<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
----------- -------------
Commission File Number 1-5091
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FUQUA ENTERPRISES, INC.
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(Exact name of registrant, as specified in its charter)
DELAWARE 13-1988043
------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE ATLANTIC CENTER, SUITE 5000
1201 W. PEACHTREE STREET, N.W., ATLANTA, GEORGIA 30309
------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 404-815-2000
------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of September 30, 1995,
there were 3,834,169 shares of Common Stock, Par Value $2.50 per share,
outstanding.
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FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
- September 30, 1995 and December 31, 1994
Condensed Consolidated Statements of Income
- for three months and nine months ended September 30, 1995 and
September 30, 1994
Condensed Consolidated Statements of Cash Flows
- for nine months ended September 30, 1995 and September 30,
1994
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Forms 8-K
(i)
<PAGE> 3
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,652 $ 4,335
Investments available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . 8,465 9,884
Receivables, less allowance of $450 . . . . . . . . . . . . . . . . . . . . . 17,095 16,220
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,885 20,543
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970 333
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970 1,432
-------------------------
Total Non-Insurance Current Assets . . . . . . . . . . . . . . . . . . . . 56,037 52,747
-------------------------
Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 27,967 27,529
Less Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (12,898) (12,561)
-------------------------
Net Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . 15,069 14,968
-------------------------
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 234
-------------------------
Total Assets of Continuing Operations . . . . . . . . . . . . . . . . . . . . . 71,253 67,949
Total Assets of Discontinued Operations (Detail below) . . . . . . . . . . . . 99,617 90,777
-------------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $170,870 $158,726
=========================
Assets of Discontinued Operations:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 59,408 $ 57,497
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 9,708 6,111
Premiums receivable, less allowance of $200 . . . . . . . . . . . . . . . . . 9,112 2,972
Reinsurance receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,884 13,039
Deferred policy acquisition costs . . . . . . . . . . . . . . . . . . . . . . 2,331 1,429
Deferred and prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . 665 1,917
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,570 1,749
Intangibles, principally goodwill, less amortization of $686 (1994, $562) . . 5,939 6,063
-------------------------
Total Assets of Discontinued Operations . . . . . . . . . . . . . . . . . $ 99,617 $ 90,777
=========================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
1
<PAGE> 4
CONDENSED CONSOLIDATED BALANCE SHEETS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 11,750
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . 6,282 8,490
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (766) 1,014
Long-term liabilities due within one year . . . . . . . . . . . . . . . . . . . 257 1,026
-------------------------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 5,773 22,280
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644 588
Long-term Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,039 14,445
-------------------------
Total Liabilities of Continuing Operations . . . . . . . . . . . . . . . . 34,456 37,313
Total Liabilities of Discontinued Operations (Detail below) . . . . . . . . 64,097 57,091
-------------------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,553 94,404
-------------------------
Stockholders' Equity:
Preference Stock, $1 par value:
authorized 8,000,000 shares; none issued . . . . . . . . . . . . . . . . . - -
Common Stock, $2.50 par value:
authorized 20,000,000 shares; issued
3,904,670 shares (1994, 3,831,670) . . . . . . . . . . . . . . . . . . . . 9,759 9,579
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . 15,140 14,374
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,122 44,188
Unrealized gains (losses) on investments . . . . . . . . . . . . . . . . . . 671 (2,469)
Treasury stock, at cost: 70,501 shares (1994, 69,246) . . . . . . . . . . . . (1,375) (1,350)
-------------------------
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . 72,317 64,322
-------------------------
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . $170,870 $158,726
=========================
Liabilities of Discontinued Operations:
Unpaid losses and loss adjustment expenses . . . . . . . . . . . . . . . . . $ 38,738 $ 37,826
Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,147 13,476
Commissions and other payables . . . . . . . . . . . . . . . . . . . . . . . 4,787 4,128
Reinsurance payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,648 1,451
Federal income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (223) 210
-------------------------
Total Liabilities of Discontinued Operations . . . . . . . . . . . . . . $ 64,097 $ 57,091
-------------------------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE> 5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(In Thousands, Except Per Share Data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Net Sales . . . . . . . . . . . . . . . . . . . . . . . $31,614 $32,310 $96,186 $95,615
Investment income . . . . . . . . . . . . . . . . . . . 210 122 576 306
-----------------------------------------------------
Total revenues . . . . . . . . . . . . . . . . . . . . 31,824 32,432 96,762 95,921
-----------------------------------------------------
COSTS AND EXPENSES:
Cost of sales . . . . . . . . . . . . . . . . . . . . . 27,185 27,293 83,929 82,318
Selling, general and administrative expenses . . . . . 2,772 2,419 7,823 7,176
Interest expense . . . . . . . . . . . . . . . . . . . 387 227 1,172 609
-----------------------------------------------------
Total costs and expenses . . . . . . . . . . . . . . . 30,344 29,939 92,924 90,103
-----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . 1,480 2,493 3,838 5,818
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . 483 393 1,340 1,619
-----------------------------------------------------
INCOME FROM CONTINUING OPERATIONS . . . . . . . . . . . . 997 2,100 2,498 4,199
-----------------------------------------------------
DISCONTINUED OPERATIONS:
Income from discontinued operations to
September 30, 1995 (less income taxes) . . . . . . . 679 763 2,444 2,585
Loss on disposal of discontinued operations
including earnings during the phase out period
(less income taxes) . . . . . . . . . . . . . . . . . (1,006) 0 (1,006) 0
-----------------------------------------------------
(327) 763 1,438 2,585
-----------------------------------------------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . $ 670 $ 2,863 $ 3,936 $ 6,784
=====================================================
PER SHARE:
Income from Continuing Operations . . . . . . . . . . . $ .26 $ .54 $ .65 $ 1.09
=====================================================
Net Income . . . . . . . . . . . . . . . . . . . . . . $ .17 $ .74 $ 1.02 $ 1.76
=====================================================
Common shares and equivalents . . . . . . . . . . . . . . 3,870 3,861 3,864 3,862
=====================================================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR NINE MONTHS ENDED
SEPTEMBER 30,
-------------
1995 1994
--------- -------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Total from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . $ (1,613) $ 396
Total from Discontinued Operations . . . . . . . . . . . . . . . . . . . . . 2,505 4,952
------------------------
Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . 892 5,348
------------------------
INVESTING ACTIVITIES:
Continuing Operations:
Sales of available for sale investments . . . . . . . . . . . . . . . . . . 2,625 94
Purchases of available for sale investments . . . . . . . . . . . . . . . . (375) (3,575)
Purchases of property, plant and equipment, net . . . . . . . . . . . . . . (1,585) (2,341)
------------------------
Total from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . 665 (5,822)
Total from Discontinued Operations . . . . . . . . . . . . . . . . . . . . . 3,792 (3,530)
------------------------
Net Cash Provided by (Used in) Investing Activities . . . . . . . . . . . 4,457 (9,352)
------------------------
FINANCING ACTIVITIES:
Continuing Operations:
Net increase (decrease) in notes payable and current maturities . . . . . (13,250) 4,750
Payment of long-term liabilities . . . . . . . . . . . . . . . . . . . . . (449) (654)
Additional long-term liabilities . . . . . . . . . . . . . . . . . . . . . 14,043 1,500
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . 946 174
Acquired shares for treasury . . . . . . . . . . . . . . . . . . . . . . . (25) (190)
------------------------
Total from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . 1,265 5,580
Total from Discontinued Operations . . . . . . . . . . . . . . . . . . . . . (2,700) (3,800)
------------------------
Net Cash Provided by (Used in) Financing Activities . . . . . . . . . . . (1,435) 1,780
------------------------
Increase in Cash and Cash Equivalents:
Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 154
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,597 (2,378)
Cash and Cash Equivalents, Beginning of Year:
Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,335 4,812
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,111 8,315
------------------------
Cash and Cash Equivalents, End of Period:
Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,652 $ 4,966
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,708 $ 5,937
========================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 7
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
1. CORPORATE DEVELOPMENT ACTIVITIES:
In September, 1995, Vista Resources, Inc. changed its name to Fuqua
Enterprises, Inc. ("Fuqua").
In October, 1995, Fuqua agreed to sell its subsidiary, American Southern
Insurance Company, for $34,000,000. The transaction which is expected to close
in December 1995 is estimated to result in a pre-tax accounting loss of
$3,150,000 less estimated earnings (net of taxes) during the phase out period
of $947,000 and less estimated tax benefit of $1,197,000.
The results of operations of American Southern and its subsidiaries through
September 30, 1995 have been reclassified as discontinued operations and are as
follows:
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(Dollars in thousands) 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . $ 11,223 $ 10,202 $ 32,673 $ 30,346
Costs and expenses . . . . . . . . . . . . . . . 10,343 9,254 29,487 26,940
---------------------------------------------------
Income before income taxes . . . . . . . . . . . 880 948 3,186 3,406
Income taxes . . . . . . . . . . . . . . . . . . 201 185 742 821
---------------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . $ 679 $ 763 $ 2,444 $ 2,585
===================================================
</TABLE>
On November 8, 1995, Fuqua acquired Basic American Medical Products, Inc.
("Basic American"). The acquisition price consisted of 600,000 shares of
Fuqua's common stock and $2,500,000 in cash. At December 31, 1994, Basic
American's historical cost basis total assets were $14,418,000 and total
liabilities were $7,107,000 and its 1994 revenues and net income were
$23,252,000 and $1,038,000, respectively. Basic American is a manufacturer and
distributor of health care equipment for the acute, long-term and home health
care markets.
2. PER SHARE CALCULATIONS:
Per share calculations are based on the average number of shares outstanding
plus common stock equivalents. Common stock equivalents include the effect of
options granted to key employees under Fuqua's stock option plan. Fully diluted
per share calculations are not significantly different from those reported.
