or negotiations and may furnish such third party information
concerning the Company and its business, properties and assets, (ii) the
Company's Board of Directors may take and disclose to the Company's
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act and (iii) following receipt of an Acquisition Proposal that is
financially superior to the Merger and reasonably capable of being financed (as
determined in each case in good faith by the Company's Board of Directors after
consultation with the Company's financial advisors), the Board of Directors of
the Company may withdraw, modify or not make its recommendation referred to in
Section 5.4 or terminate this Agreement in accordance with Section 7.1(d), but
in each case referred to in the foregoing clauses (i) through (iii) only to the
extent that the Board of Directors of the Company shall conclude in good faith
that such action is necessary in order for the Board of Directors of the
Company to act in a manner that is consistent with its fiduciary obligations
under applicable law. The Company shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by the Company
or any Company representatives with respect to any Acquisition Proposal
existing on the date hereof. The Company will promptly notify AMRE of any
inquiries or developments related to any of the above or any such requests for
such information or the receipt of any Acquisition Proposal, including the
identity of the person or group engaging in such discussions or negotiations,
requesting such information or making such Acquisition Proposal, and (unless
the Board of Directors of the Company concludes such disclosure is inconsistent
with its fiduciary obligations under applicable law) the material terms and
conditions of any Acquisition Proposal. As used in this Agreement,
"Acquisition Proposal" shall mean any proposal or offer, other than a proposal
or offer by AMRE or any of its affiliates, for a tender or exchange offer, a
merger, consolidation or other business combination involving the Company or
any Company Subsidiary or any proposal to acquire in any manner a substantial
equity interest in, or substantially all of the assets of, the Company or any
Company Subsidiary.
5.11 Notification of Certain Matters. Each party will promptly
give written notice to the other parties upon becoming aware of the occurrence
or failure to occur, or impending or threatened occurrence or failure to occur,
of any event that would cause or constitute, or would be likely to cause or
constitute, a breach of any of its representations, warranties or covenants
contained in this Agreement and will use all reasonable efforts to prevent or
promptly remedy the occurrence or failure. No such notification shall limit or
affect the representations, warranties, covenants or conditions or remedies of
the parties hereunder.
5.12 Access to Information.
(a) The Company and AMRE and their respective officers,
directors, employees and agents shall afford the officers, employees
and agents of the other parties hereto complete access at all
reasonable times to their respective officers, employees,
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agents, properties, facilities, books, records and contracts and those
of their respective subsidiaries (including the Company Subsidiaries)
and shall furnish the other parties hereto all financial, operating
and other data and information as the other parties hereto through
their officers, employees or agents, may reasonably request. Each
party hereto shall hold and will cause their respective
representatives to hold in strict confidence all documents and
information concerning the other parties hereto (and the Company
Subsidiaries) furnished to other parties hereto in connection with the
transactions contemplated by this Agreement (except to the extent that
such information can be shown to have been (i) previously known by the
party to whom the information was disclosed (or their respective
Affiliates) prior to its disclosure to the party to whom the
information was disclosed, (ii) in the public domain through no fault
of the party to whom the information was disclosed or (iii) later
lawfully acquired by the party to whom the information was disclosed
(or their respective affiliates) from other sources, and will not
release or disclose such information to any other person, except in
connection with this Agreement to (i) their respective auditors,
attorneys, financial advisors and other consultants or advisors or
(ii) responsible financial institutions, partnerships and individuals
after the disclosing party, has made reasonable efforts to cause such
financial institutions, partnerships and individuals to agree to be
bound by the provisions of this Section 5.12 as if the reference to
the disclosing party herein were to them (it being understood that
such persons shall be informed by the disclosing party of the
confidential nature of such information and shall be directed by the
disclosing party to treat such information confidentially); provided
that the disclosing party and their respective representatives may
provide such documents and information in response to judicial or
administrative process or applicable governmental laws, rules,
regulations, orders or ordinances, but only that portion of the
documents or information which, on the advice of counsel, is legally
required to be furnished, and provided that the disclosing party
notifies the non-disclosing party of its obligation to provide such
information prior to such disclosure and fully cooperates with the
non-disclosing party to protect the confidentiality of such documents
and information under applicable law. If the transactions
contemplated by this Agreement are not consummated, the parties shall
return to each other all copies of written information furnished to
them by the other parties hereto or their respective affiliates,
agents, representatives or advisers.
(b) Any schedule which is not attached hereto at the time
that AMRE and Merger Sub execute this Agreement shall not be
subsequently attached hereto or incorporated herein unless such
schedule is acceptable to AMRE and Merger Sub.
5.13 Information for Other Filings. The parties represent to each
other that the information provided and to be provided by AMRE, Merger Sub and
the Company, respectively, for use in any document to be filed with any other
governmental agency or authority in connection with the transactions
contemplated hereby shall, at the respective times such documents are filed
with the governmental agency or authority and on the Effective Date be true and
correct in all material respects and shall not omit to state any material fact
required to be stated therein or necessary in order to make such information
not false or misleading, and the Company, AMRE and Merger Sub each agree to so
correct any such information provided by it for use in such documents that
shall have become false or misleading.
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5.14 Employment Agreements. At the Effective Time, AMRE shall
enter into employment agreements with each of Mark Honigsfeld and Murray Gross
substantially in the forms attached hereto as Exhibits A and B (respectively,
the "HONIGSFELD AND GROSS EMPLOYMENT AGREEMENTS").
5.15 Sub-License Agreement. No later than the mailing of the Joint
Proxy Statement/Prospectus, AMRE and the Company shall have entered into a
Sub-License Agreement containing the terms and conditions contained in Exhibit
C attached hereto and such other terms and conditions as the parties hereto may
mutually agree. In the event AMRE and the Company disagree on whether a
particular term should be included in the Sub-License Agreement or what
provisions should be included in any section of the Sub-License Agreement, the
parties agree to submit such disagreement to Mr. Dave Yoho of Dave Yoho &
Associates, 10803 W. Main St., Fairfax, Virginia for arbitration. (AMRE and
the Company acknowledge Mr. Dave Yoho has a son by the same name who is
employed by Dave Yoho & Associates, and it is the intention of AMRE and the
Company that the elder Dave Yoho act as the arbitrator of disputes between the
parties). The decision(s) made by Dave Yoho regarding the inclusion or
non-inclusion of any term or provision in the Sub-License shall be final and
binding on each of AMRE and the Company for all purposes. Each party shall
bear its own expenses in connection with the arbitration of any dispute,
including attorney's fees, witness expenses and expenses of presenting the
case, but all fees of Dave Yoho and/or Dave Yoho & Associates shall be divided
and paid equally by AMRE and the Company. If this Agreement is terminated
pursuant to Section 7.1(d) hereof, the obligations of AMRE and the Company
under this Section 5.15 shall remain in full force and effect.
5.16 Company Reincorporation in Delaware. Provided that such
action will not prevent, delay or in any manner adversely affect the ability of
the parties to consummate the Merger, the Company shall cause the Company to
become a Delaware corporation no later than three business days prior to the
mailing of the Joint Proxy Statement/Prospectus.
5.17 Affiliate Letters.
(a) Prior to the Effective Time, the Company shall
deliver to AMRE a list (the "COMPANY AFFILIATE LIST") of names and
addresses of those persons who, as of the date of this Agreement, were
in the reasonable judgment of the Company, "affiliates" (each such
person, an "AFFILIATE OF THE COMPANY") of the Company within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act and under the SEC guidelines and interpretations
applicable to Pooling of Interests. The Company Affiliate List will
be updated as appropriate from time to time, up to and including the
Effective Time. The Company shall provide AMRE such information and
documents as AMRE shall reasonably request for purposes of reviewing
such list. The Company shall deliver or cause to be delivered to
AMRE, concurrently with the execution of this Agreement and when
necessary from time to time between the date hereof and the Effective
Time, from each Affiliate of the Company identified in the Company
Affiliate List, an Affiliate Letter in the form attached hereto as
Exhibit D-1 (the "COMPANY AFFILIATE LETTER"). AMRE shall be entitled
to place legends as specified in such Affiliate Letters on the
certificates evidencing any AMRE Common Stock to be received by each
Affiliate of the
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Company, pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the
AMRE Common Stock, consistent with the terms of such Company Affiliate
Letters.
(b) At least ten (10) days prior to the date of the
meeting of AMRE's stockholders contemplated by this Agreement, AMRE
shall deliver to the Company a list of names and addresses of those
persons who were, in AMRE's reasonable judgment, at the record date
for such meeting, Affiliates of AMRE. AMRE shall provide the Company
such information and documents as the Company shall reasonably request
for purposes of reviewing such list. AMRE shall use all reasonable
efforts to deliver or cause to be delivered to the Company, prior to
the Effective Time from each of the Affiliates of AMRE identified in
the foregoing list (as the same may be supplemented or as aforesaid),
Affiliates Letters in the form attached hereto as Exhibit D-2 (the
"AMRE AFFILIATE LETTER").
5.18 Pooling. From and after the date hereof and until the
expiration of the Restricted Period (as defined below), AMRE and the Company
shall use commercially reasonable efforts to prevent any of its or their
Subsidiaries or Affiliates (as defined in Section 5.17) from taking any action,
or failing to take any reasonable action, that would jeopardize the treatment
of the Merger as a "pooling of interests." For purposes hereof, the Restricted
Period shall mean the period commencing on the date hereof and terminating on
the date on which thirty days of combined operations are publicly announced by
AMRE. Notwithstanding any other terms of this Agreement to the contrary, it
shall not be a condition precedent to the consummation of the transactions
contemplated by this Agreement that the Merger shall be treated as a "pooling
of interests" under applicable accounting standards.
5.19 Stockholders Agreement. The Affiliates of the Company shall
enter into the Stockholders Agreement attached hereto as Exhibit E.
5.20 Documentation; Registration. AMRE shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of AMRE
Common Stock for delivery upon exercise of the options provided in the Company
Options. Promptly following the Effective Time of the Merger, AMRE shall file
a Registration Statement covering the shares of AMRE Common Stock issuable upon
the exercise of the assumed Company Options. AMRE will use its reasonable
efforts to cause such shares to be registered under the Securities Act and to
maintain such registration in effect until the exercise or termination of all
such Company Options.
5.21 Director and Officer Indemnification.
(a) From and after the Effective Time, AMRE shall
indemnify, defend and 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 Company
Subsidiary or an employee of the Company or any Company subsidiary who
acts as a fiduciary under any benefit or pension plan of the Company
or any Company Subsidiary (the "INDEMNIFIED PARTIES") against all
losses, claims, damages,
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costs, expenses (including attorneys' fees), liabilities or judgments
or amounts that are paid in settlement with the approval of AMRE
(which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit,
proceeding or investigation based on or arising out of, or pertaining
to this Agreement or the transactions contemplated hereby (the
"INDEMNIFIED LIABILITIES"), in each case to the full extent permitted
under the Delaware Law (and AMRE 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 (or them
and AMRE and the Surviving Corporation after the Effective Time) and
the Company (or after the Effective Time, AMRE and the Surviving
Corporation) 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, AMRE and the Surviving
Corporation) will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that neither the Company, AMRE
nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 5.21(a), upon learning of any such
claim, action, suit, proceeding or investigation, shall notify AMRE,
but the failure so to notify shall not relieve AMRE from any liability
that it may have under this Section 5.21(a), except to the extent such
failure materially prejudices AMRE. 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 on any significant issue between the
positions of any two or more Indemnified Parties. The Indemnified
Parties and AMRE agree that the rights to indemnification provided
pursuant to this Section 5.21(a), including provisions relating to
advances of expenses incurred in defense of any action or suit with
respect to matters pertaining to this Agreement or matters
contemplated hereby, shall survive the Merger and shall continue in
full force and effect for a period of six years from the Effective
Time; provided, however, that all rights to indemnification in respect
to any Indemnified Liabilities asserted or made with such period shall
continue until the disposition of such Indemnified Liabilities.
(b) From and after the Effective Time, AMRE and the
Surviving Corporation shall, indemnify, defend and hold harmless the
Indemnified Parties against all losses, claims, damages, costs,
expenses (including attorneys' fees), 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 the arising
in whole or in part out of the fact that such person is or was a
director, officer, or such employee of the Company or any Company
Subsidiary that pertains to any matter existing or occurring at or
prior to the date hereof ("Existing Liabilities"), in each case to the
full extent permitted under the Delaware Law (and AMRE and the
Surviving Corporation 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
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investigation is brought against any Indemnified Parties after the
Effective Time, (i) the Indemnified Parties may retain counsel
satisfactory to them, the Surviving Corporation and AMRE and AMRE and
the Surviving Corporation shall pay all fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor
are received; and AMRE and the Surviving Corporation will use all
reasonable efforts to assist in the vigorous defense of any such
matter, provided that neither AMRE nor the Surviving Corporation shall
be liable for any settlement effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section
5.21(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Surviving Corporation and AMRE, but
the failure so to notify shall not relieve a party from any liability
that it may have under this Section 5.21(b), except to the extent such
failure materially prejudices such party. 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 on any significant issue between the
positions of any two or more Indemnified Parties. The Indemnified
Parties, AMRE and Merger Sub agree that all rights to indemnification,
including provisions relating to advances of expenses incurred in
defense of any action or suit with respect to matters occurring prior
to the Effective Time, shall survive the Merger and shall continue in
full force and effect for a period of two years from the Effective
Time (provided, however, that all rights to indemnification in respect
to any Existing Liabilities asserted or made with such period shall
continue until the disposition of such Existing Liabilities).
Notwithstanding anything to the contrary contained herein, the
Indemnified Parties, AMRE and Merger Sub agree that (i) if at the time
any claim, action, suit, proceeding or investigation is brought
against any of the Indemnified Parties the tangible net book value of
the Surviving Corporation is equal to or greater than the tangible net
book value of the Surviving Corporation as reflected in the last
Company Report filed before the Effective Time, as adjusted to give
effect to the lease termination referred to in Section 5.25 if the
results of such termination are not reflected in the last Company
Report filed before the Effective Time, then the Indemnified Parties
shall be entitled to be indemnified pursuant to this Section 5.21(b)
only by the Surviving Corporation and only to the extent of the
Surviving Corporation's tangible net book value; and (ii) if at the
time any claim, action, suit, proceeding or investigation is brought
against any of the Indemnified Parties the tangible net book value of
the Surviving Corporation is less than the tangible net book value of
the Surviving Corporation as reflected in the last Company Report
filed before the Effective Time, as adjusted to give effect to the
lease termination referred to in Section 5.25 if the results of such
termination are not reflected in the last Company Report filed before
the Effective Time, the Indemnified Parties shall be entitled to be
indemnified pursuant to this Section 5.21(b) by AMRE and the Surviving
Corporation, but in no event shall the obligations of the Surviving
Corporation and AMRE under this Section 5.21(b), in the aggregate,
exceed the tangible net book value of the Surviving Corporation as
reflected in the last Company Report filed before the Effective Time
as adjusted to give effect to the lease termination referred to in
Section 5.25 below.
5.22 Listing Application. AMRE shall prepare and submit to the
NYSE a listing application covering AMRE Common Stock to be issued in
connection with the Merger and
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issuable upon exercise of the Company Options and shall use its reasonable
efforts to obtain, prior to the Effective Time, approval for the listing of
such AMRE Common Stock upon official notice of issuance.
5.23 Public Announcements. AMRE and Merger Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or transaction reporting
system.
5.24 Tax Free Reorganization. AMRE shall not, and AMRE shall not
permit Surviving Corporation to, take any action which would disqualify the
Merger as a tax free "reorganization" within the meaning of Section
368(a)(1)(A) and Section 368(a)(2)(E) of the code, and AMRE and Surviving
Corporation agree to report the Merger for tax purposes as a tax free
"reorganization."
5.25 Lease Termination. Prior to December 31, 1995, the Company
agrees to terminate the lease agreement for its principal offices and its
manufacturing facility in Brooklyn, New York, and in connection therewith shall
pay no more than $525,000 (the "TERMINATION PAYMENT"). The Termination Payment
shall be paid in full prior to December 31, 1995.
5.26 Home Financial Acceptance Corp. Prior to the Effective Time
the Company agrees that Home Financial Acceptance Corp. ("HFAC") shall conduct
no business or operations beyond obtaining lending licenses it would be
required to have to begin operations and that it shall have no contractual
commitment which is not cancelable without cost to HFAC, AMRE or the Company.
ARTICLE 6
CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect the Merger.
The obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) the Merger shall have been approved and adopted by
the requisite consent of the stockholders of each of AMRE and the
Company required by applicable law or by the applicable regulations of
any stock exchange;
(b) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the
Hart-Scott-Rodino Act shall have expired or been terminated;
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(c) no preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or commission
nor any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority shall be in effect that would
make the acquisition or holding directly or indirectly by AMRE of the
shares of Common Stock of the Surviving Corporation illegal or
otherwise prevent the consummation of the Merger. In the event any
such order or injunction shall have been issued, each party agrees to
use its reasonable efforts to have any such injunction lifted or order
reversed;
(d) the Form S-4 shall have become effective and shall be
effective at the Effective Time, and no stop order suspending
effectiveness of the Form S-4 shall have been issued;
(e) all consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board
or other regulatory body required in connection with the execution,
delivery and performance of this Agreement shall have been obtained or
made, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Time and except
where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have
a material adverse effect on the Company; provided, however, that for
the purposes of this Section 6.1(e), the failure of the Company to
obtain the consent of (i) lenders under credit agreements disclosed in
the Company Reports or (ii) landlord's consents under any leases
disclosed in the Company Disclosure Letter or the Company Reports
shall not be considered to have a material adverse effect on the
Company;
(f) Bear, Stearns & Co. Inc. shall have advised AMRE and
Merger Sub in writing that the Merger is fair from a financial point
of view;
(g) Southwest Securities, Inc. shall have advised the
Company in writing that the Merger is fair from a financial point of
view;
(h) the AMRE Common Stock to be issued to Company
stockholders in connection with the Merger shall have been approved
for listing on the NYSE, subject only to official notice of issuance;
and
(i) no action shall be pending which has been filed by
any state or federal authority or any other party seeking to enjoin
consummation of the transactions contemplated by this Agreement,
including, but not limited to, the Merger and no injunction shall have
been issued and shall be effective or enforceable or under appeal if
the effectiveness or enforceability thereof has been lifted or stayed
by a court or other authority of competent jurisdiction, preventing
the Merger, or imposing conditions on, the Merger which are materially
adverse to AMRE, Merger Sub, the Company or any of their stockholders.
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6.2 Additional Conditions to the Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the
fulfillment at or prior to the Effective Time of the following conditions
(unless waived):
(a) each of AMRE and Merger Sub shall in all material
respects have performed each obligation and agreement and complied
with each covenant to be performed and complied with by it hereunder
on or prior to the Effective Time;
(b) the representations and warranties of AMRE and Merger
Sub in this Agreement shall be true and correct in all material
respects when made and at the Effective Time with the same force and
effect as though made at such time, except as affected by the
transactions contemplated hereby;
(c) the Designee shall have been elected to the Board of
Directors of AMRE as of the Effective Time;
(d) AMRE and Merger Sub shall have furnished to the
Company a certificate, dated the Effective Date, signed by a
responsible officer of each of AMRE and Merger Sub, to the effect that
all conditions set forth in Section 6.2(a) and (b) have been
satisfied;
(e) AMRE shall have filed and had declared effective a
Form S-8 with respect to the registration of the shares of AMRE Common
Stock issuable upon exercise of Company Options converted into options
to purchase shares of AMRE Common Stock pursuant to Section 1.5(e)
hereof;
(f) AMRE and Merger Sub shall have executed and delivered
the Honigsfeld Employment Agreement and the Gross Employment
Agreement;
(g) the Company shall have received the opinion of
counsel to the Company dated the Closing Date and based on customary
representations and assumptions, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that the Company, Merger Sub
and AMRE will each be a party to that reorganization within the
meaning of Section 368(b) of the Code;
(h) the AMRE Common Stock to be issued to the Company
stockholders in connection with the Merger shall have been approved
for listing on the NYSE, subject only to official notice of issuance;
(i) the Company shall have received a copy of the
resolutions of the Board of Directors of AMRE and Merger Sub
authorizing the execution, delivery and performance of the Agreement
and the consummation of the transactions contemplated hereby and a
copy of the resolutions or other consent of the stockholders of AMRE
approving the Merger, all certified by the Secretary of AMRE on the
Effective Date.
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Such certificates shall state that the resolutions set forth therein
have not been amended, modified, revoked or rescinded as of the date
of such certificates;
(j) the Company shall have received a certificate of the
Secretary of AMRE dated the Effective Date, as to the incumbency and
signature of the officers of AMRE executing this Agreement and any
certificate, agreement or other documents to be delivered pursuant
hereto, together with evidence of the incumbency of such Secretary;
and
(k) AMRE's Certificate of Incorporation shall have been
amended as provided in Section 5.5 hereof.
6.3 Additional Conditions to the Obligations of AMRE and Merger
Sub. The obligations of AMRE and Merger Sub to effect the Merger are also
subject to the fulfillment at or prior to the Effective Time of the following
conditions (unless waived):
(a) the Company shall in all material respects have
performed each obligation and agreement and complied with each
covenant to be performed and complied with by it hereunder on or prior
to the Effective Time;
(b) the representations and warranties of the Company in
this Agreement shall be true and correct in all material respects when
made and at the Effective Time with the same force and effect as
though made at such time, except as affected by the transactions
contemplated hereby;
(c) the Company shall have furnished to AMRE and Merger
Sub a certificate, dated the Effective Date, signed by a responsible
officer of the Company, to the effect that all conditions set forth in
Section 6.3(a) and (b) have been satisfied;
(d) the Company shall have provided or made available to
AMRE and Merger Sub or their designated representatives the
information and documents as specified in Section 5.12 for review by
AMRE and its agents and representatives;
(e) all of the members of the Company's Board of
Directors shall have irrevocably tendered their resignations effective
as of the Effective Time and the Company shall have accepted such
resignations;
(f) AMRE shall have received the opinion of its counsel,
dated the Closing Date and based on customary representations and
assumptions, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and that AMRE, Merger Sub and the Company will each
be a party to that reorganization within the meaning of Section 368(b)
of the Code;
(g) AMRE and Merger Sub shall have received a copy of the
resolutions of the Board of Directors of the Company authorizing the
execution, delivery and
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performance of the Agreement and the consummation of the transactions
contemplated hereby and a copy of the resolutions or other consent of
the stockholders of the Company approving the Merger, all certified by
the Secretary of the Company on the Effective Date. Such certificates
shall state that the resolutions set forth therein have not been
amended, modified, revoked or rescinded as of the date of such
certificates;
(h) AMRE and Merger Sub shall have received a certificate
of the Secretary of the Company dated the Effective Date, as to the
incumbency and signature of the officers of the Company executing this
Agreement and any certificate, agreement or other documents to be
delivered pursuant hereto, together with evidence of the incumbency of
such Secretary;
(i) AMRE and Merger Sub shall have received a certificate
of good standing from the state where the Company is incorporated;
(j) each holder of Company Options shall have agreed to
the assumption by AMRE of such Company Options in accordance with the
terms of Section 1.5(e) hereof; and
(k) the Company shall have delivered to AMRE and Merger
Sub all necessary consents, waivers, authorizations and approvals, so
that neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result
in the acceleration or termination of, or the creation in any party of
the right to accelerate, terminate, modify or cancel, any indenture,
contract, lease, sublease, loan agreement, note or other obligation or
liability to which the Company is a party or is bound or to which any
of their assets are subject, (ii) conflict with, violate or result in
a breach of any provision of the charter documents or bylaws of the
Company, or any Stockholder, (iii) conflict with or violate any law,
rule, regulation, ordinance, order, writ, injunction or decree
applicable to the Company or by which any of their respective
properties or assets is bound or affected or (iv) conflict with or
result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or
result in the creation of any lien, charge or encumbrance on any of
the properties or assets of the Company pursuant to any of the terms,
conditions or provisions of any indenture, contract, lease, sublease,
loan agreement, note, permit, license, franchise, agreement or other
instrument, obligation or liability to which the Company is a party or
by which the Company or any of its assets is bound or affected;
provided, however, that for the purposes of this Section 6.3(k), the
failure of the Company to obtain the consent of (i) lenders under
credit agreements disclosed in the Company Reports or (ii) landlord's
consents under any leases disclosed in the Company Disclosure Letter
or the Company Reports shall not be considered to have a material
adverse effect on the Company or be required as a condition to Closing
by AMRE or Merger Sub.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time whether before or after approval of the Merger by
the stockholders :
(a) by mutual written consent of the Boards of Directors
of AMRE, Merger Sub and the Company;
(b) by either of the Boards of Directors of Merger Sub or
the Company if the Effective Time shall not have occurred on or before
April 1, 1996; provided, however, that the right to terminate under
this Section 7.1(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur on or
before such date;
(c) if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall have issued an
order, decree or ruling or taken any other action (which order, decree
or ruling the parties hereto shall use all reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and
nonappealable;
(d) by the Company in the event a third party makes a
bona fide proposal for an acquisition of the Company for consideration
that exceeds $11.28 per share of Company Common Stock.
The date on which this Agreement is terminated pursuant to any
of the foregoing subsections of this Section 7.1 is herein referred to
as the "TERMINATION DATE."
7.2 Effect of Termination. Except as set forth in Sections 5.4,
5.12(a) and 5.15, upon the termination of this Agreement pursuant to Section
7.1, this Agreement shall forthwith become null and void, except that nothing
herein shall relieve any party from liability for any breach of this Agreement
prior to such termination.
7.3 Fees and Expenses. In the event the Company terminates this
Agreement pursuant to Section 7.1(d), the Company shall, within 15 business
days of termination, pay AMRE a fee equal to $2,000,000.
7.4 Amendment. This Agreement may be amended by the parties
hereto, at any time before or after approval of the Merger by the stockholders
of the Company, but, after any such approval, no amendment shall be made that
changes the form or reduces the amount of consideration to be paid to the
stockholders of the Company or that in any other way materially adversely
affects the rights of such stockholders (other than a termination of this
Agreement in accordance with the provisions hereof) without the further
approval of such stockholders. This
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Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
7.5 Waiver. At any time prior to the Effective Time, any term,
provision or condition of this Agreement may be waived in writing (or the time
for performance of any of the obligations or other acts of the parties hereto
may be extended) by the party that is entitled to the benefits thereof.
ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements.
All representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to the extent
expressly provided herein to be conditions to the Merger and shall not survive
the Merger; provided, however, the agreements contained in Article 1 and
Sections 4.2, 5.8, 5.9, 5.15, 5.19, 5.20, 5.21, 5.24, 7.3 and 8.5 shall
survive.
8.2 Public Statements. So long as this Agreement is in effect,
neither the Company nor AMRE shall, or shall permit any of its subsidiaries to,
issue or cause the publication of any press release or other announcement with
respect to the Merger or this Agreement without consulting with and obtaining
the consent of the other parties; provided, however, that such consent shall
not be required where such release or announcement is required by applicable
law.
8.3 Notices. All notices and other communications hereunder shall
be in writing and, except where notice is specifically required to be given by
telecopier or facsimile shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by
cable, telegram, telecopier or telex to the parties at the following addresses
or at such other addresses as shall be specified by the parties by like notice:
(a) if to AMRE or Merger Sub to each of:
AMRE, Inc.
8586 N. Stemmons Freeway
South Tower, Suite 102
Dallas, TX 75247
Fax No. (214) 658-6101
Attn: President and General Counsel
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, TX 75201
Fax No. (214) 969-4343
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Attn: Gary M. Lawrence, P.C.
(b) if to the Company:
Facelifters Home Systems, Inc.
One Park Place
621 N.W. 53rd Street, Suite 450
Boca Raton, FL 33487
Fax No. (407) 997-2842
Attn: Murray Gross, President
and
Facelifters Home Systems, Inc.
800 Snediker Ave.
Brooklyn, NY 11207-7606
Fax No. (516) 569-7639
Attn: Mark Honigsfeld
with a copy to:
Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, TX 75202
Fax No. (214) 953-5822/5823
Attn: Charles D. Maguire, Jr.
Notice so given shall (in the case of notice so given by mail)
be deemed to be given and received in the fourth calendar day after
posting and (in the case of notice so given by cable, telegram,
telecopier, telex or personal delivery) on the date of actual
transmission or (as the case may be) personal delivery.
8.4 Closing. The Closing of the transactions contemplated by this
Agreement shall take place at Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas, Texas 75201, or such
other place as the parties may agree, as soon as practicable after the
satisfaction or waiver of the conditions set forth in Section 6.