3. MANDATORY CHANGE IN ACCOUNTING FOR INVESTMENTS:
Effective January 1, 1994, Fuqua adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"). In accordance with SFAS 115, prior period financial
statements have not been restated to reflect the change in accounting
principle. The cumulative effect on net income as of January 1, 1994 of
adopting SFAS 115 for investments which previously were classified as held to
maturity and are now classified as trading securities was immaterial. The
balance of stockholders' equity as of January 1, 1994 was increased by
$1,238,000, net of income taxes, to reflect the net unrealized gains on
investments previously classified as held to maturity which are now classified
as available for sale.
5
<PAGE> 8
4. INVENTORIES:
Inventories consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(Dollars in thousands) 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 2,090 $ 4,016
Work in progress 13,258 9,213
Raw materials and supplies 8,537 7,314
------- -------
$23,885 $20,543
======= =======
</TABLE>
5. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
(Dollars in thousands) 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest payments $1,491 $ 748
------ -------
Income tax payments $2,893 $ 3,201
------ -------
</TABLE>
6. CAPITAL STOCK:
During the third quarter of 1995, options were issued for 150,000 shares at
an exercise price of $20.50 per share.
During the second and third quarters of 1995, options, for 72,000 shares
were exercised at $8.50 per share. There were no options exercised in the first
quarter of 1995.
7. DEBT:
On November 6, 1995, Fuqua put into place a Revolving Credit Facility
provided by three banks (the "Facility"). The Facility is for up to
$60,000,000 for a three year period to be used for working capital and to
provide funds for corporate development activities. The interest expense under
the Facility is based on matrix pricing which ranges from LIBOR plus 40 to
LIBOR plus 70 basis points, plus a charge on the unused commitment of from 12.5
to 18.75 basis points. The Facility replaced, at more favorable rates,
borrowings of approximately $16,000,000 including short-term borrowings of
$14,043,000 at September 30, 1995 which, as a result, have been classified as
long-term debt. The Facility includes normal and customary restrictive
covenants regarding funded debt to capital, funded debt to cash flow, interest
coverage, and dividend payments.
8. ADJUSTMENT OF TAX RESERVES:
During the third quarter of 1994, Fuqua made a favorable adjustment for
amounts that were no longer considered necessary for loss contingencies for
income taxes resulting in a reduction in income tax expense of $540,000 ($.14
per share).
_______________________
The unaudited condensed consolidated financial statements reflect all
adjustments (consisting of normal recurring accruals) which are, in the opinion
of management, necessary for a fair statement of the results for the interim
periods. It is suggested that these unaudited condensed consolidated financial
statements be read in conjunction with the consolidated financial statements
and notes thereto included in Fuqua's 1994 Annual Report on Form 10-K.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CORPORATE DEVELOPMENT:
In September 1995, Vista Resources, Inc. changed its name to Fuqua
Enterprises, Inc. ("Fuqua").
In October 1995, Fuqua agreed to sell its subsidiary, American Southern
Insurance Company ("American Southern"), for $34,000,000. The transaction,
which is expected to close in December 1995, is expected to result in an
accounting loss of $1,006,000 which has been reduced by earnings during the
phase out period and applicable taxes. The results of operations of American
Southern through September 1995 have been reclassified as discontinued
operations. See Note 1 to Notes to Condensed Consolidated Financial Statements
in this Form 10-Q for further discussion regarding discontinued operations.
On November 8, 1995, Fuqua acquired Basic American Medical Products, Inc.
("Basic American"). The acquisition price consisted of 600,000 shares of Fuqua
common stock and $2,500,000 in cash. At December 31, 1994, Basic American's
historical cost basis total assets were $14,418,000 and total liabilities were
$7,107,000 and its 1994 revenues and net income were $23,252,000 and
$1,038,000, respectively. Basic American is a manufacturer and distributor of
health care equipment for the acute, long-term and home health care markets.
CONTINUING OPERATIONS:
Net sales for the third quarter of 1995 were approximately 2% lower than the
third quarter of 1994 and for the first nine months were approximately 1.0%
higher than the comparable period of 1994. These comparisons reflect volume
declines in shoe and garment leather as a result of weak retail demand. Sales
to customers in foreign countries remained stable at approximately 30% of total
sales for the first nine months of 1995 as compared to the comparable period of
1994.
The gross profit margin for the third quarter of 1995 was 14.0% (1994,
15.5%) and for the first nine months 12.7% (1994, 13.9%). The decline in
margins in 1995 resulted from the decrease in volume of higher margin shoe
leather as compared to the same period of 1994.
Selling, general and administrative expenses were $647,000 (9%) higher for
the nine months and $353,000 (14.6%) higher for the third quarter as compared
to 1994. These increases resulted principally from higher commissions related
to foreign sales.
Trade receivables were $17,095,000 at September 30, 1995, which represents
an increase of 5.4% when compared to $16,220,000 at December 31, 1994 due
principally to increased foreign sales and seasonal factors. Inventories were
$23,885,000 at September 30, 1995 as compared to $20,543,000 at December 31,
1994. This increase in inventories of 16.2% arose from new product start up
and delivery rescheduling by customers in 1995.
Capital expenditures in the first nine months of 1995 were $1,440,000; it is
estimated that capital expenditures for the full year will be approximately
$2,000,000 excluding approximately $1,680,000 of expenditures for environmental
facilities and equipment. Depreciation expense in the first nine months of
1995 was $1,329,000 as compared to $1,304,000 for the first nine months of
1994.
Investment income in the first nine months of 1995 was $576,000, as compared
to $306,000 in 1994. For the third quarter of 1995, investment income was
$210,000, compared to $122,000 in the third quarter of 1994.
Interest expense for the first nine months increased from $609,000 in 1994
to $1,172,000 in 1995; in the third quarter interest expense increased from
$227,000 in 1994 to $387,000 in 1995, reflecting the additional borrowings to
finance higher levels of inventory.
In the first quarter of 1994, Fuqua adopted Statement of Financial
Accounting Standard No. 115 ("SFAS 115"), which changed the accounting and
reporting for investments in certain debt and equity securities. The
cumulative effect of adopting SFAS 115 was to increase equity by $1,238,000 as
of January 1, 1994 for the unrealized gains,
7
<PAGE> 10
net of tax, on investments previously classified as held to maturity which are
now classified as available for sale. The cumulative effect on net income as of
January 1, 1994 from investments which were classified as held to maturity and
are now classified as trading securities was immaterial.
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" ("SFAS 121"). SFAS 121 requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances based on future expected cash flows indicate
that the carrying amount may not be recoverable. SFAS 121 is effective for
financial statements for fiscal years beginning after December 15, 1995. Upon
adoption, Fuqua does not believe that SFAS 121 will have a material impact on
its consolidated financial statements.
Fuqua's financial statements are recorded on the basis of historical cost.
While it is difficult to measure the impact of inflation, management believes
that the effects of inflation on Fuqua have not been significant. To the
extent that inflationary pressures have an adverse effect through higher raw
material and asset replacement costs, Fuqua attempts to minimize these effects
through cost reductions and productivity improvements, as well as price
increases.
LIQUIDITY:
At September 30, 1995, Fuqua had cash and marketable securities of
$13,117,000 as compared to $14,219,000 at December 31, 1994. The current ratio
was 9.7 to 1.0 at September 30, 1995 as compared to 2.4 to 1.0 at December 31,
1994. The improvement in the current ratio at September 30, 1995 results from
replacing $14,043,000 of short-term debt with the new Revolving Credit
Facility.
Fuqua put into place a Revolving Credit Facility for $60,000,000 for a three
year period to be used to replace existing working capital borrowings and to
provide funds for corporate development activities. The Facility replaced, at
more favorable rates, borrowings of $16,000,000. As more fully discussed in
Note 7 to Notes to Condensed Consolidated Financial Statements in this Form
10-Q, the Facility includes normal and customary restrictive covenants and
limits on Fuqua's ability to pay dividends.
Management believes that Fuqua and its subsidiaries have adequate liquidity
and borrowing capacity to meet their financial obligations and operational
needs.
8
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
<TABLE>
<CAPTION>
Designation
of Exhibit in
This Form 10-Q Description of Exhibits
- -------------- -----------------------
<S> <C>
2(a) Agreement and Plan of Merger By and Among Basic American Medical
Products, Inc., BA Acquisition Corporation and Fuqua and with
respect to Articles 7, 12 and 13 thereof, Gene J. Minotto dated
as of October 6, 1995. (Fuqua agrees to furnish a copy of any
omitted schedule to the Commission upon request.)
2(b) Stock Purchase Agreement between Atlantic American Corporation
and Fuqua dated as of October 16, 1995. (Fuqua agrees to
furnish a copy of any omitted schedule to the Commission upon
request.)
3 Bylaws of Fuqua, as amended.
10(a) Registration Rights Agreement between Fuqua and Gene J. Minotto
dated November 8, 1995.
10(b) Revolving Credit Agreement between SunTrust Bank, Atlanta,
Wachovia Bank of Georgia, and Fleet Bank of Maine and Fuqua,
dated November 6, 1995.
11 Earnings per share calculations.
27 Financial Data Schedules (for SEC use only).
</TABLE>
(b) Reports on Form 8-K
During the three months ended September 30, 1995, two reports on Form
8-K were filed:
The Form 8-K report dated September 7, 1995 related to the
change of Fuqua's corporate name from Vista Resources, Inc. to
Fuqua Enterprises, Inc.
The Form 8-K report dated October 6, 1995 reported the
execution of an agreement to acquire Basic American Medical
Products, Inc. and the agreement for a $60,000,000 revolving
credit facility led by SunTrust Bank, Atlanta to provide funds
for working capital and acquisitions.
9
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FUQUA ENTERPRISES, INC.
REGISTRANT
/s/ Brady W. Mullinax, Jr.
-----------------------------------
Brady W. Mullinax, Jr., Vice
President-Finance, Treasurer and
Chief Financial Officer (Principal
Financial and Accounting Officer
and Executive Officer duly
authorized to sign on behalf of
the registrant)
Date: November 10, 1995
10
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Designation
of Exhibit in
This Form 10-Q Description of Exhibits
- -------------- -----------------------
<S> <C>
2(a) Agreement and Plan of Merger By and Among Basic American Medical Products, Inc., BA
Acquisition Corporation and Fuqua and with respect to Articles 7, 12 and 13 thereof,
Gene J. Minotto dated as of October 6, 1995.
2(b) Stock Purchase Agreement between Atlantic American Corporation and Fuqua dated as of
October 16, 1995. (Fuqua agrees to furnish a copy of any schedule omitted to the
Commission upon request.)
3 Bylaws of Fuqua, as amended.
10 Registration Rights Agreement between Fuqua and Gene J. Minotto dated November 8, 1995.
10(a) Revolving Credit Agreement between SunTrust Bank, Atlanta, Wachovia Bank of Georgia,
and Fleet Bank of Maine and Fuqua, dated November 6, 1995.
11 Earnings per share calculations.
27 Financial Data Schedules (for SEC use only).
</TABLE>
<PAGE> 1
EXHIBIT 2(a)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BASIC AMERICAN MEDICAL PRODUCTS, INC.,
BA ACQUISITION CORPORATION
AND
FUQUA ENTERPRISES, INC.
AND
WITH RESPECT TO ARTICLES 7, 12 AND 13 HEREOF,
GENE J. MINOTTO
DATED AS OF OCTOBER 6, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 - TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 - MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Shares Held by the Company or Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Dissenting Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4 - EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Rights of Former Company Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.6 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.7 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.8 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.9 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.11 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.12 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.13 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.14 Employment and Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.16 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.17 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.18 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.20 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.21 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.22 Accounting, Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 Authority of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Accounting, Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES OF MINOTTO. . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1 Ownership of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2 Authorization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 No Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Litigation Relating to the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.5 Agreement to Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.6 Securities Act Covenants and Representations . . . . . . . . . . . . . . . . . . . . . . . . 21
7.7 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 8 - CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Affirmative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Negative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.3 Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 9 - ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Proxy Statement; Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.2 Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Applications; Antitrust Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 Filings with State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.9 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.10 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . . . . . . . . . . . . . . . . 27
10.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 Conditions to Obligations of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3 Conditions to Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 11 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 12 - SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.2 Obligation of Minotto to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.3 Obligation of Parent to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.4 Conditions of Indemnification with Respect to Third Party Claims . . . . . . . . . . . . . . 31
12.5 Limitations on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.6 Payment of Indemnification Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.7 Reduction for Certain Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.8 Section 16 Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.9 Subrogation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 13 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
13.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.12 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.13 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of OCTOBER 6, 1995, by and among BASIC AMERICAN MEDICAL
PRODUCTS, INC. (the "Company"), a Georgia corporation having its principal
office located in Norcross, Georgia; BA ACQUISITION CORPORATION ("Sub"), a
Georgia corporation having its principal office located in Atlanta, Georgia;
and FUQUA ENTERPRISES, INC. ("Parent"), a Delaware corporation having its
principal office located in Atlanta, Georgia and with respect to Articles 7, 12
and 13 hereof, GENE J. MINOTTO ("Minotto").
PREAMBLE
The Boards of Directors of the Company, Sub and Parent are of the
opinion that the transactions described herein are in the best interests of the
parties and their respective shareholders. This Agreement provides for the
acquisition of the Company by Parent pursuant to the merger of Sub with and
into the Company. At the effective time of such merger, the outstanding shares
of the capital stock of the Company shall be converted into the right to
receive the consideration specified herein. As a result, Minotto will become a
stockholder of Parent and the Company shall continue to conduct its business
and operations as a wholly owned subsidiary of Parent. The transactions
described in this Agreement are subject to the approval of the shareholders of
the Company, and the satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this Agreement that the
Merger for federal income tax purposes shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code.
Concurrently with the execution and delivery of this Agreement, as
a condition and inducement of Parent's willingness to enter into this
Agreement, Parent and Minotto have agreed to enter into a registration rights
agreement in the form of Exhibit 1 (the "Registration Rights Agreement"),
pursuant to which Parent will provide certain registration rights with respect
to certain shares of Parent Common Stock to Minotto.
Certain terms used in this Agreement are defined in Section 13.1
of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, Sub shall be merged with and into the Company
in accordance with the provisions of Section 14-2-1101 et. seq. of the GBCC and
with the effect provided in Section 14-2-1106 of the GBCC (the "Merger"). The
Company shall be the Surviving Corporation resulting from the Merger and shall
become a wholly owned Subsidiary of Parent and shall continue to be governed by
the Laws of the State of Georgia. The Merger shall be consummated pursuant to
the terms of this Agreement, which has been approved and adopted by the
respective Boards of Directors of the Company, Sub and Parent.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at
9:00 A.M. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 9:00 A.M.), or at such
other time as the Parties, acting through their chief executive officers or
chief financial officers, may mutually agree. The place of Closing shall be at
the offices of Alston & Bird, Atlanta, Georgia, or such other place as may be
mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Certificate of Merger reflecting the Merger shall become effective
with the Secretary of State of the State of Georgia (the "Effective Time").
The Certificate of Merger will contain the undertaking required by Section
14-2-1105.1 of the GBCC. Subject to the terms and conditions hereof, unless
<PAGE> 6
otherwise mutually agreed upon in writing by the chief executive officers or
chief financial officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on the first business day
following the last to occur of (i) the effective date (including expiration of
any applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the date on which the shareholders of the Company approve this Agreement to the
extent such approval is required by applicable Law; or such later date within
30 days thereof as may be specified by Parent.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Articles of Incorporation of Sub in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Sub in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Sub in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of Sub in office immediately prior to
the Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and
after the Effective Time in accordance with the Bylaws of the Surviving
Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, the Company, Sub or the shareholders of any of
the foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of Parent Capital Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of Sub Common Stock issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into one
share of common stock, $.01 par value per share, of the Surviving Corporation.
(c) Each share of Company Common Stock (excluding shares held by
the Company or any Parent Company, in each case other than in a fiduciary
capacity or as a result of debts previously contracted, and excluding shares
held by shareholders who perfect their statutory dissenters' rights as provided
in Section 3.4 of this Agreement) issued and outstanding at the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for the
right to receive the following: (A) with respect to Minotto, 600,000 shares of
Parent Common Stock and $1,329,980 in cash, and (B) with respect to the
Minority Shareholders, $178.03 in cash for each share of Company Common Stock
held by such Minority Shareholder (collectively, the "Merger Consideration").
3.2 ANTI-DILUTION PROVISIONS. In the event the Company or
Parent changes the number of shares of Company Common Stock or Parent Common
Stock, respectively, issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or
similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Merger Consideration shall be proportionately
adjusted.
- 2 -
<PAGE> 7
3.3 SHARES HELD BY THE COMPANY OR PARENT. Each of the shares of
Company Common Stock held by the Company or by any Parent Company, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS. Any holder of shares of Company
Common Stock who perfects his dissenters' rights in accordance with and as
contemplated by Section 14-2-1301 et. seq. of the GBCC shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, that no such payment shall be made to any
dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the GBCC and surrendered to the
Company the certificate or certificates representing the shares for which
payment is being made. In the event that after the Effective Time a dissenting
shareholder of the Company fails to perfect, or effectively withdraws or loses,
his right to appraisal and of payment for his shares, Parent shall issue and
deliver the consideration to which such holder of shares of Company Common
Stock is entitled under this Article 3 (without interest) upon surrender by
such holder of the certificate or certificates representing shares of Company
Common Stock held by him.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. At the Closing, each holder of shares
of Company Common Stock (other than shares to be canceled pursuant to Section
3.3 of this Agreement or as to which statutory dissenters' rights have been
perfected as provided in Section 3.4 of this Agreement) issued and outstanding
at the Effective Time shall surrender the certificate or certificates
representing such shares to Parent and shall promptly upon surrender thereof
receive in exchange therefor the consideration provided in Section 3.1 of this
Agreement, together with all undelivered dividends or distributions in respect
of such shares (without interest thereon) pursuant to Section 4.2 of this
Agreement. Parent shall not be obligated to deliver the consideration to which
any former holder of Company Common Stock is entitled as a result of the Merger
until such holder surrenders his certificate or certificates representing the
shares of Company Common Stock for exchange as provided in this Section 4.1 and
delivers an executed Internal Revenue Service Form W-9. The certificate or
certificates of Company Common Stock so surrendered shall be duly endorsed as
Parent may require and be accompanied by such other evidence of ownership as
Parent may reasonably require. Any other provision of this Agreement
notwithstanding, neither Parent nor the Surviving Corporation shall be liable
to a holder of Company Common Stock for any amounts paid or property delivered
in good faith to a public official pursuant to any applicable abandoned
property Law.
4.2 RIGHTS OF FORMER COMPANY SHAREHOLDERS. At the Effective
Time, the stock transfer books of the Company shall be closed as to holders of
Company Common Stock immediately prior to the Effective Time and no transfer of
Company Common Stock by any such holder shall thereafter be made or recognized.
Until surrendered for exchange in accordance with the provisions of Section 4.1
of this Agreement, each certificate theretofore representing shares of Company
Common Stock (other than shares to be canceled pursuant to Sections 3.3 and 3.4
of this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive the consideration provided in Section 3.1 of
this Agreement in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by the Company in respect of such shares of Company Common Stock in accordance
with the terms of this Agreement and which remain unpaid at the Effective Time.
However, upon surrender of such Company Common Stock certificate, the
applicable Merger Consideration shall be delivered and paid with respect to
each share represented by such certificate.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
5.1 ORGANIZATION, STANDING, AND POWER. The Company is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Georgia, and has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its
Assets. The Company is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) The Company has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of the Company, subject to the approval of this Agreement by the holders
of a majority of the outstanding Company Common Stock, which is the only
shareholder vote required for approval of this Agreement and consummation of
the Merger by the Company. Subject to such requisite shareholder approval,
this Agreement represents a legal, valid, and binding obligation of the
Company, enforceable against the Company in accordance with its terms (except
in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
by the Company, nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of the
Company's Articles of Incorporation or Bylaws, or (ii) constitute or result in
a Default under, or require any Consent pursuant to, or result in the creation
of any Lien on any Asset of the Company under, any Contract or Permit of the
Company , where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company, or, (iii) subject to receipt of the requisite approvals
referred to in Section 10.1(b) of this Agreement, violate any Law or Order
applicable to the Company or any of its respective Assets.