8.5 Miscellaneous. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the
subject matter hereof; except with respect to Sections 5.14, 5.19,
5.20 and 5.21 is not intended to confer upon any other person any
rights or remedies hereunder, shall not be assigned; and shall be
governed in all respects, including validity, interpretation and
effect, by the internal laws of the State of Delaware without giving
effect, to the principles of conflict of laws thereof. This Agreement
may be executed in one or more counterparts which together shall
constitute a single agreement. If any
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<PAGE> 50
provision of this Agreement shall be held to be illegal, invalid or
unenforceable under any applicable law, then such contravention or
invalidity shall not invalidate the entire Agreement. Such provision
shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render
it legal, valid and enforceable, then this Agreement shall be
construed as if not containing the provision held to be invalid, and
the rights and obligations of the parties shall be construed and
enforced accordingly.
[Signature Page Follows]
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<PAGE> 51
AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE
IN WITNESS WHEREOF, AMRE, Merger Sub, the Company and the Company Sub
have caused this Agreement to be executed as of the date first written above.
AMRE, INC.
By: /s/ ROBERT M. SWARTZ
--------------------------
Name: Robert M. Swartz
------------------
Title: President
------------------
AMRE ACQUISITION, INC.
By: /s/ ROBERT M. SWARTZ
---------------------------
Name: Robert M. Swartz
------------------
Title: President
------------------
FACELIFTERS HOME SYSTEMS, INC.,
a New York corporation
By: /s/ MURRAY H. GROSS
---------------------------
Name: Murray H. Gross
------------------
Title: President
------------------
FACELIFTERS HOME SYSTEMS, INC.,
a Delaware corporation
By: /s/ MURRAY H. GROSS
---------------------------
Name: Murray H. Gross
------------------
Title: President
------------------
S-1
<PAGE> 52
EXHIBIT A
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of ____________________, 199__, (the "date of
this Agreement") is by and between AMRE, Inc., a Delaware corporation ("AMRE"),
and Mark Honigsfeld, of Woodmere, New York ("Honigsfeld").
W I T N E S S E T H:
WHEREAS, AMRE, AMRE Acquisition, Inc., a Delaware corporation and
wholly-owned subsidiary of AMRE ("Merger Sub"), and Facelifters Home Systems,
Inc., a Delaware corporation ("Facelifters"), have entered into an Agreement
and Plan of Merger dated October 31, 1995, pursuant to which Merger Sub will
merge with and into Facelifters (the "Merger");
WHEREAS, Honigsfeld previously served as the Chairman of the Board and
Chief Executive Officer of Facelifters; and
WHEREAS, AMRE wishes to hire Honigsfeld in the capacity of Business
Consultant in order to secure Honigsfeld's services in connection with the
kitchen cabinet refacing business of AMRE and its wholly owned subsidiaries as
well as such other duties as may be designated by the Chief Executive Officer
of AMRE;
WHEREAS, in connection with the execution of this Agreement Honigsfeld
has agreed to terminate his existing employment agreement with Facelifters;
NOW, THEREFORE, in consideration of the covenants and mutual
agreements contained herein, AMRE and Honigsfeld agree as follows:
1. Employment. AMRE agrees to employ Honigsfeld as its Business
Consultant and Honigsfeld agrees to serve in such capacity on the terms and
conditions hereinafter set forth.
2. Term.
(a) Term of Agreement. The initial term of this Agreement
(the "Initial Term") shall commence on the Effective Date of the Merger, and
shall end at midnight on the third anniversary of such date (the "Expiration
Date").
(b) Term of Employment. The period from the Effective
Date of the Merger to the first to occur of (i) the Expiration Date or (ii) the
date on which Honigsfeld's employment is terminated pursuant to paragraph 5 or
paragraph 6 is hereinafter referred to as the "Term of Employment".
<PAGE> 53
(c) Extension of Term. In the event AMRE elects not to
extend the term of this Agreement past the Expiration Date, AMRE shall provide
written notice to Honigsfeld no later than 12 months prior to the Expiration
Date. If AMRE does not provide written notice to Honigsfeld as provided in the
previous sentence, the Term of Employment and the Expiration Date shall be
extended automatically for successive periods of one year upon the same terms
as existed for the previous year of the Term of Employment (each such
successive one year period is hereafter referred to as a "Renewal Term").
3. Services. During the Term of Employment, Honigsfeld will
devote his full business time to the business and affairs of AMRE and such
other members of the AMRE Group as may be requested by the Chief Executive
Officer of AMRE, and shall use his best efforts, skills and abilities to
promote the interests of AMRE; provided, however, that Honigsfeld may, from
time to time, engage in such other pursuits, including (without limitation)
personal, legal, financial and business affairs, provided, in each case, that
such pursuits do not interfere with the proper performance of duties and
obligations under the terms hereof and do not create any actual or intentional
conflict of interest. For the purposes of this Agreement, the term "AMRE
Group" means all corporations or other business organizations, with respect to
any one of which AMRE possesses the ability, directly or through any
intervening medium, to elect a majority of the Board of Directors (or persons
filling similar functions).
4. Compensation and Benefits.
(a) Salary. During the Term of Employment, AMRE shall pay
to Honigsfeld such annual salary as the Board of Directors of AMRE from time to
time may determine, but such annual salary shall in no event be less than
$400,000 per year. AMRE agrees to pay Honigsfeld's annual salary to Honigsfeld
in accordance with the usual and customary procedures for the payment of
compensation to salaried employees of AMRE, but in any event to make such
payment in not less than monthly installments.
(b) Additional or Incentive Compensation. During the
first year of the Term of Employment, Honigsfeld shall participate in an
incentive compensation plan to be adopted by AMRE's Board of Directors which
will be based on the quantity and aggregate value of new sub-license agreements
that may be entered into in connection with the former Facelifters' operations.
The parties hereto acknowledge that the estimated value of such bonus during
the first year of the Term of Employment is expected to be approximately
$250,000, but shall in no event be less than $100,000 nor more than $500,000.
Honigsfeld shall not be entitled to any compensation in addition to his annual
salary after the first year of the Term of Employment except as may otherwise
be mutually agreed by the parties hereto.
(c) Employee Benefits (General). During the Term of
Employment, Honigsfeld shall be entitled to receive benefits and perquisites
ordinarily provided to executive officers of AMRE, including a monthly
automobile allowance of $750.00, and eligibility to participate in all employee
welfare benefit plans or employee pension benefit plans (within the meaning of
the Employee Retirement Income Security Act of 1974) from time to time
maintained by AMRE. Honigsfeld shall be entitled to participate in all such
plans or programs on terms no less favorable than those generally available to
executive officers of AMRE and at a level of
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participation commensurate with his position as Business Consultant of AMRE and
with his level of compensation.
(d) Executive Supplemental Life and Disability Insurance.
Subject to the limits and provisions referred to in the next sentence, during
the Term of Employment, in addition to all other group term life or benefits
provided under any AMRE sponsored group life insurance plan (if any), AMRE
shall (i) maintain, at no cost (except recognition, if applicable, of imputed
income for tax purposes) to Honigsfeld, Executive Supplemental Life Insurance
in an amount equal to 300% of Honigsfeld's annual salary, (ii) maintain
Executive Long Term Disability Insurance which will provide a benefit equal to
55% of Honigsfeld's monthly base salary and (iii) make available for purchase
by Honigsfeld at his sole expense Executive Long Term Disability Insurance
which will provide a benefit equal to 20% of Honigsfeld's monthly base salary.
The types of policies, the identity of the carriers and the exact terms,
limitation, underwriting specifications and benefits of each of such coverages
shall be no less favorable than the coverages provided by AMRE to its other
executive officers. Any coverage for Honigsfeld by the insurance described in
this paragraph 4(d) shall be subject to Honigsfeld meeting the insurance
carrier's underwriting requirements. AMRE shall arrange for and submit such
application or other information required with respect to such insurance
coverage promptly upon the commencement of the Term of Employment. Should this
Employment Agreement be terminated under the terms of paragraph 5(a)(iii), AMRE
shall continue the payment of his salary to his designated beneficiary for a
period of up to one year or until such time that the Executive Supplemental
Life Insurance benefit is paid to his designated beneficiary, in which case
AMRE may deduct from the insurance benefit an amount equal to the salary
advanced to Honigsfeld's beneficiary after the time of his death until the
payment of the insurance benefit.
(e) Vacation. Honigsfeld shall accrue paid vacation at
the rate of 10 hours of paid vacation for each calendar month he is employed
during the Term of Employment, subject to a maximum accrual of 120 hours at any
time. Hours of vacation accrued for any period of less than a full calendar
month shall be prorated. Honigsfeld shall not be required to use paid vacation
time for the purpose of celebrating religious holidays.
(f) Annual Physical Examination. During the Term of
Employment, to the extent not covered by any insurance plan maintained by AMRE,
AMRE shall reimburse Honigsfeld for the cost of one comprehensive annual
physical examination during each calendar year by a physician of Honigsfeld's
choosing.
(g) Expenses. AMRE shall pay or reimburse Honigsfeld upon
submission of vouchers by him, and approval thereof by the Chief Executive
Officer or Chief Financial Officer of AMRE, for all entertainment, travel,
meal, hotel accommodation and miscellaneous expenses reasonably incurred by him
in the interest of AMRE's business and in accordance with current AMRE policy
during the Term of Employment.
5. Termination of Employment Other Than in Connection With a
Change of Control of AMRE.
(a) Termination by AMRE for Good Cause. AMRE may
terminate Honigsfeld's employment prior to the Expiration Date for good cause
only upon compliance with
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<PAGE> 55
the requirement of this paragraph 5(a). "Good Cause" for termination by AMRE
shall mean only (i) the willful engagement by Honigsfeld in misconduct which is
materially injurious to AMRE, monetarily or otherwise, (ii) Honigsfeld's
physical or mental disability, if such disability results in Honigsfeld's
receiving permanent disability payments pursuant to a group or individual
disability insurance policy maintained by AMRE on behalf of Honigsfeld, or
(iii) Honigsfeld's death. For purposes of this paragraph 5(a), no act or
failure to act on Honigsfeld's part shall be considered "willful" unless done,
or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of AMRE. Notwithstanding the
foregoing, Honigsfeld shall not be deemed to have been terminated for good
cause within the meaning of clause (i) of the preceding sentence without (i)
reasonable notice to Honigsfeld setting forth the reasons for AMRE's intention
to terminate for good cause, (ii) an opportunity for Honigsfeld, together with
his counsel, to be heard before the Board of Directors of AMRE, and (iii)
written notice from the Board of Directors of AMRE finding that in the good
faith opinion of such Board, Honigsfeld was guilty of the conduct set forth
above and specifying the particulars thereof in detail. In the event of the
termination of Honigsfeld's employment in accordance with the conditions of
this paragraph 5(a), the Term of Employment shall end, all of Honigsfeld's
obligations pursuant to this Agreement (except for those provided in paragraphs
8, 9 and 10, if termination is for a reason other than death) shall end and
AMRE's obligations to pay compensation to Honigsfeld pursuant to paragraph 4
shall cease on the effective date of termination.
(b) Termination by AMRE Other Than for Good Cause. AMRE
may terminate Honigsfeld's employment prior to the Expiration Date for any
reason other than Good Cause upon providing not less than 30 days' prior
written notice to Honigsfeld specifying the effective date of termination. If
AMRE terminates Honigsfeld's employment other than for Good Cause under
paragraph 5(a) prior to the public announcement of, or actual or deemed
knowledge of AMRE of, any actual or proposed transaction which results,
directly or indirectly, in a change of control of AMRE, as defined in paragraph
6, the Term of Employment shall end on the effective date of termination, but
AMRE shall provide, as a severance benefit to Honigsfeld and as liquidated
damages for breach by AMRE of its otherwise applicable obligations thereunder,
each of the following: (i) within three (3) days of the effective date of
termination, a lump sum cash payment equal to the sum of all accrued vacation
pay and monthly cash payments which would, except for the termination have been
paid to Honigsfeld as salary under paragraph 4(a) through the Expiration Date,
(ii) not later than the date on which incentive compensation for the fiscal
year in which Honigsfeld's termination of employment occurs (the "Current
Fiscal Year") would be paid to Honigsfeld if he were employed on the last day
of the Current Fiscal Year, an amount equal to the product of (a) the incentive
compensation which would have been paid to Honigsfeld if he were still employed
on the last day of the Current Fiscal Year, and (b) a fraction, the numerator
of which is the number of days in the Current Fiscal Year through the effective
date of termination and the denominator of which is 365; provided, however,
that if the effective date of termination occurs on or before October 31, 1996,
such amount payable pursuant to this cause (ii) shall not be less than One
Hundred Thousand Dollars ($100,000.00), and (iii) continuation of all life,
health, disability insurance benefits then in effect and described in paragraph
4 through the period ending on the Expiration Date.
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<PAGE> 56
(c) Substantial Change in Conditions, Authority or
Responsibilities. If AMRE, during the Term of Employment, but prior to the
public announcement of, or actual or deemed knowledge of AMRE of, any actual or
proposed transaction which results, directly or indirectly, in a Change of
Control of AMRE, as defined in paragraph 6, makes any substantial change in
Honigsfeld's employment conditions, authority or job responsibilities which
would constitute "Good Reason", within the meaning of paragraph 6(c), if a
Change of Control of AMRE had then occurred, then Honigsfeld may elect to
terminate his employment in accordance with the procedures set forth in
paragraph 6(b) and such employment will be deemed terminated by AMRE without
Good Cause and the severance benefits specified in paragraph 5(b) shall apply.
(d) Termination by Honigsfeld. Honigsfeld may terminate
his employment at any time on or after the effective date of this Agreement
upon providing 30 days' prior written notice to AMRE stating the effective date
of termination. In any such event, all obligations of AMRE to Honigsfeld under
this Agreement and all obligations of Honigsfeld to AMRE (except those provided
for in paragraphs 7 through 10) shall cease and the Term of Employment shall
end on the specified effective date of termination.
(e) Mitigation. AMRE's termination of Honigsfeld's
employment under paragraph 5(b) or 5(c) shall immediately relieve Honigsfeld of
all obligations under this Agreement (except for those provided in paragraphs 7
through 10), shall not obligate Honigsfeld to seek other employment and shall
not be construed to require the application of any compensation which
Honigsfeld may earn in any such other employment to reduce AMRE's obligation to
provide severance benefits as provided herein. Honigsfeld's right to receive
severance benefits hereunder shall not be subject to voluntary or involuntary
sale, pledge, hypothecation, transfer or assignment by Honigsfeld, nor shall
Honigsfeld, by virtue of such right, acquire any right, title or interest in
particular assets of AMRE and such right shall be no greater than the right of
any unsecured general creditor of AMRE.
6. Change of Control of AMRE. In the event of a Change of Control
of AMRE, the following provisions of this Agreement shall apply notwithstanding
any other terms or conditions of this Agreement:
(a) Extension of Term of Agreement. Upon the change of
control of AMRE, the Expiration Date referred to in paragraph 2(a)
shall be changed to the date which is two (2) years subsequent to the
date immediately prior to the date on which the change of control of
AMRE occurred.
(b) Termination of Employment by Honigsfeld for Good
Reason. Honigsfeld's employment may be terminated by Honigsfeld during
the Term of Employment for Good Reason if, (i) within 90 days of the
date of occurrence of a triggering event (as defined below),
Honigsfeld notifies AMRE in writing of his intention to treat such
event as Good Reason, (ii) within 30 days following receipt of such
notice provided for in (i), AMRE fails to cure the triggering event,
and (iii) within 60 days following the expiration of the 30-day period
described in (ii), Honigsfeld voluntarily terminates his employment by
giving written notice to AMRE.
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<PAGE> 57
(c) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of one or more of the following
events subsequent to the public announcement of, or actual or deemed
knowledge of AMRE of, any actual or proposed transaction which
results, directly or indirectly, in a Change of Control of AMRE (each
of which shall be a "triggering event"):
(i) the assignment to Honigsfeld of any duties
materially inconsistent in any respect with Honigsfeld's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by paragraph 3 of this Agreement, or any other
action by AMRE which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by AMRE promptly
after receipt of notice thereto given by Honigsfeld;
(ii) any failure by AMRE to materially comply with
any of the provisions of paragraph 4 of this Agreement, other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by AMRE promptly
after receipt of notice thereof given by Honigsfeld, unless
AMRE agrees to fully compensate Honigsfeld for any such
reduction;
(iii) Honigsfeld is required to locate his office
more than 50 miles from the current location of Woodmere, New
York, excluding business travel reasonably consistent with the
amount of travel required of him prior to such relocation;
(iv) any purported termination by AMRE of
Honigsfeld's employment otherwise than as expressly permitted
by this Agreement;
(v) any failure of any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
AMRE to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that AMRE would be
required to perform it if no such succession had taken place;
or
(vi) AMRE's request that Honigsfeld perform an
illegal, or wrongful act in violation of AMRE's code of
conduct policies.
(d) Severance Benefit on Termination by Honigsfeld for
Good Reason. Upon termination of Honigsfeld's employment by Honigsfeld
pursuant to paragraph 6(b) or by AMRE for a reason other than Good
Cause subsequent to the public announcement of, or AMRE's actual or
deemed knowledge of, any actual or proposed transaction which results,
directly or indirectly, in a Change of Control of AMRE, all
obligations of AMRE to Honigsfeld under this Agreement and all
obligations of Honigsfeld to AMRE (except those provided for in
paragraphs 7 through 10) shall cease and the Term of Employment shall
end and AMRE shall pay to Honigsfeld within 10 days of such
termination of employment, the sum of (i) all accrued vacation pay and
(ii) an amount
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equal to the greater of (A) two times the amount of Honigsfeld's
annual salary on the date prior to the Change of Control or (B) if
such termination occurs during the Initial Term, then an amount equal
to the annual salary remaining to be paid during the Initial Term
pursuant to paragraph 4(a). In the event the cash settlement payment
payable under this paragraph 6(d), either alone or together with any
other payments which Honigsfeld has the right to receive from AMRE,
would constitute an "excess parachute payment" (as defined in Section
280G of the Internal Revenue Code of 1986, as amended), such cash
settlement amount shall be increased to an amount sufficient to
provide Honigsfeld, after satisfaction of all federal excise taxes and
federal and state income taxes attributable to such increases in
amount, a net amount equal to such cash settlement amount calculated
as described above and before any such excise tax.
(e) Definition of Change of Control of AMRE. For the
purpose of this Agreement, a "Change of Control of AMRE" shall be
deemed to have occurred:
(i) When any "person" as defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and as used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) of
the Exchange Act, excluding any employee benefit plan
sponsored or maintained by AMRE or any subsidiary of AMRE
(including any trustee of such plan acting as trustee),
directly or indirectly, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, as amended from
time to time), of securities of AMRE representing:
(A) 30% or more of the combined voting power of
AMRE's then outstanding securities with
respect to the election of the directors of
AMRE; or
(B) 20% or more of such combined voting power if
such person thereby becomes the largest
stockholder of AMRE; or
(ii) When, during any period of 24 consecutive
months, the individuals who, at the beginning of such period,
constitute the Board of Directors of AMRE (the "Incumbent
Directors") cease for any reason other than death to
constitute at least a majority thereof, provided, however,
that a director who was not a director at the beginning of
such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with
the approval of, at least a majority of the directors who then
qualified as Incumbent Directors either actually (because they
were directors at the beginning of such 24-month period) or by
prior operation of this provision; or
(iii) The occurrence of a transaction requiring
stockholder approval of the acquisition of AMRE by an entity
other than AMRE or a 50% or more owned subsidiary of AMRE
through purchase of assets, or by merger, or otherwise, except
in the case of a transaction pursuant to which, immediately
after the transaction, AMRE's stockholders immediately prior
to the transaction own at
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least 60% of the combined voting power of the surviving
entity's then outstanding securities with respect to the
election of the directors of such entity solely by reason of
such transaction.
The foregoing notwithstanding, the acquisition by Ronald I. Wagner, or
by a "Group" as defined above of which Ronald I. Wagner is a member, of
securities of AMRE representing up to a maximum of 40% of the combined voting
power of AMRE's then outstanding securities with respect to the election of the
directors of AMRE shall not constitute a "Change of Control of AMRE".
7. Restrictions on Investments and Competing Activities.
(a) Except to the extent permitted by the last sentence
of this paragraph 7(a) and by paragraph 7(b), during the Term of Employment,
Honigsfeld will not hold or acquire (whether by purchase, gift or otherwise)
any direct or beneficial interest in any securities (debt or equity) of, or any
other interest in, any corporation (domestic or foreign) or any other business
organization engaged, directly or indirectly, in any business competitive with
that conducted by AMRE or any member of the AMRE Group nor will Honigsfeld
himself (whether in an individual capacity or as a member of a partnership or
otherwise) engage, directly or indirectly, in any business competitive with
that conducted by AMRE or any member of the AMRE Group. The restrictions on the
investment activities of Honigsfeld, set forth in the first sentence of this
subparagraph (a), do not apply to investments in debt securities of any
corporation, if such debt securities are traded on a national securities
exchange, or to investments in equity securities of any corporation, if such
equity securities are traded on a national securities exchange, provided that
the aggregate holdings (direct and beneficial) of Honigsfeld, his spouse and
minor children in equity securities of such corporation do not, at any time,
equal 1% or more of the outstanding equity securities of such corporation.
(b) Honigsfeld agrees that, in addition to the
restrictions imposed by paragraph 7(a), he will conduct his respective
investment activities in strict compliance with any and all policies with
respect thereto now or hereafter established by AMRE (and any other member of
the AMRE Group that employs Honigsfeld), and Honigsfeld further agrees to
render, and cause to be rendered, any and all such reports with respect thereto
as may be required by AMRE or any such other member of the AMRE Group. The
foregoing notwithstanding, an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by Honigsfeld promptly after
receipt of notice of any failure to comply with such policies shall not
constitute a violation of the provisions of this subparagraph.
8. Confidentiality. Honigsfeld agrees and acknowledges that the
trade secrets of AMRE and the AMRE Group, as such secrets may exist from time
to time, are valuable, special and unique assets of AMRE and the AMRE Group,
and that access to and knowledge of such secrets are essential to the
performance of Honigsfeld's duties hereunder. Honigsfeld will not, in whole or
in part, for his own purposes or for the benefit of any person, firm,
corporation or other entity (except AMRE or any member of the AMRE Group)
disclose to any person, firm, corporation, association or any other entity, any
such trade secrets or any other confidential or secret information with respect
to the business of AMRE or the AMRE Group (including, without limitation, any
such information with respect to customers), nor will Honigsfeld make
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use of any such trade secrets or other confidential or secret information for
his own purposes or for the benefit of any person, firm, corporation or other
entity (except AMRE or any member of the AMRE Group) under any circumstances
during or after the Term of Employment; provided, however, that after the Term
of Employment these restrictions shall not apply to such trade secrets or
confidential or secret information which are then in the public domain (so long
as Honigsfeld was not responsible, directly or indirectly, for permitting such
trade secrets or confidential or secret information to enter the public domain
without AMRE's consent).
9. Covenants Not to Solicit or Interfere.
(a) In the event Honigsfeld's employment is terminated by
AMRE other than for Good Cause as provided in paragraph 5(a) hereof
and other than by AMRE in accordance with the provisions of paragraph
6(d), Honigsfeld shall not compete with AMRE or any member of the AMRE
Group in the business of AMRE or the AMRE Group in any geographic area
in which AMRE (or such member of the AMRE Group) is actively engaged
in such business on the date Honigsfeld's employment hereunder
terminates for a period beginning on the date Honigsfeld's employment
terminates and ending on what would be the Expiration Date as defined
in paragraph 2 above had the Agreement not been earlier terminated.
(b) In the event Honigsfeld's employment is terminated
for Cause as provided in paragraph 5(a) hereof, or if Honigsfeld
terminates this Agreement pursuant to paragraph 5(d) hereof, for a
period of 12 months from the effective date of Honigsfeld's
termination of employment for Cause, Honigsfeld will not compete with
AMRE or any member of the AMRE Group in the business of AMRE or the
AMRE Group in any geographic area in which AMRE (or such member of the
AMRE Group) is actively engaged in such business on the date
Honigsfeld's employment hereunder terminates.
(c) If Honigsfeld terminates his employment pursuant to
paragraph 6(b) hereof or if AMRE terminates Honigsfeld's employment
for a reason other than Good Cause subsequent to the announcement of,
or AMRE's actual or deemed knowledge of, any actual or proposed
transaction which results, directly or indirectly in a change of
control of AMRE, Honigsfeld shall not compete with AMRE or any member
of the AMRE Group in the business of AMRE or the AMRE Group in any
geographic area in which AMRE (or such member of the AMRE Group) is
actively engaged in such business on the date Honigsfeld's employment
terminates for a period equal to the greater of (i) two years or (ii)
if such termination occurs during the Initial Term, then a period
ending when the Initial term would have expired were it not for such
earlier termination.
(d) The term "compete", as used herein, means to engage
in competition, directly or indirectly (including, without limitation,
to conduct the business of AMRE or the AMRE Group for any customer
with which Honigsfeld had any significant business contacts during his
employment hereunder), either as a proprietor, partner, employee,
agent, consultant, director, officer, controlling stockholder or in
any other capacity or manner whatsoever. It is the desire and intent
of the parties that the provisions of this paragraph 9 shall be
enforced to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if, and
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to the extent that, any portion of this paragraph 9 shall be
adjudicated to be invalid or unenforceable, this paragraph 9 shall be
deemed amended to delete therefrom or reform the portion thus
adjudicated to be invalid or unenforceable, such deletion or
reformation to apply only with respect to the operation of this
paragraph 9 in the particular jurisdiction in which such adjudication
is made.
10. Injunctive Relief. Honigsfeld acknowledges and agrees that a
breach or threatened breach of the provisions of paragraphs 7, 8 or 9 may cause
irreparable injury to AMRE and any member of the AMRE Group, and that, as a
result of such breach AMRE, or any member of the AMRE Group, as the case may
be, shall be entitled, among and in addition to other remedies available at law
or in equity, to an injunction restraining Honigsfeld from continuing the
activity causing such breach. Such remedy shall not be exclusive and shall be
in addition to any other remedy AMRE or any such member of the AMRE Group may
be entitled.
11. Miscellaneous.
(a) Notices. Any notice required or permitted to be given
under this Agreement shall be deemed to have been received when delivered in
person or mailed, postage prepaid, by certified mail addressed, in the case of
Honigsfeld, to his last known residence as provided by him to AMRE, or, in the
case of AMRE, to its principal office.
(b) Benefits and Obligations. This Agreement shall be
binding upon, shall inure to the benefit of, and shall be enforceable by AMRE
and its respective successors and assigns, and Honigsfeld, his heirs, assigns
or legal representatives; provided, however, that the obligations of Honigsfeld
contained herein may not be delegated or assigned.
(c) Entire Agreement; Amendment. This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof and may only be amended by an agreement in writing signed
by all of the parties hereto.
(d) Waiver. The failure of any party hereto to insist, in
any one or more instances, upon performance of any of the terms and conditions
of this Agreement, shall not be construed as a waiver or relinquishment of any
right granted hereunder or of the future performance of any such term, covenant
or condition.
(e) Severability. In the event that any portion of this
Agreement may be held to be invalid or unenforceable for any reason, the
parties hereto agree that said invalidity or unenforceability shall not affect
the other portions of this Agreement and that the remaining covenants, terms
and conditions or portions thereof shall remain in full force and effect and
any court of competent jurisdiction may so modify the objectionable provision
as to make it valid and enforceable.
(f) Governing Laws. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
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(g) Captions. The captions contained in this Agreement
are for the convenience of AMRE and Honigsfeld and shall not be deemed or
construed as in any way limiting or extending the language of the provisions to
which such captions refer.
(h) Termination of Existing Employment Agreement.
Upon the execution of this Agreement Honigsfeld's existing employment agreement
with Facelifters dated October 1, 1993 and amended on March 27, 1995, shall
immediately terminate and be of no further force or effect, and all payments
due thereunder, other than incentive compensation or bonuses which shall,
within thirty days from the date hereof be paid pro rata as of the end of the
month of the closing of the Merger, are waived and released.
IN WITNESS WHEREOF, AMRE has caused this Agreement to be executed by
its officer thereunto duly authorized, and Honigsfeld has hereunto set his
hand, all as of the day, month and year first above written.
AMRE, INC.