(c) Other than in connection or compliance with the
provisions of the GBCC or under the HSR Act, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
the Company of the Merger and the other transactions contemplated in this
Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of the Company consists
of (i) 5,000,000 shares of Company Common Stock, of which 89,872 shares are
issued and outstanding as of the date of this Agreement and not more than
89,872 shares will be issued and outstanding at the Effective Time, and (ii) no
shares of preferred stock. All of the issued and outstanding shares of capital
stock of the Company are duly and validly issued and outstanding and are fully
paid and nonassessable under the GBCC. None of the outstanding shares of
capital stock of the Company has been issued in violation of any preemptive
rights of the current or past shareholders of the Company.
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<PAGE> 9
(b) Except as set forth in Section 5.3(a) of this
Agreement, or as disclosed in Section 5.3 of the Company Disclosure Memorandum,
there are no shares of capital stock or other equity securities of the Company
outstanding and no outstanding Rights relating to the capital stock of the
Company.
5.4 SUBSIDIARIES. The Company does not have any Subsidiaries.
5.5 FINANCIAL STATEMENTS. The Company has included in Section
5.5 of the Company Disclosure Memorandum copies of all the Company Financial
Statements that have been prepared for periods ended prior to the date hereof
and will deliver to Parent copies of all the Company Financial Statements
prepared subsequent to the date hereof. The Company Financial Statements (as
of the dates thereof and for the periods covered thereby) (i) are or, if dated
after the date of this Agreement, will be in accordance with the books and
records of the Company , which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may be, maintained
in accordance with good business practices, and (ii) present or will present,
as the case may be, fairly the financial position of the Company as of the
dates indicated and the results of operations, changes in shareholders'
equity, and cash flows of the Company for the periods indicated, in accordance
with GAAP (subject to any exceptions as to consistency specified therein or as
may be indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments that are not material in
amount or effect).
5.6 INVENTORY. Except as disclosed in Section 5.6 of the
Company Disclosure Memorandum, the inventories of the Company are in good
condition, conform in all respects with applicable specifications and
warranties, are not obsolete and are saleable in the ordinary course of
business and at values not less than the recorded cost plus an amount adequate
to cover normal selling and disposition costs. The value of all items of
slow-moving, excessive, redundant, or obsolete inventory and of inventory of
below standard quality or which cannot be returned to the manufacturer thereof
has been written down to net realizable value or adequate reserves have been
provided therefore, and since December 31, 1994, has been accrued on the books
of the Company in the ordinary course of business consistent with past practice
and in accordance with GAAP.
5.7 ACCOUNTS RECEIVABLE. The accounts receivable shown on the
Company's balance sheet as of December 31, 1994, and all accounts receivable
created since December 31, 1994 through the Closing Date, represent and will
represent valid obligations owing to the Company and are collectible or
realizable by the Company, subject to the reserve for doubtful accounts
disclosed in the Company Financial Statements, and with respect to accounts
receivable created since December 31, 1994 as accrued on the books of the
Company in the ordinary course of business consistent with past practice and in
accordance with GAAP since December 31, 1994.
5.8 ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not
have any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company, except Liabilities which
are accrued or reserved against in the balance sheets of the Company as of
December 31, 1994, included in the Company Financial Statements delivered prior
to the date of this Agreement or reflected in the notes thereto. The Company
has not incurred or paid any Liability since December 31, 1994, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
5.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1994, except as disclosed in the Company Financial Statements delivered prior
to the date of this Agreement or as disclosed in Section 5.9 of the Company
Disclosure Memorandum, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company, and (ii) the Company has
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of the Company provided in Article 7 of this
Agreement.
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<PAGE> 10
5.10 TAX MATTERS.
(a) All Tax returns required to be filed by or on behalf
of the Company have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1994, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and all returns filed are complete
and accurate. All Taxes shown on filed returns have been paid. As of the date
of this Agreement, there is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on the Company, except as reserved against in the Company
Financial Statements delivered prior to the date of this Agreement or as
disclosed in Section 5.10 of the Company Disclosure Memorandum. All Taxes and
other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) The Company has not executed an extension or waiver
of any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due
for the Company for the period or periods through and including the date of the
respective Company Financial Statements has been made and is reflected on such
Company Financial Statements.
(d) Deferred Taxes of the Company have been provided for
in accordance with GAAP.
(e) The Company is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code.
5.11 ASSETS. Except as disclosed in Section 5.11 of the Company
Disclosure Memorandum or as disclosed or reserved against in the Company
Financial Statements delivered prior to the date of this Agreement, the Company
has good and marketable title, free and clear of all Liens, to all of its
respective Assets. All tangible properties used in the business of the Company
are in good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with the Company's past practices. All
Assets which are material to the Company's business, held under leases or
subleases by the Company, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The
Company currently maintains adequate insurance with respect to its businesses.
The Company has not received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no claims pending under
such policies of insurance and no notices have been given by the Company under
such policies. The Assets of the Company include all assets required to
operate the business of the Company as presently conducted.
5.12 ENVIRONMENTAL. Except as disclosed in Section 5.12 of the
Company Disclosure Memorandum,
(a) There is no Environmental Litigation (or any Litigation
against any Person whose liability, or any portion thereof, for Environmental
Matters or under any Environmental Laws the Company has or may have retained or
assumed contractually or by operation of law) pending or threatened with
respect to (i) the ownership, use, condition or operation of the business, the
Real Property or any other Asset of the Company or any Asset formerly held for
use or sale by the Company or any of its predecessors or any of its former
Subsidiaries, or (ii) any
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<PAGE> 11
violation or alleged violation of or liability or alleged liability under any
Environmental Law or any Order related to Environmental Matters. There are no
existing, and to the Knowledge of the Company there have not been, violations
of (i) any Environmental Law, or (ii) any Order related to Environmental
Matters, with respect to the ownership, use, condition or operation of the
business, the Real Property or any other Asset of the Company or any Asset
formerly held for use or sale by the Company or any of its predecessors or any
of its former Subsidiaries. There are no present or, to the Knowledge of the
Company past, actions, activities, circumstances, conditions, events or
incidents, including, without limitation, any Environmental Matter, that could
form the basis of (i) any Environmental Litigation against the Company, or (ii)
any Litigation against any Person whose liability (or any portion thereof) for
Environmental Matters or under any Environmental Laws the Company has or may
have retained or assumed contractually or by operation of law. To the
Knowledge of the Company, neither the Company, any of its predecessors or any
of its former Subsidiaries nor anyone known to the Company has used any Assets
or premises of the Company or any of its predecessors or any of its former
Subsidiaries or any part thereof for the handling, treatment, storage, or
disposal of any Hazardous Substances.
(b) No release, discharge, spillage or disposal of any Hazardous
Substances is occurring, or to the Knowledge of the Company has occurred, at
any Assets or Real Property of the Company or any of its predecessors or any of
its former Subsidiaries or any part thereof while or before such Assets or Real
Property or premises were owned, leased, operated, or managed, directly or
indirectly, by the Company.
(c) To the Knowledge of the Company, no soil or water in, under
or adjacent to any Assets or Real Property or premises of the Company or assets
formerly held for use or sale by the Company or any of its predecessors or any
of its former Subsidiaries has been contaminated by any Hazardous Substance
while or before such assets or premises were owned, leased, operated or
managed, directly or indirectly, by the Company or any of its predecessors or
any of its former Subsidiaries.
(d) To the Knowledge of the Company, all waste containing any
Hazardous Substances generated, used, handled, stored, treated or disposed of
(directly or indirectly) by the Company or any of its predecessors or any of
its former Subsidiaries has been released or disposed of in compliance with all
applicable reporting requirements under any Environmental Laws. There is no
Environmental Litigation with respect to any such release or disposal.
(e) All underground tanks and other underground storage
facilities presently or previously located at any Real Property owned, leased,
operated or managed by the Company or any of its predecessors or any of its
former Subsidiaries or any such tanks or facilities located at any Real
Property while such Real Property was owned, leased, operated, or managed by
the Company or any of its predecessors or any of its former Subsidiaries are
listed together with the capacity and contents (former and current) of each
such tank or facility in the Company Disclosure Memorandum. None of such
underground tanks or facilities is leaking or has ever leaked.
(f) All waste, hazardous or otherwise, has been removed from all
Real Property of the Company and its predecessors and its former Subsidiaries.
(g) The Company and each of its predecessors and each of its
former Subsidiaries have complied with all applicable reporting requirements
under all Environmental Laws concerning the disposal or release of Hazardous
Substances and neither the Company nor any of its predecessors or any of its
former Subsidiaries have made any such reports concerning any Real Property of
the Company or concerning the operations or activities of the Company or any of
its predecessors or any of its former Subsidiaries.
(h) No building or other Improvement or any Real Property owned,
leased, operated or managed by the Company contains any asbestos-containing
materials.
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<PAGE> 12
(i) Without limiting the generality of any of the foregoing, (i)
all on-site and off-site locations where the Company or any of its predecessors
or any of its former Subsidiaries have stored, disposed or arranged for the
disposal of Hazardous Substances are identified in the Company Disclosure
Memorandum and (ii) no polychlorinated biphenyls (PCB's) are used or stored on
or in any Real Property owned, leased, operated or managed by the Company or
any of its predecessors or any of its former Subsidiaries.
(j) The Company Disclosure Memorandum contains a correct and
complete list of all environmental site assessments and other studies relating
to the investigation of the possibility of the presence or existence of any
Environmental Matter with respect to the Company, the business of the Company,
the Assets of the Company or any of the Real Property, and the Company has
previously delivered to Parent a correct and complete copy of each such
assessment and study.
5.13 COMPLIANCE WITH LAWS. The Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Except as disclosed in Section 5.13 of the Company Disclosure Memorandum, the
Company :
(a) is not in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business; and
(b) has not received any notification or communication from any
agency or department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that the Company is not in
compliance with any of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, (ii) threatening to revoke any Permits, or (iii)
requiring the Company to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any Board resolution or similar undertaking.
5.14 EMPLOYMENT AND LABOR MATTERS.
(a) Section 5.14 of the Company Disclosure Memorandum contains a
correct and complete list of (i) all employees whose direct annual compensation
exceeds $80,000 and (ii) the number of employees in each job classification
employed by the Company along with a complete and accurate schedule (the
"Employee Benefits Schedule") of the direct compensation (including, without
limitation, wages, salaries and actual or anticipated bonuses) plus an accurate
description of other benefits paid or provided in the fiscal year ended
December 31, 1994 and to be paid or provided in the current fiscal year.
Section 5.14 of the Company Disclosure Memorandum contains correct and complete
copies of all written personnel policies, rules or procedures and correct and
complete descriptions of all oral personnel policies, rules or procedures of
the Company. Except as disclosed in Section 5.14 of the Company Disclosure
Memorandum, the employment of all employees of the Company is terminable at
will by the Company without any penalty or severance obligation of any kind on
the part of the Company. Other than as disclosed in Section 5.14 of the
Company Disclosure Memorandum, the Company shall not owe any amounts to any of
its employees for any reason whatsoever as of the Closing Date.
(b) Except as and to the extent set forth in Section 5.14 of the
Company Disclosure Memorandum, (i) no attempt to organize any group or all of
the employees of the Company has been made, proposed or threatened; (ii) the
Company is not a party to any union agreement or collective bargaining
agreement or work rules or practices agreed to with any labor organization or
employee association applicable to any employees of the Company; (iii) the
Company has not had any Equal Employment Opportunity Commission charges or
other claims of employment discrimination made against it; (iv) no Wage and
Hour Department investigations have ever been made of the Company; (v) no labor
strike, dispute, slowdown, stoppage or lockout is pending or threatened against
or affecting
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<PAGE> 13
the Company, its business or its assets and during the past five years there
has not been any such action; (vi) no union claims to represent any of the
employees of the Company; (vii) the Company is not now, or in the past been,
engaged in any unfair labor practices as defined in the National Labor
Relations Act or other applicable law; (viii) no unfair labor practice charge
or complaint against the Company is pending or threatened before the National
Labor Relations Board or any similar governmental authority; (ix) there is no
grievance against the Company arising out of any collective bargaining
agreement or other grievance procedure; and (x) no claim is pending or
threatened in any forum by or on behalf of any present or former employee of
the Company, any applicant for employment or classes of the foregoing alleging
breach of any express or implied contract of employment, any law governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship.
(c) The Company has not received any notice that any of the
officers, employees, consultants, agents, or other persons performing services
for the Company, will terminate or contemplates terminating his or her
employment currently or at any time before or within 60 days after the Closing
Date or will otherwise not be available to Parent, or not agree to employment
by Parent, on the same terms and conditions as his or her current employment by
the Company.
(d) Since 1989, the Company has not effectuated (i) a "plant
closing", as defined in the Worker Adjustment and Retraining Notification Act
(the "WARN Act"), affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Company; or
(ii) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of the Company; nor has the Company been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local Law. None of the
Company's employees has suffered an "employment loss" (as defined in the WARN
Act) since six (6) months prior to the date hereof.
5.15 EMPLOYEE BENEFIT PLANS.
(a) The Company has disclosed in Section 5.15 of the Company
Disclosure Memorandum, and has delivered or made available to Parent prior to
the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, currently adopted, maintained
by, sponsored in whole or in part by, or contributed to by the Company or any
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors,
or other beneficiaries are eligible to participate (collectively, the "Company
Benefit Plans"). The Company has also delivered or will make available to
Parent prior to the Effective Time true and correct copies of all trust or
other funding agreements executed in conjunction with any Company Benefit Plan,
copies of Form 5500 annual reports for each Company Benefit Plan for the last
three years (together with all schedules and financial statements which
constitute a part of such annual report), copies of any currently effective
employee handbooks that describe the terms of any Company Benefit Plan, and
copies of any other currently effective description of any Company Benefit
Plan. Any of the Company Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is referred to herein
as a "Company ERISA Plan." Each Company ERISA Plan which is also a "defined
benefit plan" (as defined in Section 414(j) of the Internal Revenue Code) is
referred to herein as a "Company Pension Plan." No Company Pension Plan is or
has been a multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All the Company Benefit Plans are in compliance in all
material respects with the applicable terms of ERISA, the Internal Revenue
Code, and any other applicable Laws. Each Company ERISA Plan which is intended
to be qualified under Section 401(a) of the Internal Revenue Code has received
a favorable determination letter from the Internal Revenue Service which
determines that the currently effective provisions of such ERISA Plan
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<PAGE> 14
meet the currently effective requirements for qualification under Section
401(a) of the Internal Revenue Code (or, if such letter from the Internal
Revenue Service has not yet been received, then the Company has applied for
such a letter on a timely basis), and the Company is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. The Company has not engaged in a transaction with
respect to any Company Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject the Company to a Tax
imposed by either Section 4975 of the Internal Revenue Code or Section 502(i)
of ERISA. There are no pending or threatened claims against any Company
Benefit Plan other than claims for benefits in the normal course, and there are
no pending or threatened investigations of any Company Benefit Plan by any
government agency.
(c) Except as disclosed in Section 5.15 of the Company
Disclosure Memorandum, no Company Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no material change in the
financial position of any Company Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Company Pension Plan, and (iii) no increase in
benefits under any Company Pension Plan as a result of plan amendments or
changes in applicable Law which is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on the Company or materially
adversely affect the funding status of any such plan. No Company Pension Plan
nor any "single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by the Company, or the single-employer
plan of any entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414 of the Internal Revenue Code or Section
302 of ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated
funding deficiency" within the meaning of Section 412 of the Internal Revenue
Code or Section 302 of ERISA. The Company has not provided, nor is required to
provide, security to a Company Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by the Company with respect to any ongoing, frozen, or terminated
single-employer plan or the single-employer plan of any ERISA Affiliate. The
Company has not incurred any withdrawal Liability with respect to a
multiemployer plan under Subtitle B of Title IV of ERISA (regardless of whether
based on contributions of an ERISA Affiliate). No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for
any Company Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(e) Except as disclosed in Section 5.15 of the Company
Disclosure Memorandum, the Company has no Liability for retiree health and life
benefits under any of the Company Benefit Plans and there are no restrictions
on the rights of the Company to amend or terminate any such Plan without
incurring any Liability thereunder.
(f) Except as disclosed in Section 5.15 of the Company
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of the Company from the
Company under any Company Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Company Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of the Company and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of
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<PAGE> 15
ERISA, have been fully reflected on the Company Financial Statements to the
extent required by and in accordance with GAAP.
5.16 MATERIAL CONTRACTS. Except as disclosed in Section 5.16 of
the Company Disclosure Memorandum or otherwise reflected in the Company
Financial Statements, neither the Company nor any of its Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $50,000, (ii) any Contract relating to the borrowing of money by the
Company or the guarantee by the Company of any such obligation (other than
trade payables, and Contracts relating to borrowings or guarantees made in the
ordinary course of business), (iii) any Contracts between or among the Company
and any Affiliate of the Company, and (iv) any other Contract or amendment
thereto that is material to the Business of the Company (together with all
Contracts referred to in Sections 5.11 and 5.15(a) of this Agreement, the
"Company Contracts"). With respect to each Company Contract and except as
disclosed in Section 5.16 of the Company Disclosure Memorandum: (i) the
Contract is in full force and effect; (ii) the Company is not in Default
thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(iii) the Company has not repudiated or waived any material provision of any
such Contract; and (iv) no other party to any such Contract is, to the
Knowledge of the Company, in Default in any respect, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company, or has repudiated or waived any material
provision thereunder. All of the indebtedness of the Company for money
borrowed is prepayable at any time by the Company without penalty or premium.
5.17 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of the Company, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against the Company, or
against any Asset, interest, or right of the Company, that is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on the
Company, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against the Company, that
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company. To the Knowledge of the Company, there is no
basis for any Litigation which, if commenced, would be reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Section 5.17 of the Company Disclosure Memorandum includes a summary
report of all Litigation as of the date of this Agreement to which the Company
is a party and which names the Company as a defendant or cross-defendant.
5.18 TITLE TO PROPERTIES.
(a) Except as disclosed in Section 5.18(a) of the Company
Disclosure Memorandum, the Company has good and valid title to all of its
properties, assets and other rights that do not constitute real property, free
and clear of all Encumbrances. The Company owns, has valid leasehold interests
in or valid contractual rights to use, all of the assets, tangible and
intangible, used by, or necessary for the conduct of the business of the
Company.
(b) The machinery, tools, equipment and other tangible physical
assets of the Company are in good working order, normal wear and tear excepted,
are being used or are useful in the business of the Company at its present
level of activity and are in an operating condition sufficient to conduct the
business of the Company as now being conducted.
(c) Section 5.18(c) of the Company Disclosure Memorandum sets
forth each and every parcel of real property or interest in real estate owned,
held under a lease or used by, or necessary for the conduct of the business of,
the Company (the "Real Property").
(d) Except as disclosed in Section 5.18(d) of the Company
Disclosure Memorandum, the Company:
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(i) owns and has good and marketable title in fee simple
to the Real Property designated as "owned property" in the
Company Disclosure Memorandum free and clear of all pledges,
liens, charges, encumbrances, easements, defects, security
interests, claims, options and restrictions of every kind
("Encumbrances"), except (A) minor imperfections of title,
none of which, individually or in the aggregate, materially
detracts from the value of or impairs the use of the affected
property or impairs the operations of the Company and (B)
liens for current taxes not yet due and payable;
(ii) with respect to the Real Property designated as
"leased property" in the Company Disclosure Memorandum is in
peaceful and undisturbed possession of the space and/or estate
under each lease under which it is a tenant, and there are no
material defaults by it as tenant thereunder; and
(iii) has good and valid rights of ingress and egress to
and from all the Real Property from and to the public street
systems for all usual street, road and utility purposes.