By:
--------------------------
Robert M. Swartz
President
--------------------------
Mark Honigsfeld
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EXHIBIT B
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of ____________, 1995, (the "date of this
Agreement") is by and between AMRE, Inc., a Delaware corporation ("AMRE"), and
Murray Gross, of Boca Raton, Florida ("Gross").
W I T N E S S E T H:
WHEREAS, AMRE, AMRE Acquisition, Inc., a Delaware corporation and
wholly-owned subsidiary of AMRE ("Merger Sub"), and Facelifters Home Systems,
Inc., a Delaware corporation ("Facelifters"), have entered into an Agreement
and Plan of Merger dated October 31, 1995, pursuant to which Merger Sub will
merge with and into Facelifters (the "Merger");
WHEREAS, Gross previously served as the President and Chief Operating
Officer of Facelifters; and
WHEREAS, AMRE wishes to hire Gross in order to secure Gross's services
in connection with the former business of Facelifters, as such business may be
carried on by the surviving entity in the Merger;
WHEREAS, in connection with the execution of this Agreement, Gross has
agreed to terminate his existing employment agreement with Facelifters;
NOW, THEREFORE, in consideration of the covenants and mutual
agreements contained herein, AMRE and Gross agree as follows:
1. Employment. AMRE agrees to employ Gross as an executive
officer in the capacity of vice president and Gross agrees to serve in such
capacity on the terms and conditions hereinafter set forth.
2. Term.
(a) Term of Agreement. The initial term of this Agreement
(the "Initial Term") shall commence on the effective date of the Merger, and
shall end at midnight on the second anniversary of such date (the "Expiration
Date").
(b) Term of Employment. The period from the effective
date of the Merger to the first to occur of (i) the Expiration Date or (ii) the
date on which Gross's employment is terminated pursuant to paragraph 5 or
paragraph 6 is hereinafter referred to as the "Term of Employment".
<PAGE> 64
3. Services. During the Term of Employment, Gross will devote his
full business time to the business and affairs of AMRE and such other members
of the AMRE Group as may be requested by the Chief Executive Officer of AMRE,
and shall use his best efforts, skills and abilities to promote the interests
of AMRE; provided, however, that Gross may, from time to time, engage in such
other pursuits, including (without limitation) personal, legal, financial and
business affairs, provided, in each case, that such pursuits do not interfere
with the proper performance of duties and obligations under the terms hereof
and do not create any actual or intentional conflict of interest.
4. Compensation and Benefits.
(a) Salary. During the Term of Employment, AMRE shall pay
to Gross such annual salary as the Board of Directors of AMRE from time to time
may determine, but such annual salary shall in no event be less than $250,000
per year. AMRE agrees to pay Gross's annual salary to Gross in accordance with
the usual and customary procedures for the payment of compensation to salaried
employees of AMRE, but in any event to make such payment in not less than
monthly installments.
(b) Additional or Incentive Compensation. During the Term
of Employment, Gross shall participate in an incentive compensation plan
consistent with incentive compensation plans provided to other executive
officers of AMRE with positions and compensation equivalent to Gross. In
addition, during the first year of the Term of Employment, Gross shall be
entitled to an incentive bonus based on performance criteria to be mutually
agreed upon by AMRE and Gross, but shall in no event be less than $100,000 nor
more than $250,000. After the first year of the Term of Employment, Gross will
participate in the AMRE incentive compensation plan in which other AMRE
executives who report directly to the Chief Executive Officer of AMRE
participate.
(c) Employee Benefits (General). During the Term of
Employment, Gross shall be entitled to receive benefits and perquisites
ordinarily provided to executive officers of AMRE, including a monthly
automobile allowance of $750.00, protection under an officer's and director's
liability insurance policy and eligibility to participate in all employee
welfare benefit plans or employee pension benefit plans (within the meaning of
the Employee Retirement Income Security Act of 1974) from time to time
maintained by AMRE. Gross shall be entitled to participate in all such plans
or programs on terms no less favorable than those generally available to
executive officers of AMRE and at a level of participation commensurate with
his position as Business Consultant of AMRE and with his level of compensation.
In the event that AMRE relocates Gross to any location other than that of his
present office, he shall be entitled to the benefits of AMRE's executive
relocation benefit package.
(d) Executive Supplemental Life and Disability Insurance.
Subject to the limits and provisions referred to in the next sentence, during
the Term of Employment, in addition to all other group term life or benefits
provided under any AMRE sponsored group life insurance plan (if any), AMRE
shall: (i) maintain, at no cost (except recognition, if applicable, of imputed
income for tax purposes) to Gross, Executive Supplemental Life Insurance in an
amount equal to 300% of Gross's annual salary, (ii) maintain Executive Long
Term Disability Insurance which will provide a benefit equal to 55% of Gross's
monthly base salary and (iii) make available for
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purchase by Gross at his sole expense Executive Long Term Disability Insurance
which will provide a benefit equal to 20% of Gross's monthly base salary. The
types of policies, the identity of the carriers and the exact terms,
limitation, underwriting specifications and benefits of each of such coverage
shall be no less favorable than the coverage provided by AMRE to its other
executive officers. Any coverage for Gross by the insurance described in this
paragraph 4(d) shall be subject to Gross meeting the insurance carrier's
underwriting requirements. AMRE shall arrange for and submit such application
or other information required with respect to such insurance coverage promptly
upon the commencement of the Term of Employment. Should this Agreement be
terminated under the terms of paragraph 5(a)(iii), AMRE shall continue the
payment of his salary to his designated beneficiary for a period of up to one
year or until such time that the Executive Supplemental Life Insurance benefit
is paid to his designated beneficiary, in which case AMRE may deduct from the
insurance benefit an amount equal to the salary advanced to Gross's beneficiary
after the time of his death until the payment of the insurance benefit.
(e) Vacation. Gross shall accrue paid vacation at the
rate of 10 hours of paid vacation for each calendar month he is employed during
the Term of Employment, subject to a maximum accrual of 120 hours at any time.
Hours of vacation accrued for any period of less than a full calendar month
shall be prorated. Gross shall not be required to use paid vacation time for
the purpose of celebrating religious holidays.
(f) Annual Physical Examination. During the Term of
Employment, to the extent not covered by any insurance plan maintained by AMRE,
AMRE shall reimburse Gross for the cost of one comprehensive annual physical
examination during each calendar year by a physician of Gross's choosing.
(g) Expenses. AMRE shall pay or reimburse Gross upon
submission of vouchers by him, and approval thereof by AMRE's Chief Executive
Officer or Chief Financial Officer, for all entertainment, travel, meal, hotel
accommodation and miscellaneous expenses reasonably incurred by him in the
interest of AMRE's business and in accordance with current AMRE policy during
the Term of Employment.
5. Termination of Employment Other Than in Connection With a
Change of Control of AMRE.
(a) Termination by AMRE for Good Cause. AMRE may
terminate Gross's employment prior to the Expiration Date for good cause only
upon compliance with the requirements of this paragraph 5(a). "Good Cause" for
termination by AMRE shall mean only (i) the willful engagement by Gross in
misconduct which is materially injurious to AMRE, monetarily or otherwise, (ii)
Gross's physical or mental disability, if such disability results in Gross's
receiving permanent disability payments pursuant to a group or individual
disability insurance policy maintained by AMRE on behalf of Gross, or (iii)
Gross's death. For purposes of this paragraph 5(a), no act or failure to act
on Gross's part shall be considered "willful" unless done, or omitted to be
done, in bad faith and without reasonable belief that the action or omission
was in the best interest of AMRE. Notwithstanding the foregoing, Gross shall
not be deemed to have been terminated for Good Cause within the meaning of
clause (i) of the preceding sentence without (i) reasonable notice to Gross
setting forth the reasons for AMRE's
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intention to terminate for Good Cause, (ii) an opportunity for Gross, together
with his counsel, to be heard before the Board of Directors of AMRE, and (iii)
written notice from the Board of Directors of AMRE finding that in the good
faith opinion of such Board, Gross was guilty of the conduct set forth above
and specifying the particulars thereof in detail. In the event of Gross's
employment in accordance with the conditions of this paragraph 5(a), the Term
of Employment shall end, all of Gross's obligations pursuant to this Agreement
(except for those provided in paragraphs 8, 9 and 10, if termination is for a
reason other than death) shall end and AMRE's obligations to pay compensation
to Gross pursuant to paragraph 4 shall cease on the effective date of
termination.
(b) Termination by AMRE Other Than for Good Cause. AMRE
may terminate Gross's employment prior to the Expiration Date for any reason
other than Good Cause upon providing not less than 30 days prior written notice
to Gross specifying the effective date of termination. If AMRE terminates
Gross's employment other than for Good Cause under paragraph 5(a) prior to the
public announcement of, or actual or deemed knowledge of AMRE, of, any actual
or proposed transaction which results, directly or indirectly, in a change of
control of AMRE, as defined in paragraph 6, the Term of Employment shall end on
the effective date of termination, but AMRE shall provide, as a severance
benefit to Gross, and as liquidated damages for breach by AMRE of its otherwise
applicable obligations thereunder, each of the following: (i) within three (3)
days of the effective date of termination, a lump sum cash payment equal to the
sum of all accrued vacation pay and monthly cash payments which would, except
for the termination have been paid to Gross as salary under paragraph 4(a)
through the Expiration Date, (ii) not later than the date on which incentive
compensation for the fiscal year in which Gross's termination of employment
occurs (the "Current Fiscal Year") would be paid to Gross if he were employed
on the last day of the Current Fiscal Year, an amount equal to the product of
(a) the incentive compensation which would have been paid to Gross if he were
still employed on the last day of the Current Fiscal Year and (b) a fraction,
the numerator of which is the number of days in the Current Fiscal Year through
the effective date of termination and the denominator of which is 365;
provided, however, that if the effective date of termination occurs on or
before October 31, 1996, such amount payable pursuant to this cause (ii) shall
not be less than One Hundred Thousand Dollars ($100,000.00), (iii) within three
days of the effective date of termination; a lump sum cash payment equal to the
payment of the automobile allowance monthly payments described in paragraph
4(c) which would, except for the termination, have been paid to Gross through
the expiration date and (iv) continuation of all life, health, disability
insurance benefits then in effect and described in paragraph 4 through the
period ending on the Expiration Date.
(c) Substantial Change in Conditions, Authority or
Responsibilities. If AMRE, during the Term of Employment, but prior to the
public announcement of, or actual or deemed knowledge of AMRE of, any actual or
proposed transaction which results, directly or indirectly, in a Change of
Control of AMRE, as defined in paragraph 6, makes any substantial change in
Gross's employment conditions, authority or job responsibilities which would
constitute "Good Reason", within the meaning of paragraph 6(c), if a Change of
Control of AMRE had then occurred, then Gross may elect to terminate his
employment in accordance with the procedures set forth in paragraph 6(b) and
such employment will be deemed terminated by AMRE without Good Cause and the
severance benefits specified in paragraph 5(b) shall apply.
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(d) Termination by Gross. Gross may terminate his
employment at any time on or after the effective date of this Agreement upon
providing 30 days' prior written notice to AMRE stating the effective date of
termination. In any such event, all obligations of AMRE to Gross under this
Agreement and all obligations of Gross to AMRE (except those provided for in
paragraphs 7 through 10) shall cease and the Term of Employment shall end on
the specified effective date of termination.
(e) Mitigation. AMRE's termination of Gross's employment
under paragraph 5(b) or 5(c) shall immediately relieve Gross of all obligations
under this Agreement (except for those provided in paragraphs 7 through 10),
shall not obligate Gross to seek other employment and shall not be construed to
require the application of any compensation which Gross may earn in any such
other employment to reduce AMRE's obligation to provide severance benefits as
provided herein. Gross's right to receive severance benefits hereunder shall
not be subject to voluntary or involuntary sale, pledge, hypothecation,
transfer or assignment by Gross, nor shall Gross, by virtue of such right,
acquire any right, title or interest in particular assets of AMRE and such
right shall be no greater than the right of any unsecured general creditor of
AMRE.
6. Change of Control of AMRE. In the event of a Change of Control
of AMRE, the following provisions of this Agreement shall apply notwithstanding
any other terms or conditions of this Agreement:
(a) Extension of Term of Agreement. Upon the change of
control of AMRE, the Expiration Date referred to in paragraph 2(a)
shall be changed to the date which is two (2) years subsequent to the
date immediately prior to the date on which the Change of Control of
AMRE occurred.
(b) Termination of Employment by Gross for Good Reason.
Gross's employment may be terminated by Gross during the Term of
Employment for Good Reason if, (i) within 90 days of the date of
occurrence of a triggering event (as defined below), Gross notifies
AMRE in writing of his intention to treat such event as Good Reason,
(ii) within 30 days following receipt of such notice provided for in
(i), AMRE fails to cure the triggering event, and (iii) within 60 days
following the expiration of the 30-day period described in (ii), Gross
voluntarily terminates his employment by giving written notice to
AMRE.
(c) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of one or more of the following
events subsequent to the public announcement of, or actual or deemed
knowledge of AMRE of, any actual or proposed transaction which
results, directly or indirectly, in a Change of Control of AMRE (each
of which shall be a "triggering event"):
(i) the assignment to Gross of any duties
materially inconsistent in any respect with Gross's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by paragraph 3 of this Agreement, or any other
action by AMRE which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and
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which is remedied by AMRE promptly after receipt of notice
thereto given by Gross;
(ii) any failure by AMRE to materially comply with
any of the provisions of paragraph 4 of this Agreement, other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by AMRE promptly
after receipt of notice thereof given by Gross, unless AMRE
agrees to fully compensate Gross for any such reduction;
(iii) except for relocating to the Dallas, Texas
metropolitan area, Gross is required to locate his office more
than 50 miles from the current location of Boca Raton,
Florida, excluding business travel reasonably consistent with
the amount of travel required of him prior to such relocation;
(iv) any purported termination by AMRE of Gross's
employment otherwise than as expressly permitted by this
Agreement;
(v) any failure of any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
AMRE to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that AMRE would be
required to perform it if no such succession had taken place;
or
(vi) AMRE's request that Gross perform an illegal,
or wrongful act in violation of AMRE's code of conduct
policies.