(e) All of the buildings, structures, improvements and fixtures
used by or useful in the business of the Company, owned or leased by the
Company, are in a good state of repair, maintenance and operating condition
and, except for normal wear and tear, there are no defects with respect thereto
which would impair the day-to-day use of any such buildings, structures,
improvements or fixtures or which would subject the Company to liability under
applicable law.
5.19 INTELLECTUAL PROPERTY. For purposes of this Agreement, the
term "Intellectual Property" shall mean, collectively, patents, designs, art
work, designs-in-progress, formulations, know-how, inventions, trademarks,
trade names, trade styles, service marks, copyrights, manufacturing processes,
and confidential or proprietary information. The Company owns or has the
uncontested right to use all Intellectual Property necessary for the conduct of
its business as presently conducted and as proposed to be conducted. Except as
disclosed in Section 5.19 of the Company Disclosure Memorandum, no claim is
pending or, to the Knowledge of the Company, threatened, and the Company has
not received any notice that the conduct of its business (including without
limitation, its use of any Intellectual Property) infringes upon,
misappropriates or conflicts with any rights in Intellectual Property claimed
by any third party, nor is there any basis known to the Company for such a
claim. No use by the Company of any Intellectual Property licensed to it
violates the terms of any agreement pursuant to which it is licensed. No claim
is pending, or to the Knowledge of the Company threatened, which alleges that
any Intellectual Property owned or licensed by or to the Company or which the
Company otherwise has the right to use is invalid or unenforceable by the
Company, nor is there any basis known to the Company for any such claim. The
Company does not manufacture products which are the subject of patents, patent
applications, copyrights, copyright registrations, trademarks, trademark
registrations, trade styles, service marks, or trade secrets owned by or
licensed from third parties, other than as described in Section 5.19 of the
Company Disclosure Memorandum. Except as shown in Section 5.19 of the Company
Disclosure Memorandum, no royalties or fees are payable by the Company to
anyone for use of the Intellectual Property. Correct and complete copies of all
agreements pursuant to which the Company has any license or right to use any
Intellectual Property or pursuant to which it licenses any Intellectual
Property have been or will be delivered to Parent. All such agreements are in
full force and effect, and there are no existing Defaults or events of Default,
real or claimed, or events which with or without notice or lapse of time, or
both, would constitute Defaults under such agreements that would give the
non-defaulting party a right to terminate such agreement or a right to receive
any payment pursuant to such agreement. Except as disclosed in Section 5.19 of
the Company Disclosure Memorandum the Company has not received any notice that
the manufacture, use, or sale by the Company of its products, or any component
or part thereof, nor any manufacturing operation or machinery employed by the
Company violates or infringes upon any claims of any United States or other
patent or patent application owned or held by any third party in any
jurisdiction, nor is there any basis known to the Company for any such claim.
No consent of any third party is required in connection with the merger with
respect to any Intellectual Property owned by, licensed to or by, or used by
the Company.
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<PAGE> 17
5.20 REPORTS. Since January 1, 1990, the Company has timely
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with all Regulatory
Authorities, (except for failures to file which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on the
Company). As of their respective dates, each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied
in all material respects with all applicable Laws. As of its respective date,
each such report and document did not, in all material respects, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
5.21 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by the Company or any
Affiliate thereof to Parent pursuant to this Agreement (including, without
limitation, the Company Disclosure Memorandum) or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. None of the information supplied or to be supplied
by the Company or any Affiliate thereof for inclusion in the Proxy Statement to
be mailed to the Company's shareholders in connection with the Shareholders'
Meeting, and any other documents to be filed by the Company or any Affiliate
thereof with any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Proxy Statement, when first mailed to the shareholders of
the Company, be false or misleading with respect to any material fact, or omit
to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, or, in the
case of the Proxy Statement or any amendment thereof or supplement thereto, at
the time of the Shareholders' Meeting, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meeting. All documents that the Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
5.22 ACCOUNTING, TAX AND REGULATORY MATTERS. Neither the Company
nor any Affiliate thereof has taken any action or has any Knowledge of any fact
or circumstance that is reasonably likely to materially impede or delay
receipt of any Consents of Regulatory Authorities referred to in Section
10.1(b) of this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Parent is a corporation
duly incorporated, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets.
Parent is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Parent has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part
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<PAGE> 18
of Parent. This Agreement represents a legal, valid, and binding obligation of
Parent, enforceable against Parent in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
by Parent, nor the consummation by Parent of the transactions contemplated
hereby, nor compliance by Parent with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Parent's Certificate of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Parent Company under, any Contract or Permit of any Parent
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent, or, (iii) subject to receipt of the requisite approvals
referred to in Section 10.1(b) of this Agreement, violate any Law or Order
applicable to any Parent Company or any of their respective material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NYSE, and other than Consents required from Regulatory
Authorities, and other than notices to or filings under the HSR Act, and other
than Consents, filings, or notifications which, if not obtained or made, are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Parent, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by Parent of the Merger and
the other transactions contemplated in this Agreement.
6.3 CAPITAL STOCK.
(a) The authorized capital stock of Parent consists of (i)
20,000,000 shares of Parent Common Stock, of which 3,834,169 are issued and
outstanding as of September 30, 1995, and (ii) 8,000,000 shares of Parent
Preferred Stock, of which no shares are issued and outstanding. All of the
issued and outstanding shares of Parent Capital Stock are, and all of the
shares of Parent Common Stock to be issued in exchange for shares of Company
Common Stock upon consummation of the Merger, when issued in accordance with
the terms of this Agreement, will be, duly and validly issued and outstanding
and fully paid and nonassessable under the DGCL. None of the outstanding
shares of Parent Capital Stock has been, and none of the shares of Parent
Common Stock to be issued in exchange for shares of Company Common Stock upon
consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of Parent. Parent has reserved
407,500 shares of Parent Common Stock for issuance under the Parent Stock
Plans, pursuant to which options to purchase no more than 294,500 shares of
Parent Common Stock are outstanding as of September 30, 1995.
(b) Except as set forth in Section 6.3(a) of this Agreement, or
as disclosed in Section 6.3 of the Parent Disclosure Memorandum, there are no
shares of capital stock or other equity securities of Parent outstanding and no
outstanding Rights relating to the capital stock of Parent.
6.4 FINANCIAL STATEMENTS. Parent has disclosed in Section 6.4
of the Parent Disclosure Memorandum all Parent Financial Statements for periods
ended prior to the date hereof and will deliver to the Company copies of all
Parent Financial Statements prepared subsequent to the date hereof. The Parent
Financial Statements (as of the dates thereof and for the periods covered
thereby) (i) are or, if dated after the date of this Agreement, will be in
accordance with the books and records of the Parent Companies, which are or
will be, as the case may be, complete and correct and which have been or will
have been, as the case may be, maintained in accordance with good business
practices, and (ii) present or will present, as the case may be, fairly the
consolidated financial position of the Parent Companies as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows of the Parent Companies for the periods indicated, in
accordance with GAAP (subject to exceptions as to consistency specified therein
or as may be indicated in the notes thereto or,
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<PAGE> 19
in the case of interim financial statements, to normal recurring year-end
adjustments that are not material in amount or effect).
6.5 REPORTS. Since January 1, 1990, or the date of organization
if later, each Parent Company has filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with (i) the SEC, including, but not limited to, Forms 10-K,
Forms 10-Q, Forms 8-K, and proxy statements and (ii) other Regulatory
Authorities. As of their respective dates, each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied
in all material respects with all applicable Laws. As of its respective date,
each such report and document did not, in all material respects, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
6.6 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any Parent Company
or any Affiliate thereof to the Company pursuant to this Agreement (including,
without limitation, the Parent Disclosure Memorandum) or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. None of the information supplied or to be supplied
by any Parent Company or any Affiliate thereof for inclusion in the Proxy
Statement to be mailed to the Company's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by any Parent
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of the Company, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any Parent Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all
material respects with the provisions of applicable Law.
6.7 AUTHORITY OF SUB. Sub is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Georgia as
a wholly owned Subsidiary of Parent. The authorized capital stock of Sub
consists of 1,000 shares of Sub Common Stock, 100 of which are validly issued
and outstanding, fully paid and nonassessable and are owned by Parent free and
clear of any Lien. Sub has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Sub. This Agreement represents a legal, valid, and binding obligation of Sub,
enforceable against Sub in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought).
6.8 ACCOUNTING, TAX AND REGULATORY MATTERS. No Parent Company
or any Affiliate thereof has taken any action or has any Knowledge of any fact
or circumstance that is reasonably likely to materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section 10.1(b) of
this Agreement.
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<PAGE> 20
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
OF MINOTTO
Minotto represents and warrants to, and agrees with, Parent and
Sub as follows:
7.1 OWNERSHIP OF COMPANY COMMON STOCK. Minotto owns
beneficially and of record 83,300 shares of Company Common Stock and has the
power to vote such shares with respect to approval of the Merger.
7.2 AUTHORIZATION, ETC. Minotto has the power, authority and
capacity to enter into this Agreement and to carry out the transactions
contemplated by this Article and Article 12 hereof, and this Agreement
constitutes a valid and binding agreement of Minotto, enforceable against
Minotto in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought).
7.3 NO CONSENT REQUIRED. Except in connection, or in compliance
with the HSR Act, if applicable, no consent, approval, order or authorization
of, or registration, declaration or filing with any Regulatory Authority or
other Person on the part of Minotto is required in connection with the
execution or delivery of or performance of Minotto's obligations under this
Agreement.
7.4 LITIGATION RELATING TO THE AGREEMENT. Minotto is not a
party to, or subject to any judgment, decree or order entered in, any
Litigation that prevents Minotto from executing this Agreement or performing
Minotto's obligations hereunder.
7.5 AGREEMENT TO VOTE.
(a) Minotto hereby agrees to attend the Shareholders' Meeting
relating to the Merger, in person or by proxy, and to vote (or cause to be
voted) all shares of Company Common Stock that Minotto owns or has the right to
vote, for approval and adoption of this Agreement and the Merger, such
agreement to vote to apply also to any adjournment or adjournments of the
Company Meeting.