(d) Severance Benefit on Termination by Gross for Good
Reason. Upon termination of Gross's employment by Gross pursuant to
paragraph 6(b) or by AMRE for a reason other than Good Cause
subsequent to the public announcement of, or AMRE's actual or deemed
knowledge of, any actual or proposed transaction which results,
directly or indirectly, in a Change of Control of AMRE, all
obligations of AMRE to Gross under this Agreement and all obligations
of Gross to AMRE (except those provided for in paragraphs 7 through
10) shall cease and the Term of Employment shall end and AMRE shall
pay to Gross within 10 days of such termination of employment, the sum
of (i) all accrued vacation pay and (ii) an amount equal to the
greater of (A) two times the amount of Gross's annual salary on the
date prior to the Change of Control or (B) if such termination occurs
during the Initial Term, then an amount equal to the annual salary
remaining to be paid during the Initial Term pursuant to paragraph
4(a). In the event the cash settlement payment payable under this
paragraph 6(d), either alone or together with any other payments which
Gross has the right to receive from AMRE, would constitute an "excess
parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended), such cash settlement amount shall be
increased to an amount sufficient to provide Gross, after satisfaction
of all federal excise taxes and federal and state income taxes
attributable to such increases in amount, a net amount equal to such
cash settlement amount calculated as described above and before any
such excise tax.
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(e) Definition of Change of Control of AMRE. For the
purpose of this Agreement, a "Change of Control of AMRE" shall be
deemed to have occurred:
(i) When any "person" as defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and as used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) of
the Exchange Act, excluding any employee benefit plan
sponsored or maintained by AMRE or any subsidiary of AMRE
(including any trustee of such plan acting as trustee),
directly or indirectly, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, as amended from
time to time), of securities of AMRE representing:
(A) 30% or more of the combined voting power of
AMRE's then outstanding securities with
respect to the election of the directors of
AMRE; or
(B) 20% or more of such combined voting power if
such person thereby becomes the largest
stockholder of AMRE; or
(ii) When, during any period of 24 consecutive
months, the individuals who, at the beginning of such period,
constitute the Board of Directors of AMRE (the "Incumbent
Directors") cease for any reason other than death to
constitute at least a majority thereof, provided, however,
that a director who was not a director at the beginning of
such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with
the approval of, at least a majority of the directors who then
qualified as Incumbent Directors either actually (because they
were directors at the beginning of such 24-month period) or by
prior operation of this provision; or
(iii) The occurrence of a transaction requiring
stockholder approval of the acquisition of AMRE by an entity
other than AMRE or a 50% or more owned subsidiary of AMRE
through purchase of assets, or by merger, or otherwise, except
in the case of a transaction pursuant to which, immediately
after the transaction, AMRE's stockholders immediately prior
to the transaction own at least 60% of the combined voting
power of the surviving entity's then outstanding securities
with respect to the election of the directors of such entity
solely by reason of such transaction.
The foregoing notwithstanding, the acquisition by Ronald I. Wagner, or
by a "Group" as defined above of which Ronald I. Wagner is a member, of
securities of AMRE representing up to a maximum of 40% of the combined voting
power of AMRE's then outstanding securities with respect to the election of the
directors of AMRE shall not constitute a "Change of Control of AMRE".
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7. Restrictions on Investments and Competing Activities.
(a) Except to the extent permitted by the last sentence
of this paragraph 7(a) and by paragraph 7(b), during the Term of Employment,
Gross will not hold or acquire (whether by purchase, gift or otherwise) any
direct or beneficial interest in any securities (debt or equity) of, or any
other interest in, any corporation (domestic or foreign) or any other business
organization engaged, directly or indirectly, in any business competitive with
that conducted by AMRE or any member of the AMRE Group nor will Gross himself
(whether in an individual capacity or as a member of a partnership or
otherwise) engage, directly or indirectly, in any business competitive with
that conducted by AMRE or any member of the AMRE Group. The restrictions on the
investment activities of Gross, set forth in the first sentence of this
subparagraph (a), do not apply to investments in debt securities of any
corporation, if such debt securities are traded on a national securities
exchange, or to investments in equity securities of any corporation, if such
equity securities are traded on a national securities exchange, provided that
the aggregate holdings (direct and beneficial) of Gross, his spouse and minor
children in equity securities of such corporation do not, at any time, equal 1%
or more of the outstanding equity securities of such corporation.
(b) Gross agrees that, in addition to the restrictions
imposed by paragraph 7(a), he will conduct his respective investment activities
in strict compliance with any and all policies with respect thereto now or
hereafter established by AMRE (and any other member of the AMRE Group that
employs Gross), and Gross further agrees to render, and cause to be rendered,
any and all such reports with respect thereto as may be required by AMRE or any
such other member of the AMRE Group. The foregoing notwithstanding, an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by Gross promptly after receipt of notice of any failure to comply
with such policies shall not constitute a violation of the provisions of this
subparagraph.
8. Confidentiality. Gross agrees and acknowledges that the trade
secrets of AMRE and the AMRE Group, as such secrets may exist from time to
time, are valuable, special and unique assets of AMRE and the AMRE Group, and
that access to and knowledge of such secrets are essential to the performance
of Gross's duties hereunder. Gross will not, in whole or in part, for his own
purposes or for the benefit of any person, firm, corporation or other entity
(except AMRE or any member of the AMRE Group) disclose to any person, firm,
corporation, association or any other entity, any such trade secrets or any
other confidential or secret information with respect to the business of AMRE
or the AMRE Group (including, without limitation, any such information with
respect to customers), nor will Gross make use of any such trade secrets or
other confidential or secret information for his own purposes or for the
benefit of any person, firm, corporation or other entity (except AMRE or any
member of the AMRE Group) under any circumstances during or after the Term of
Employment; provided, however, that after the Term of Employment these
restrictions shall not apply to such trade secrets or confidential or secret
information which are then in the public domain (so long as Gross was not
responsible, directly or indirectly, for permitting such trade secrets or
confidential or secret information to enter the public domain without AMRE's
consent).
9. Covenants Not to Solicit or Interfere. For a period of 12
months from the effective date of Gross's termination of employment, Gross will
not compete with AMRE or any
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member of the AMRE Group in the business of AMRE or the AMRE Group in any
geographic area in which AMRE (or such member of the AMRE Group) is actively
engaged in such business on the date Gross's employment hereunder terminates.
The term "compete", as used herein, means to engage in competition, directly or
indirectly (including, without limitation, to conduct the business of AMRE or
the AMRE Group for any customer with which Gross had any significant business
contacts during his employment hereunder), either as a proprietor, partner,
employee, agent, consultant, director, officer, controlling stockholder or in
any other capacity or manner whatsoever. It is the desire and intent of the
parties that the provisions of this paragraph 9 shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if, and to the extent
that, any portion of this paragraph 9 shall be adjudicated to be invalid or
unenforceable, this paragraph 9 shall be deemed amended to delete therefrom or
reform the portion thus adjudicated to be invalid or unenforceable, such
deletion or reformation to apply only with respect to the operation of this
paragraph 9 in the particular jurisdiction in which such adjudication is made.
10. Injunctive Relief. Gross acknowledges and agrees that a breach
or threatened breach of the provisions of paragraphs 7, 8 or 9 may cause
irreparable injury to AMRE and any member of the AMRE Group, and that, as a
result of such breach AMRE, or any member of the AMRE Group, as the case may
be, shall be entitled, among and in addition to other remedies available at law
or in equity, to an injunction restraining Gross from continuing the activity
causing such breach. Such remedy shall not be exclusive and shall be in
addition to any other remedy AMRE or any such member of the AMRE Group may be
entitled.
11. Miscellaneous.
(a) Notices. Any notice required or permitted to be given
under this Agreement shall be deemed to have been received when delivered in
person or mailed, postage prepaid, by certified mail addressed, in the case of
Gross, to his last known residence as provided by him to AMRE, or, in the case
of AMRE, to its principal office.
(b) Benefits and Obligations. This Agreement shall be
binding upon, shall inure to the benefit of, and shall be enforceable by AMRE
and its respective successors and assigns, and Gross, his heirs, assigns or
legal representatives; provided, however, that the obligations of Gross
contained herein may not be delegated or assigned.
(c) Entire Agreement; Amendment. This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof and may only be amended by an agreement in writing signed
by all of the parties hereto.
(d) Waiver. The failure of any party hereto to insist, in
any one or more instances, upon performance of any of the terms and conditions
of this Agreement, shall not be construed as a waiver or relinquishment of any
right granted hereunder or of the future performance of any such term, covenant
or condition.
(e) Severability. In the event that any portion of this
Agreement may be held to be invalid or unenforceable for any reason, the
parties hereto agree that said invalidity or unenforceability shall not affect
the other portions of this Agreement and that the remaining
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covenants, terms and conditions or portions thereof shall remain in full force
and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid and enforceable.
(f) Governing Laws. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas.
(g) Captions. The captions contained in this Agreement
are for the convenience of AMRE and Gross and shall not be deemed or construed
as in any way limiting or extending the language of the provisions to which
such captions refer.
(h) Termination of Existing Employment Agreement.
Upon the execution of this Agreement, Gross' existing employment agreement with
Facelifters dated October 1, 1993 and amended on March 27, 1995 shall
immediately terminate and be of no further force or effect, and all payments
due thereunder, other than incentive compensation or bonuses which shall,
within thirty days from the date hereof be paid pro rata as of the end of the
month of the closing of the Merger, are waived and released.
IN WITNESS WHEREOF, AMRE has caused this Agreement to be executed by
its officer thereunto duly authorized, and Gross has hereunto set his hand, all
as of the day, month and year first above written.
AMRE, INC.
By:
-------------------------
Robert M. Swartz
President
-------------------------
Murray Gross
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EXHIBIT C
TERM SHEET RE SUB-LICENSE AGREEMENT
WITH AMERICAN REMODELING, INC.
1. Definition of terms used in Agreement consistent with Paragraph 1 of
Master License Agreement ("MLA") between Century 21 Real Estate
Corporation ("C21"), TM Acquisition Corp. and American Remodeling,
Inc. ("ARI").
2. Three (3) year term, non-cancelable Sub-License Agreement, and
Sub-Licensee shall be entitled to twelve (12) months prior notice of
Sub-Licensor's intent not to renew the Sub-License Agreement, and any
such initial renewal shall be at a royalty not to exceed 8% and other
terms and conditions to be generally in conformance with the
Sub-License Agreement.
3. Exclusive for territories that Sub-Licensee currently has in its
License Agreement with Sears, Roebuck & Co. ("Sears").
4. Products covered under this exclusive License Agreement include
kitchen cabinet refacing, kitchen remodeling which includes any and
all products or services dealing with the kitchen area such as
flooring, wall treatments, window treatments, painting, countertops,
cabinets, plumbing, electrical, lighting, windows as it pertains to
the kitchen, skylights, exhaust hoods, etc.
5. Fee: 8% of revenue as described in Paragraph 11.2 of MLA.
6. In recognition of transition costs, 4% of the sub-license fee will be
credited against payment to Sub-Licensee for the first and second
years of the term of the Agreement and 2% will be credited against
payment to Sub- Licensee for the third year of the term of the
Agreement.
7. Quality standards required of Sub-Licensee to be commensurate with
Facelifter's current standards of quality as it exists prior to this
agreement.
8. Payment of fees to Licensor monthly due within 10 days of month end.
9. Referral fees commensurate with MLA (see Paragraph 12).
10. Consumer credit sales can be conducted through Sub-Licensee finance
company or other third parties which Sub- Licensee chooses.
11. Use of C21 trademark on logo same as terms in MLA.
12. Approval process for advertising materials same as terms in MLA except
that approval time limits will be expanded as agreed.
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13. Insurance requirements consistent with MLA (see paragraph #21).
14. Sub-Licensee has the right to pursue collections within the normal
course of commercial business practice for any customer payment
delinquencies.
15. ARI has no right to make adjustments to a customers contract or a
customers account greater than the greater of 10% or $500 for any one
contract without the approval of Sub-Licensee.
16. Any disputes to be handled consistent with Section 5.15 of the Merger
Agreement.
17. Sub-Licensee has the right to compete using any name other than Sears,
except Sub-Licensee cannot compete in markets in which Sub-Licensee
has a 21 sublicense.
18. Laws of the State of New York.
Prepared October 31, 1995.
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EXHIBIT D-1
AMRE, Inc.
8586 North Stemmons Freeway
South Tower, Suite 102
Dallas, TX 75247
Re: Affiliate Status
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of Facelifters Home Systems, Inc., a Delaware corporation
("Facelifters"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in
and for purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Merger Agreement, dated as of October
31, 1995 (the "Agreement"), by and between AMRE, Inc., a Delaware corporation
("AMRE"), AMRE Acquisition, Inc., a Delaware corporation ("Merger Sub"), and
Facelifters, Merger Sub will be merged with and into Facelifters (the
"Merger").
As a result of the Merger, I may receive shares of Common Stock of
AMRE, $.01 par value per share (the "AMRE Common Stock"), or options to
purchase AMRE Common Stock. I will receive _____ shares of AMRE Common Stock
(or options to purchase _____ shares of AMRE Common Stock) in exchange for each
share of common stock, $.01 par value per share, of Facelifters ("Facelifters
Common Stock") (or options to purchase Facelifters Common Stock) owned by me at
the time of the Merger.
I represent and warrant to, and covenant with, AMRE that in the event
I receive any AMRE Common Stock or options to purchase AMRE Common Stock as a
result of the Merger:
A. I shall not make any sale, transfer or other disposition of
any AMRE Common Stock issued to me in the Merger in violation
of the Act or the Rules and Regulations.
B. I shall not make any sale, transfer or other disposition of
any AMRE Common Stock issued to me in the Merger until the
provisions for a "pooling of interests" as specified in
Section 5.8 of the Merger Agreement have been satisfied.
C. I have carefully read this letter and the Agreement and
discussed their requirements and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of any
AMRE Common Stock issued to me in the Merger, to the extent I
felt necessary, with my counsel or counsel for Facelifters.
D. I have been advised that the issuance of AMRE Common Stock to
me in the Merger has been or will be registered with the
Commission under the Act on a
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Registration Statement on Form S-4. However, I have also been
advised that, since at the time the Merger will be submitted
for a vote of the stockholders of Facelifters, I may be deemed
to be an affiliate of Facelifters, the distribution by me of
any AMRE Common Stock issued to me in the Merger will not have
been registered under the Act and that I may not sell,
transfer or otherwise dispose of any AMRE Common Stock issued
to me in the Merger unless (i) such sale, transfer or other
disposition has been registered under the Act, (ii) such sale,
transfer or other disposition is made in conformity with the
volume and other limitations of Rule 145 promulgated by the
Commission under the Act, or (iii) in the opinion of counsel
reasonably acceptable to AMRE, which opinion shall be
submitted in writing to AMRE in form and substance reasonably
satisfactory to AMRE, such sale, transfer or other disposition
is otherwise exempt from registration under the Act.