(b) Minotto hereby agrees that at all times prior to the
Effective Time he shall continue to own a number and kind of shares of Company
Common Stock having the right to cast over 90% of the votes of the outstanding
capital stock of the Company entitled to vote on this Agreement and the Merger
and any other proposals.
(c) To the extent inconsistent with the foregoing provisions of
this Section 7.5, Minotto hereby revokes any and all previous proxies with
respect to Minotto's shares of Company Common Stock.
7.6 SECURITIES ACT COVENANTS AND REPRESENTATIONS. Minotto
hereby agrees and represents to Parent that Minotto has been advised that to
the extent Minotto is considered an "affiliate" of the Company at the time this
Agreement is submitted for a vote of the shareholders of the Company, any
public offering or sale by Minotto of any Parent Common Stock received by
Minotto in the Merger will, under current law, require either (i) the further
registration under the Securities Act of any Parent Common Stock to be sold by
Minotto, (ii) compliance with Rule 145 promulgated by the SEC under the
Securities Act or (iii) the availability of another exemption from such
registration under the Securities Act.
7.7 INVESTMENT INTENT. Minotto represents that he is and will be
acquiring the Parent Common Stock for investment purposes only and for his own
account and not with a view to the distribution or resale of such Parent Common
Stock within the meaning of the Securities Laws. Minotto will refrain from
transferring or otherwise
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<PAGE> 21
disposing of any of the shares of Parent Common Stock received in the Merger,
or any interest therein, in such manner as to cause Parent to be in violation
of the registration requirements of the Securities Laws or applicable state
securities or blue sky laws.
ARTICLE 8
CONDUCT OF BUSINESS PENDING CONSUMMATION
8.1 AFFIRMATIVE COVENANTS OF THE COMPANY. Unless the prior
written consent of the chief executive officer, chief operating officer or
chief financial officer of Parent shall have been obtained, and except as
otherwise expressly contemplated herein, the Company shall (a) operate its
business only in the usual, regular, and ordinary course, (b) preserve intact
its business organization and Assets and maintain its rights and franchises,
and (c) take no action which would (i) adversely affect the ability of any
Party to obtain any Consents required for the transactions contemplated hereby,
or (ii) adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
8.2 NEGATIVE COVENANTS OF THE COMPANY. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, the Company covenants and agrees that it will not do or agree or
commit to do any of the following without the prior written consent of the
chief executive officer, chief operating officer or chief financial officer of
Parent, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of the Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money in excess of an aggregate of $100,000, or impose, or suffer the
imposition, on any Asset of the Company of any Lien or permit any such Lien to
exist (other than Liens in effect as of the date hereof that are disclosed in
the Company Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans), directly
or indirectly, any shares, or any securities convertible into any shares, of
the capital stock of the Company, or declare or pay any dividend or make any
other distribution in respect of the Company's capital stock; or
(d) except for this Agreement, or as disclosed in Section 8.2(d)
of the Company Disclosure Memorandum, issue, sell, pledge, encumber, authorize
the issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of Company Common Stock or any other capital stock of the
Company, or any stock appreciation rights, or any option, warrant, conversion,
or other right to acquire any such stock, or any security convertible into any
such stock; or
(e) adjust, split, combine or reclassify any capital stock of
the Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Company Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any Asset other
than in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment, either
by purchase of stock of securities, contributions to capital, Asset transfers,
or purchase of any Assets, in any Person, or otherwise acquire direct or
indirect control over any Person; or
(g) grant any increase in compensation or benefits to the
employees or officers of the Company, except in accordance with past practice
disclosed in Section 8.2(g) of the Company Disclosure Memorandum or as
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required by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 8.2(g) of the Company Disclosure Memorandum;
and enter into or amend any severance agreements with officers of the Company;
grant any material increase in fees or other increases in compensation or other
benefits to directors of the Company except in accordance with past practice
disclosed in Section 8.2(g) of the Company Disclosure Memorandum; or
voluntarily accelerate the vesting of any stock options or other stock-based
compensation or employee benefits; or
(h) enter into or amend any employment Contract between the
Company and any Person (unless such amendment is required by Law) that the
Company does not have the unconditional right to terminate without Liability
(other than Liability for services already rendered), at any time on or after
the Effective Time;
(i) adopt any new employee benefit plan of the Company or make
any material change in or to any existing employee benefit plans of the Company
other than any such change that is required by Law or that, in the opinion of
counsel, is necessary or advisable to maintain the tax qualified status of any
such plan; or
(j) make any significant change in any Tax or accounting methods
or systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of the Company for
material money damages or restrictions upon the operations of the Company; or
(l) modify, amend or terminate any material Contract or waive,
release, compromise or assign any material rights or claims.
8.3 COVENANTS OF PARENT. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Parent
covenants and agrees that it shall (x) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment,
to enhance the long-term value of the Parent Common Stock and the business
prospects of the Parent Companies and to the extent consistent therewith use
all reasonable efforts to preserve intact the Parent Companies' core businesses
and goodwill with their respective employees and the communities they serve,
and (y) take no action which would (i) materially adversely affect the ability
of any Party to obtain any Consents required for the transactions contemplated
hereby, or (ii) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement; provided, that the foregoing
shall not prevent any Parent Company from discontinuing or disposing of any of
its Assets or business if such action is, in the judgment of Parent, desirable
in the conduct of the business of Parent and its Subsidiaries. Parent further
covenants and agrees that it will not, without the prior written consent of the
chief executive officer, president or chief financial officer of the Company,
which consent shall not be unreasonably withheld, amend the Certificate of
Incorporation or Bylaws of Parent in each case, in any manner adverse to the
holders of Company Common Stock.
8.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the
occurrence or impending occurrence of any event or circumstance relating to it
or any of its Subsidiaries which (i) is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on it or (ii) would cause or
constitute a material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
8.5 REPORTS. Each Party and its Subsidiaries, if any, shall
file all reports required to be filed by it with Regulatory Authorities between
the date of this Agreement and the Effective Time and shall deliver to the
other Party copies of all such reports promptly after the same are filed. If
financial statements are contained in any such reports filed with the SEC, such
financial statements will fairly present the consolidated financial position of
the
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<PAGE> 23
entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material). As of their respective dates, such reports filed with the SEC will
comply in all material respects with the Securities Laws and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.
ARTICLE 9
ADDITIONAL AGREEMENTS
9.1 PROXY STATEMENT; SHAREHOLDER APPROVAL. The Company shall
call a Shareholders' Meeting, to be held as soon as reasonably practicable for
the purpose of voting upon approval of this Agreement and such other related
matters as it deems appropriate. In connection with the Shareholders' Meeting,
(i) the Company shall prepare a Proxy Statement and mail such Proxy Statement
to its shareholders, (ii) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection with
such Proxy Statement, (iii) the Board of Directors of the Company shall
recommend to its shareholders the approval of this Agreement, and (iv) the
Board of Directors and officers of the Company shall use their reasonable
efforts to obtain such shareholders' approval.
9.2 EXCHANGE LISTING. Parent shall use its reasonable efforts
to list, prior to the Effective Time, on the NYSE, subject to official notice
of issuance, the shares of Parent Common Stock to Minotto pursuant to the
Merger.
9.3 APPLICATIONS; ANTITRUST NOTIFICATION. Parent shall promptly
prepare and file, and the Company shall cooperate in the preparation and, where
appropriate, filing of, applications with all Regulatory Authorities having
jurisdiction over the transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions contemplated by
this Agreement. Each of the Parties will within five business days of the date
hereof file with the United States Federal Trade Commission and the United
States Department of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental or additional information
which may reasonably be requested in connection therewith pursuant to the HSR
Act and will comply in all material respects with the requirements of the HSR
Act.
9.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to
the conditions of this Agreement, the Company shall execute and file the
Certificate of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
9.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries, if any, to use, its reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary,
proper, or advisable under applicable Laws to consummate and make effective, as
soon as practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.
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9.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other
Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the
other Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information furnished to
it by the other Party concerning its and its Subsidiaries' businesses,
operations, and financial positions and shall not use such information for any
purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Effective Time, each
Party shall promptly return or certify the destruction of all documents and
copies thereof, and all work papers containing confidential information
received from the other Party.
(c) The Company shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with Persons, if any,
which were considering an Acquisition Transaction with the Company to preserve
the confidentiality of the information relating to the Company provided to such
Persons and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other
Party or which has had or is reasonably likely to have a Material Adverse
Effect on the other Party; provided, however, that the failure to give such
notice shall not give rise to any Liability against Parent by the Company, or
against Company by Parent, as the case may be, or otherwise affect the
representations, warranties, covenants or agreements (including, without
limitation, indemnification obligations) of the Company, Parent or Minotto set
forth herein (or the rights and remedies of Parent or the Company in the event
of a breach thereof) or any of the other terms and conditions of this
Agreement.
9.7 PRESS RELEASES. Prior to the Effective Time, the Company
and Parent shall consult with each other as to the form and substance of any
press release or other public disclosure related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 9.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
9.8 CERTAIN ACTIONS. Except with respect to this Agreement and
the transactions contemplated hereby, neither the Company nor any Affiliate
thereof or any Representatives thereof retained by the Company shall directly
or indirectly solicit any Acquisition Proposal by any Person. Neither the
Company nor any Affiliate or Representative thereof shall furnish any
non-public information, negotiate with respect to, or enter into any Contract
with respect to, any Acquisition Proposal. The Company shall promptly notify
Parent orally and in writing in the event that it receives any inquiry or
proposal relating to any such transaction. The Company shall (i) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any of the
foregoing, and (ii) direct and use its reasonable efforts to cause all of its
Representatives not to engage in any of the foregoing.
9.9 TAX TREATMENT. Each of the Parties undertakes and agrees to
use its reasonable efforts to cause the Merger, and to take no action which
would cause the Merger not to qualify for treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code for federal
income tax purposes.
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<PAGE> 25
9.10 CHARTER PROVISIONS. The Company shall take all necessary
action to ensure that the entering into of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby do not and will
not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of the Company or restrict
or impair the ability of Parent or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of
the Company that may be directly or indirectly acquired or controlled by it.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
10.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
13.6 of this Agreement:
(a) SHAREHOLDER APPROVAL. The shareholders of the Company shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by Law
and by the provisions of any governing instruments.