E. I understand that AMRE is under no obligation to register
under the Act the sale, transfer or other disposition by me or
on my behalf of any AMRE Common Stock issued to me in the
Merger or to take any other action necessary in order to make
compliance with an exemption from such registration available;
provided, however, that nothing in this Section D shall impair
or otherwise affect any registration rights granted pursuant
to the Stockholders' and Registration Rights Agreement dated
as of _____________, 199_ by and between Facelifters, AMRE and
the Stockholders signatory thereto.
F. I have no present intention to sell or dispose of any shares
of Facelifters Common Stock now owned or of any shares of AMRE
Common Stock to be received by me in or as a result of the
Merger.
G. I also understand that stop transfer instructions will be
given to AMRE's transfer agent with respect to the AMRE Common
Stock issued to me in the Merger and that there will be placed
on the certificates representing the AMRE Common Stock issued
to me in the Merger, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 promulgated
under the Securities Act of 1933, as amended,
applies. The shares represented by this certificate
may only be transferred in accordance with the terms
of a letter dated ______________, 1996 from the
registered holder hereof to AMRE, Inc., a copy of
which letter is on file at the principal office of
AMRE, Inc."
H. I also understand that unless the transfer by me of any AMRE
Common Stock issued to me in the Merger has been registered
under the Act or is a sale made in conformity with the
provisions of Rule 145, AMRE reserves the right to put the
following legend on the certificates issued to my transferee:
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"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, and were acquired from a person who received
such shares in a transaction to which Rule 145
promulgated under the Securities Act of 1933, as
amended, applies. The shares have been acquired by
the holder not with a view to, or for resale in
connection with, any distribution thereof within the
meaning of the Securities Act of 1933, as amended,
and may not be sold or otherwise transferred except
in accordance with an exemption from the registration
requirements of the Securities Act of 1933, as
amended."
It is understood and agreed that the legends set forth in paragraphs G
and H above shall be removed by delivery of substitute certificates without
such legend if the undersigned shall have delivered to AMRE an opinion of
counsel in form and substance reasonably satisfactory to AMRE, to the effect
that such legend is not required for purposes of the Act.
DATED AS OF _______________, 199_
Sincerely,
AGREED AND ACKNOWLEDGED:
AMRE, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
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<PAGE> 78
EXHIBIT D-2
AMRE, Inc.
8586 North Stemmons Freeway
South Tower, Suite 102
Dallas, TX 75247
Re: Affiliate Status
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of AMRE, Inc., a Delaware corporation ("AMRE"), as the term
"affiliate" is (i) defined for purposes of paragraphs (c) and (d) of Rule 145
of the Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and/or (ii) used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission. Pursuant to the terms of
the Merger Agreement, dated as of October 31, 1995 (the "Agreement"), by and
between Facelifters Home Systems, Inc., a New York corporation
("Facelifters"), AMRE Acquisition, Inc., a Delaware corporation ("Merger Sub"),
and AMRE, Merger Sub will be merged with and into Facelifters (the "Merger").
I may own the shares of Common Stock of AMRE, $.01 par value per share
(the "AMRE Common Stock") and options to purchase AMRE Common Stock set forth
on Exhibit A attached hereto.
I represent and warrant to, and covenant with, AMRE that:
A. I shall not make any sale, transfer or other disposition of any
AMRE Common Stock owned by me until the provisions for a
"pooling of interests" as specified in Section 5.8 of the
Merger Agreement have been satisfied.
B. I have no present intention to sell or dispose of any shares of
Facelifters Common Stock.
DATED AS OF _______________, 199_
Sincerely,
<PAGE> 79
EXHIBIT E
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "AGREEMENT") dated as of October
31, 1995 is by and between the undersigned stockholders of Facelifters Home
Systems, Inc., a New York corporation (the "COMPANY") (each such stockholder a
"STOCKHOLDER") and AMRE, Inc., a Delaware corporation ("AMRE").
PRELIMINARY STATEMENTS
A. Concurrently herewith, AMRE, AMRE Acquisition, Inc., a
wholly-owned subsidiary of AMRE ("MERGER SUB"), and the Company, are entering
into an Agreement and Plan of Merger of even date herewith (the "MERGER
AGREEMENT"), pursuant to which, and subject to the terms and conditions
contained therein, Merger Sub will be merged with and into the Company (the
"MERGER").
B. As a condition to their willingness to enter into the
Merger Agreement, AMRE has required that each of the certain Stockholders, who
collectively own more than 30% of the outstanding common stock of the Company
(collectively, the "SIGNATORY STOCKHOLDERS"), enter into, and each of the
Signatory Stockholders has agreed to enter into, this Agreement or an agreement
in the same form as this Agreement (together, the "STOCKHOLDER AGREEMENTS").
C. The Board of Directors of the Company has, prior to the
execution of the Merger Agreement and the Stockholder Agreements, approved the
Merger Agreement and the Merger.
D. Terms used but not defined in this Agreement shall have the
meaning as set forth for such term in the Merger Agreement.
WHEREAS, AMRE and Merger Sub will enter into the Merger Agreement
in part in reliance on each Stockholder's representations, warranties and
agreements set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and other good and valuable
consideration the receipt and sufficiency of which are hereby approved, and
intending to be legally bound hereby, it is agreed as follows:
STATEMENT OF AGREEMENT
1. AGREEMENT TO SUPPORT MERGER. Each Stockholder agrees
during the Term (as hereinafter defined), subject to the terms of Section 3
hereto, to vote any and all shares of the Company's common stock $0.01 par
value per Share (the "COMMON STOCK") listed on Exhibit A attached hereto (the
"SHARES") held by such Stockholder in favor of the Merger pursuant to the terms
of the Merger and the Merger Agreement, but in the event that a vote for the
Merger does not take place during the Term, then Stockholder agrees not to vote
in favor of any other Change of Control (as hereinafter defined) during the
Term; provided, however, no stockholder
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shall be required to vote in favor of any modification or amendment to the
Merger Agreement which would reduce the Exchange Ratio.
2. PROXY WITH RESPECT TO THE SHARES. During the Term, each
Stockholder hereby irrevocably appoints Merger Sub as Stockholder's
attorney-in-fact and proxy, with full power of substitution, to vote or to
express written consent in lieu of a vote or meeting with respect to all of the
Shares which Stockholder is entitled to vote at any meeting of stockholders
(whether annual or special and whether or not an adjourned meeting) of the
Company, or pursuant to written action taken in lieu of any such meeting or
otherwise, in such manner as to cause the Merger and the Merger Agreement to be
approved and the right to vote against any other transaction or proposal which
would constitute a Change of Control; provided, however, this proxy shall not
be used to vote in favor of any modification or amendment to the Merger
Agreement which would reduce the Exchange Ratio. During the Term, this proxy
is irrevocable, is coupled with an interest sufficient in law to support an
irrevocable proxy and is granted in consideration of and as an inducement to
cause AMRE and Merger Sub to enter into the transactions contemplated by this
Agreement and the Merger Agreement. During the Term, this proxy shall revoke
any other proxy granted by Stockholder at any time with respect to the Shares
and during the Term, no subsequent proxies will be given with respect thereto
by Stockholder. "CHANGE OF CONTROL" shall mean any action or agreement that
would impede, interfere with, delay, postpone or attempt to discourage the
Merger, including but not limited to, (a) any extraordinary corporate
transaction (other than the Merger), such as a merger, other business
combination, reorganization or liquidation involving Company, (b) a sale or
transfer of a material amount of assets of Company or any of its subsidiaries,
(c) any change in the management or board of directors of Company, except as
otherwise agreed to in writing by AMRE, or (d) any material change in the
present capitalization of Company. The duration of the proxy granted under
this Section 2 (the "TERM") will continue until the earlier of April 1, 1996 or
(a) when AMRE, Merger Sub and Stockholder mutually consent in writing to
terminate this Agreement, or (b) upon the termination of the Merger Agreement
by AMRE or Company pursuant to Section 7.1 of the Merger Agreement.
3. CONDITION TO STOCKHOLDER'S OBLIGATIONS. The obligations of
the parties to perform under this Agreement upon its execution and thereafter
shall be subject to the additional condition that there shall be no preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction in effect which prohibits (i) this Agreement, or (ii) the Merger.
Each Stockholder and AMRE agree not to seek any such injunction or order and
shall use their respective reasonable best efforts to oppose and shall seek the
immediate lifting of any such injunction or order.
4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. Each
Stockholder, solely on behalf of such Stockholder, represents and warrants to
AMRE as follows:
4.1 OWNERSHIP OF SHARES. On the date hereof, the
Shares listed on Exhibit A opposite the Stockholder's name are all of the
shares of the Company's Common Stock currently beneficially and of record owned
by the Stockholder and options to acquire Company Stock. Except as set forth
on Exhibit A, Stockholder does not have any rights to acquire any additional
shares of the Company's capital stock. Stockholder currently has, and at the
closing of the Merger will have, good, valid and marketable title to the Shares
listed on Exhibit A
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opposite the Stockholder's name, free and clear of all liens, encumbrances,
restrictions, options, warrants, rights to purchase and claims of every kind
(other than the encumbrance created by this Agreement).
4.2 POWER; BINDING AGREEMENT. Stockholder has the
full legal right, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement.
5. EXPENSES. Except as provided in Section 6(h), each party
hereto will pay all of its expenses in connection with the transactions
contemplated by this Agreement, including, without limitation, the fees and
expenses of its counsel and other advisers.
6. CERTAIN COVENANTS OF AMRE. AMRE agrees to provide each
Stockholder the following registration rights:
(a) DEMAND REGISTRATION. At any time prior to three
years from the date hereof, the Signatory Stockholders owning a majority of the
AMRE common stock issued to the Signatory Stockholders in the Merger may make a
written request for registration ("DEMAND REGISTRATION") under the Securities
Act of 1933, as amended (the "SECURITIES ACT") of all or a part of the common
stock of AMRE received pursuant to the Merger Agreement (the "REGISTRABLE
SECURITIES"). Subject to the provisions of this paragraph, AMRE shall not be
obligated to effect more than one such Demand Registration. Notwithstanding
the foregoing, (i) AMRE shall not be obligated to effect a registration
pursuant to this Section 6(a) during the period starting with the date ninety
(90) days prior to AMRE's estimated date of filing of, and ending on a date 180
days following the effective date of, a registration statement pertaining to an
underwritten public offering of Common Stock for the account of AMRE, and (ii)
if AMRE is required to effect a registration pursuant to this Section 6(a) and
AMRE furnishes to the Signatory Stockholders a certificate signed by the
President of AMRE stating that in the good faith judgment of the Board of
Directors of AMRE it would be materially adverse to AMRE and its stockholders
for such registration statement to be filed on or before the date such filing
would otherwise be required hereunder and it is therefore necessary to defer
the filing of such registration statement, then AMRE shall have the right to
defer such filing for a period not to exceed 90 days after receipt of the
request for such registration from the Signatory Stockholders; provided that
during such time AMRE may not file a registration statement for securities to
be issued and sold for its own account other than on Form S-8, S-4 or any
successor similar forms or any other form not available for registering the
Registrable Securities for sale to the public. AMRE shall at all times use
commercially reasonable efforts to register such Registrable Securities. A
registration will not count as a Demand Registration until it has become
effective, unless the cause of such failure shall be in part attributable to
actions of any of the Signatory Stockholders. If any Demand Registration is in
the form of an underwritten offering, AMRE shall have the right to designate
the underwriter(s) with the approval of the Signatory Stockholders, which
approval shall not be unreasonably withheld or delayed.
If a requested registration pursuant to this Section 6(a)
involves an underwritten offering, and the managing underwriter shall advise
AMRE in writing that, in its opinion, the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering, then the Registrable Securities requested to be registered pursuant
to this Section 6(a) shall either (i) be reduced to the number of Registrable
Securities which AMRE
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is so advised can be sold in (or during the time of) such offering, or, (ii) in
the alternative, the Signatory Stockholders holding a majority of the
Registrable Securities may elect to cancel the Demand Registration, which shall
not then count as a Demand Registration hereunder.
(b) PIGGY-BACK REGISTRATION. If, at any time prior
to three years from the date hereof, AMRE proposes to register any of its
securities under the Securities Act (other than by a registration on Form S-8,
S-4 or any successor similar forms or any other form not available for
registering the Registrable Securities for sale to the public and other than
pursuant to Section 6(a) hereof), whether for sale for its own account or other
security holders, AMRE will, each such time, at least 30 days prior to filing
the registration statement, give written notice to the Signatory Stockholders
of its intention to do so and upon the written request of any of the Signatory
Stockholders made within 15 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
each of the Signatory Stockholders), AMRE will use commercially reasonable
efforts to affect the registration under the Securities Act of all Registrable
Securities which AMRE has been so requested to register by each of the
Signatory Stockholders; provided, however, that if at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, AMRE shall determine for any reason not to register or to delay
registration of such securities, AMRE may, at its election, give written notice
of such determination to each of the Signatory Stockholders who have requested
registration of any Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration, and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities being registered pursuant to this
Section 6(b) for the same period as the delay in registering such other
securities.
(c) PRIORITY IN PIGGY-BACK REGISTRATIONS. If (i) a
registration pursuant to Section 6(c) involves an underwritten offering of the
securities so being registered, whether or not for sale for the account of
AMRE, to be distributed (on a firm commitment basis) by or through one or more
underwriters, whether or not the Registrable Securities so requested to be
registered for sale for the account of any of the Signatory Stockholders are
also to be included in such underwritten offering, and (ii) the managing
underwriter of such underwritten offering shall inform in writing AMRE and each
of the Signatory Stockholders who have requested registration of any
Registrable Securities of its belief that the number of securities requested to
be included in such registration exceeds the number which can be sold in (or
during the time of) such offering, then AMRE may include in such offering all
securities proposed by AMRE to be sold for its own account and all securities
proposed to be sold by any other holders of AMRE securities exercising demand
registration rights (if any) and may decrease the number of Registrable
Securities and other securities of AMRE that are requested to be included in
such registration by decreasing the Registrable Securities requested to be
included in such registration (pro rata among all the holders of Registrable
Securities requesting such registration on the basis of the number of shares of
such securities held by such holder immediately prior to the filing of the
registration statement with respect to such registration). AMRE shall not be
required under this Section 6(c) to include any of the Registrable Securities
in such underwriting unless the Signatory Stockholder owning such Registrable
Securities accepts the terms of the underwriting as determined by AMRE and the
underwriters selected by AMRE.
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(d) PROCEDURES. If and whenever AMRE is required to
use commercially reasonable efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 6(a) or
6(b) hereof, AMRE will, subject to the limitations provided herein:
(i) promptly prepare and as soon as
reasonably practicable file with the Securities and Exchange
Commission (the "SEC") the requisite registration statement to
effect such registration and thereafter, subject to the provisions
of Section 6 hereof, use reasonable efforts to cause such
registration statement to become promptly effective;
(ii) promptly prepare and file with the SEC
such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement until
such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement;
provided, however, that AMRE shall not in any event be required to
keep the registration statement effective for a period of more
than three months after such registration statement becomes
effective; and provided, further that AMRE may delay the filing or
suspend the effectiveness of any registration under this
Agreement, or without suspending such effectiveness instruct the
Signatory Stockholders not to sell any Registrable Securities
included in any such registration, if (A) AMRE shall have
determined that AMRE would be required to disclose any action
taken or proposed to be taken by AMRE in good faith, including
without limitation the acquisition or divestiture of assets, which
disclosure would adversely effect AMRE or on such actions, or (B)
required by law, to update the prospectus relating to any such
registration to include updated financial statements (a
"SUSPENSION PERIOD") by providing the Signatory Stockholders with
written notice of such Suspension Period and the reasons therefor.
Each Stockholder agrees to maintain such reason as is disclosed by
AMRE in strict confidence. In addition, AMRE shall not be
required to keep any registration effective, or may without
suspending such effectiveness, instruct the Signatory Stockholders
who have Registrable Securities included in such registration not
to sell such securities, during any period which AMRE is
instructed, directed, ordered or otherwise requested by any
governmental agency or self-regulatory organization to stop or
suspend such trading or sales ("SUPPLEMENTAL EXTENSION PERIOD").
In the event of a Suspension Period or Supplemental Extension
Period, the period during which any registration under this
Agreement is to remain effective pursuant to this Section 6(d)
shall be tolled until the end of any such Suspension Period or
Supplemental Extension Period;
(iii) furnish to each of the Signatory
Stockholders who have Registrable Securities included in the
registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus)
and any other prospectus filed under Rule 424 under the Securities
Act, and such other documents, as such Signatory Stockholders may
reasonably request;
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(iv) use reasonable efforts to register or
qualify all Registrable Securities and other securities covered by
such registration statement under such other securities or blue
sky laws of such jurisdiction as each seller thereof shall
reasonably request and to keep such registration or qualification
in effect for 90 days as such registration statement remains in
effect (provided, however, that AMRE shall not in any event be
required to keep such registration or qualification in effect for
a period of more than three months after such registration or
qualification becomes effective), and further provided that
(anything in this Agreement to the contrary notwithstanding with
respect to the bearing of expenses) if any jurisdiction in which
the securities shall be qualified shall require that expenses
incurred in connection with the qualification of the securities in
that jurisdiction be borne by the Signatory Stockholders who have
Registrable Securities included in the registration statement,
then such expenses shall be payable by such Signatory
Stockholders, to the extent required by such jurisdiction; and
(v) use reasonable efforts to list all
Registrable Securities covered by such registration statement on
any securities exchange on which any of AMRE's Common Stock is
then listed.
(e) STOCKHOLDER INFORMATION REQUIREMENTS. It shall
be a condition precedent to the obligations of AMRE to take any such action
with respect to registering a Stockholder's Registrable Securities pursuant to
this Section 6 that the Stockholder furnish AMRE in writing such information
regarding the Stockholder, the Registrable Securities and the distribution of
such securities as AMRE may from time to time request in writing within ten
days of such request. If a Stockholder fails to provide AMRE with any such
information, AMRE may exclude the Stockholder's Registrable Securities from the
registration statement.
(f) REQUESTED UNDERWRITTEN OFFERINGS. If requested
by the underwriters for any underwritten offering of Registerable Securities
pursuant to a registration requested under Section 6 hereof, AMRE will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to contain such customary representations and warranties, covenants
and indemnities by AMRE and such other terms as are generally required in
agreements of this type. The Signatory Stockholders who have Registrable
Securities included in the registration statement will cooperate with AMRE in
the negotiation of the underwriting agreement. If requested by the
underwriters of any underwritten offering pursuant to a registration under
Section 6 hereof, each of the Signatory Stockholders who does not have
Registrable Securities included in the registration statement agrees to enter
into an agreement with such underwriters not to sell its shares Common Stock
for a period of time (not to exceed 360 days) after the effectiveness of a
registration statement equal to the period of time which the sellers of
securities in such registration have agreed not to sell their shares after the
effectiveness of such registration statement. Each of the Signatory
Stockholders who has Registrable Securities included in the registration
statement shall be a party to such underwriting agreement.
(g) INCIDENTAL UNDERWRITTEN OFFERINGS. If AMRE at
any time proposes to register any of its securities under the Securities Act as
contemplated by Section 6(b) hereof and such securities are to be distributed
by or through one or more underwriters, AMRE will, if requested by any of the
Signatory Stockholders as provided in Section 6(b) hereof and subject to the
provisions of Section 6(c) hereof, use reasonable efforts to arrange for such
underwriters
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to include all the Registrable Securities to be offered and sold by such
Signatory Stockholders to be distributed by such underwriters, provided that
such Signatory Stockholders have accepted the terms of the underwriting as
determined hereunder and the Underwriter(s) selected by AMRE. In such event,
such Signatory Stockholders shall be a party to the underwriting agreement
between AMRE and such Underwriters.
(h) EXPENSES AND INDEMNIFICATION. All expenses
incurred by AMRE in connection with the registration of Registrable Securities
pursuant to Section 6(a) or 6(b) hereof, including without limitation, all
registration and qualification fees, printers' costs and fees and disbursements
of counsel for AMRE, but not including underwriter's discounts, commissions and
disbursements of joint counsel for the Signatory Stockholders, shall be paid by
AMRE. In connection with any public offering of Registrable Securities
pursuant to this Section, AMRE agrees to indemnify each of the Signatory
Stockholders who have Registrable Securities included in the registration
statement to the same extent as AMRE indemnifies any underwriter participating
therein. In connection with any underwritten public offering, each of the
Signatory Stockholders who have Registrable Securities included in the
registration statement shall indemnify AMRE, but only to the same extent that
an underwriter participating therein indemnifies AMRE and, in any event, only
with respect to information provided by each of the Signatory Stockholders.
7. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing (except as otherwise provided herein)
and shall be deemed duly given when received by delivery in person, by
telecopy, telex or telegram or by certified mail, postage prepaid, or by an
overnight courier service, addressed as follows:
If to AMRE or Merger Sub:
AMRE, Inc.
8585 North Stemmons Freeway
SouthTower, Suite 102
Dallas, Texas 75247
Telephone: (214) 658-6300
Fax: (214) 658-6101
Attention: Robert M. Swartz, President
with copies to:
AMRE, Inc.
8585 North Stemmons Freeway
SouthTower, Suite 102
Dallas, Texas 75247
Telephone: (214) 658-6335
Fax: (214) 658-6101
Attention: C. Curtis Everett
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If to Stockholder:
To the address set forth on the signature page hereto.
8. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with
the documents expressly referred to herein, constitute the entire agreement
among the parties hereto with respect to the subject matter contained herein
and supersede all prior agreements and understanding among the parties with
respect to such subject matter. This Agreement may not be modified, amended,
altered or supplemented except by an agreement in writing executed by the party
against whom such modification, amendment, alteration or supplement is sought
to be enforced.
9. ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except that Merger Sub may assign any or
all of its rights and obligations hereunder to AMRE or any direct or indirect
wholly- owned subsidiary of AMRE without the consent of any Stockholder, but no
such transfer shall relieve Merger Sub of its obligations under this Agreement
if such subsidiary does not perform the obligations of Merger Sub hereunder.
10. GOVERNING LAW. This Agreement, and all matters relating
hereto, shall be governed by, and constituted in accordance with the laws of
the State of Delaware without giving effect to the principles of conflicts of
laws thereof.
11. RESTRICTIONS ON TRANSFER. Each Stockholder agrees with,
and covenants to, AMRE and Merger Sub as follows:
(a) For as long as the Merger Sub holds the proxy
and power of attorney granted pursuant to Section 2 above, each Stockholder
shall not (i) transfer (which terms shall include, without limitation, for the
purposes of this Agreement, any sale, gift, pledge, alienation, assignment or
other disposition, directly or indirectly, by operation of law, in connection
with any merger or otherwise (collectively, a "TRANSFER")), or consent to any
Transfer of, any or all of the Shares or any interest therein, except pursuant
to the Merger, (ii) enter into any contract, option or other agreement or
understanding with respect to any Transfer of any or all of the Shares or any
interest therein, (iii) grant any proxy, power of attorney or other
authorization in or with respect to the Shares, except for this Agreement, or
(iv) deposit the Shares into a voting trust or enter into a voting agreement or
arrangement with respect to the Shares.
(b) Following the Merger, Stockholder agrees not to
Transfer any shares of Common Stock (as defined in the Merger Agreement)
received in exchange for the Shares pursuant to the Merger except as follows:
(i) pursuant to an effective registration statement under the Securities Act or
(ii) subject to receipt of an opinion of counsel satisfactory to AMRE that such
a Transfer is permissible under the Securities Act.
(c) There is no plan or intention by the Stockholder
to sell, exchange or otherwise dispose of the Shares of AMRE received by the
Stockholder in the Merger.
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<PAGE> 87
12. CHANGE IN STATE OF INCORPORATION. The parties hereto
expressly acknowledge that, provided it will not prevent, delay or in any
manner adversely affect the ability of the parties to consummate the Merger,
the Company intends, prior to its mailing of the Joint Proxy
Statement/Prospectus, to change its state of incorporation from New York to
Delaware, as previously contemplated in the Company's proxy materials for its
annual meeting of stockholders held August 9, 1995. Provided that such
reincorporation will not prevent, delay or in any manner adversely affect the
parties ability to consummate the Merger, each Stockholder hereby agrees to
take all action that may be necessary to effect such reincorporation, including
voting the Shares of Common Stock held by such Stockholder in favor of such
reincorporation if so required. Each Stockholder and AMRE expressly
acknowledge and agree that if the reincorporation occurs, then the term
"Company" shall mean and refer to the constituent corporation to the
reincorporation that is the surviving corporation under Delaware law (the
"Survivor") and the terms "Common Stock" and "Shares" shall respectively refer
to the common stock of the Survivor and the common stock of the Survivor owned
by the Stockholders.
13. COMPANY STOCK OPTIONS. Each Stockholder executing an
Employment Agreement with AMRE in connection with the Merger agrees to waive
and release the benefit of any reload provisions with respect to any Company
options previously granted to such Stockholder pursuant to any Company stock
option or other incentive compensation plan.
14. CERTAIN EVENTS. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of Stockholder's Shares shall pass, whether by operation
of law or otherwise, including without limitation, such Stockholder's heirs,
guardians, administrators or successors. In the event of any stock split,
stock dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Shares, or the acquisition of
additional shares of Company Common Stock or other voting securities of the
Company by Stockholder, the number of Shares listed in Exhibit A set forth
opposite the Stockholders Name shall be adjusted appropriately and this
Agreement and the obligations hereunder shall attach to any additional shares
of Company Common Stock or other voting securities of the Company issued to or
acquired by such Stockholder.
15. STOCKHOLDER CAPACITY. No person executing this Agreement
who is or becomes during the term hereof a director of Company makes any
agreement or understanding herein in his or her capacity as a director. Each
Stockholder is executing this Agreement solely in his or her capacity as the
record and beneficial owner of his or her Shares. The parties hereto
acknowledge and agree that none of the provisions herein set forth shall be
deemed to restrict or limit any fiduciary duty, the undersigned or any partner
of the undersigned or any of their respective affiliates may have as a member
of the Board of Directors or executive officer of Company, or as counsel to
Company; provided, that no such duty shall excuse any Stockholder from his or
her obligation as a stockholder of Company to vote the Shares, to the extent
that they may be so voted, as herein provided and to otherwise comply with the
terms and conditions of this Agreement.
16. ENFORCEMENT. Each Stockholder agrees that irreparable
damage would occur and that AMRE and Merger Sub would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms
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<PAGE> 88
or were otherwise breached. It is accordingly agreed that AMRE and Merger Sub
shall be entitled to an injunction or injunctions to prevent breaches or
threatened breaches by any Stockholder or Company of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which AMRE and/or Merger Sub may
be entitled at law or in equity. In addition, each of the parties hereto
irrevocably and unconditionally (i) consents to be subject to the personal
jurisdiction of any federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat the personal jurisdiction of such courts by
motion or other request for leave from any such court, (iii) agrees that such
party shall not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a federal court
sitting in the State of Delaware or a Delaware state court and (iv) that
service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service, and that service made pursuant to (iv)
above shall have the same legal force and effect as if served upon such party
personally within the State of Delaware.
17. APPROVAL OF MERGER. Each of the Stockholders agree that,
by execution and delivery of this Agreement, such Stockholder consents to and
approves the Merger to the same extent and with the same force and effect as if
such Stockholder had consented to, approved and voted for the Merger at a
formal meeting of the Company's stockholders duly called and held for the
purpose of acting upon the proposal to approve the Merger; provided that this
section shall not constitute a consent or approval of any modification or
amendment to the Merger Agreement that would reduce the Exchange Ratio.
IN WITNESS WHEREOF, AMRE has caused this Agreement to be executed
by its duly authorized officer and the Stockholder has executed this Agreement
as of the date and year first above written.
AMRE, INC.
By:
-----------------------
Name:
----------------------
Title:
---------------------
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<PAGE> 89
STOCKHOLDERS NUMBER OF SHARES
Mark Honigsfeld
- --------------------------- ----------------------
Printed Name
- ---------------------------
Signature
- ---------------------------
Address
- ---------------------------
Murray Gross
- --------------------------- ----------------------
Printed Name
- ---------------------------
Signature
- ---------------------------
Address
- ---------------------------
Deedee Honigsfeld
- --------------------------- ----------------------
Printed Name
- ---------------------------
Signature
- ---------------------------
Address
- ---------------------------
11