(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than those
referred to in Section 10.1(b) of this Agreement) or for the preventing of any
Default under any Contract or Permit of such Party which, if not obtained or
made, is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on such Party.
(d) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes
illegal consummation of the transactions contemplated by this Agreement.
(e) EXCHANGE LISTING. The shares of Parent Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(f) TAX MATTERS. Each Party shall have received a written
opinion of counsel from Alston & Bird , in form reasonably satisfactory to such
Parties (the "Tax Opinion"), to the effect that (i) the Merger will constitute
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) the exchange in the Merger of Company Common Stock held by Minotto
for Parent Common Stock will not give rise to gain or loss to Minotto with
respect to such exchange, and (iii) none of the Company, Sub or Parent will
recognize gain or loss as a consequence of the Merger (except for amounts
resulting from any required change in accounting methods and any income and
deferred gain recognized pursuant to Treasury regulations issued under Section
1502 of the Internal Revenue Code). In rendering such Tax Opinion, such
counsel shall be entitled to rely upon representations of officers of the
Company, Minotto and Parent reasonably satisfactory in form and substance to
such counsel.
10.2 CONDITIONS TO OBLIGATIONS OF PARENT. The obligations of
Parent to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Parent pursuant to Section 13.6(a) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth or referred to in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
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<PAGE> 26
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date), except as expressly contemplated by
this Agreement.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of the Company to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior
to the Effective Time shall have been duly performed and complied with in all
material respects.
(c) CERTIFICATES. The Company shall have delivered to Parent
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Section 10.2(a) and 10.2(b) of
this Agreement have been satisfied, and (ii) certified copies of resolutions
duly adopted by the Company's Board of Directors and shareholders evidencing
the taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as Parent and
its counsel shall request.
(d) DISSENTING SHAREHOLDERS. The holders of no more than 2.5%
of the shares of Company Common Stock issued and outstanding at the Effective
Time shall have asserted dissenters' rights under the GBCC.
10.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations
of the Company to perform this Agreement and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by the Company pursuant to Section 13.6(b)
of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent set forth or referred to in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except as expressly contemplated by this
Agreement.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Parent to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior
to the Effective Time shall have been duly performed and complied with in all
material respects.
(c) CERTIFICATES. Parent shall have delivered to the Company
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Section 10.3(a) and 10.3(b) of
this Agreement have been satisfied, and (ii) certified copies of resolutions
duly adopted by Parent's Board of Directors and Sub's Board of Directors and
shareholder evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as the Company and its counsel shall request.
(d) REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement shall have been executed and delivered by Parent.
ARTICLE 11
TERMINATION
11.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
Shareholders of the Company, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
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<PAGE> 27
(a) By mutual consent of the Board of Directors of Parent and
the Board of Directors of the Company; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching Party of such breach
and which breach is reasonably likely, in the opinion of the non-breaching
Party, to have, individually or in the aggregate, a Material Adverse Effect on
the breaching Party; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching Party of such breach;
or
(d) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal; or
(e) By the Board of Directors of either Party in the event that
the Merger shall not have been consummated by December 31, 1995, if the failure
to consummate the transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party electing to terminate
pursuant to this Section 11.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 11.1(e) of this Agreement.
11.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 11.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 11.2 and Article 13 and Section 9.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant
to Sections 11.1(b), 11.1(c) or 11.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
ARTICLE 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by (a) the Company in Article 5 of this
Agreement, (b) Parent in Article 6 of this Agreement and (c) by Minotto in
Article 7 shall survive until the first anniversary of the Effective Time
hereunder, and shall not survive thereafter.
12.2 OBLIGATION OF MINOTTO TO INDEMNIFY. Subject to the
limitations of Section 12.5, Minotto agrees to indemnify and hold Parent and
the Surviving Corporation harmless from and against all Losses asserted
against, imposed upon or incurred by Parent or the Surviving Corporation by
reason of or resulting from a breach of any representation or warranty of the
Company contained in Article 5 hereof or of Minotto contained in Article 7
hereof.
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<PAGE> 28
12.3 OBLIGATION OF PARENT TO INDEMNIFY. Subject to the
limitations of Section 12.5 and the provisions of Section 12.7, Parent agrees
to indemnify and hold the Shareholders harmless from and against all Losses
asserted against, imposed upon or incurred by the Shareholders by reason of or
resulting from a breach of any representation or warranty of Parent contained
in Article 6 hereof.
12.4 CONDITIONS OF INDEMNIFICATION WITH RESPECT TO THIRD PARTY
CLAIMS. Each party indemnified (the "Article 12 Indemnified Party") under the
provisions of Section 12.2 or 12.3, upon receipt of written notice of any claim
or the service of a summons, or other initial legal process upon it in any
action instituted against it, in respect of which indemnity may be sought on
account of any indemnity agreement contained in Section 12.2 or 12.3, shall
promptly give notice of such claim or the commencement of such action, or
threat thereof, to the party (the "Article 12 Indemnifying Party") from whom
indemnity shall be sought hereunder. The Article 12 Indemnifying Party shall
be entitled at its own expense to participate in the defense of such claim or
action, in which case the defense shall be conducted by counsel reasonably
acceptable to the Article 12 Indemnified Party, and such Article 12 Indemnified
Party shall bear the fees and expenses of any additional counsel retained by
it; but if the Article 12 Indemnifying Party shall elect not to assume the
defense of such claim or action, the Article 12 Indemnifying Party shall
reimburse each Article 12 Indemnified Party for the reasonable fees and
expenses of any counsel retained by it. Notwithstanding the above, should any
Article 12 Indemnified Party reasonably conclude that there may be defenses to
it that are different from or additional to those available to the Article 12
Indemnifying Party, the Article 12 Indemnifying Party shall not have the right
to direct the defense of such action on behalf of the Article 12 Indemnified
Party and all such fees and expenses of the Article 12 Indemnified Party shall
be borne by the Article 12 Indemnifying Party. The Article 12 Indemnifying
Party shall also have the right to settle or compromise any such claim but only
if it shall first obtain the written consent of the Article 12 Indemnified
Party, which consent shall not be unreasonably withheld. For the purposes of
this Section 12.4 and Section 12.5, all of the Shareholders shall be considered
one Article 12 Indemnified Party and the Parent and the Surviving Corporation
shall be considered one Article 12 Indemnified Party.
12.5 LIMITATIONS ON LIABILITY.
(a) No Article 12 Indemnifying Party shall be required to
indemnify an Article 12 Indemnified Party unless the amount of any Loss for
which indemnity is claimed hereunder, when aggregated with all other Losses for
which indemnity is claimed hereunder by such Article 12 Indemnified Party,
shall exceed $160,000 (the "Deductible Amount"), at which time rights to
indemnification for Losses may be asserted for the Deductible Amount and any
amounts in excess thereof; provided, however, that the foregoing Deductible
Amount shall not apply to any initial Loss: (A) which results form or arises
out of fraud and intentional misrepresentation or any intentional breach of
warranty or covenant on the part of the Indemnifying Party, or (B) which
results from or arises out of any Claim incident to any of the matters referred
to in the foregoing clause (A).
(b) No Article 12 Indemnifying Party shall be required to pay
any amounts in respect of any indemnity hereunder which, when aggregated with
all such other amounts paid by such Article 12 Indemnifying Party exceed
$1,600,000.
(c) Except with respect to claimed Losses for which proper
notice of indemnification shall have been submitted in good faith and in
reasonable detail on or before the first anniversary of the Effective Time, all
rights of indemnification under this Article 12 shall terminate and expire on
the first anniversary of the Effective Time.
12.6 PAYMENT OF INDEMNIFICATION LIABILITY. To the extent that
any Article 12 Indemnifying Party shall be required to indemnify any Article 12
Indemnified Party, such indemnification obligation may (at the option of the
Indemnifying Party and as an alternative to a cash payment) be satisfied for
all purposes hereunder by delivering to such Article 12 Indemnified Party
certificates, duly endorsed for transfer, representing that number of shares of
Parent Common Stock having a value (based on the last reported sale price on
the New York Stock Exchange of Parent Common Stock on the Closing Date or, if
Parent Common Stock does not trade on the New
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York Stock Exchange on such date, the last date prior to the Closing Date that
Parent Common Stock does trade on the New York Stock Exchange, (rounded to the
nearest share), equal to the amount due such Article 12 Indemnified Party
hereunder, subject to Section 12.5.
12.7 REDUCTION FOR CERTAIN BENEFITS.
(a) In the event a Claim hereunder results in a tax benefit to
the Article 12 Indemnified Party, the Article 12 Indemnifying Party shall be
entitled to a credit against any liability thereunder in the amount by which
(i) the present value of the federal and state income taxes of the Article 12
Indemnified Party shall be reduced by reason of any deduction allowed the
Article 12 Indemnified Party for any payment, settlement or satisfaction of
such Claim, exceeds (ii) the present value of the federal and state income
taxes payable by the Article 12 Indemnified Party by reasons of any payment
under this Article 12.
(b) Any insurance or other recovery, payment or credit received
by the Article 12 Indemnified Party from any third party which was not taken
into account in computing the amount of any Claim shall promptly be paid over
to the Article 12 Indemnifying Party up to the amount of the indemnification
payment made by the Article 12 Indemnifying Party with respect thereto, such
that the total amount received by the Article 12 Indemnified Party from the
Article 12 Indemnifying Party and the third parties in connection with such
Claim shall not exceed the amount of such Claim.
12.8 SECTION 16 DEFERRAL. In the event that Minotto (i) is or
may be deemed to be covered by Section 16 of the Exchange Act, and (ii) has an
indemnification obligation that may be payable in shares of Parent Common Stock
hereunder and has, within six months prior to the time that such obligation
arises, purchased any shares of Parent Common Stock, Minotto shall be entitled
to delay payment of his indemnification obligation hereunder until after six
months have passed from the date of the last purchase prior to the time that
such obligation arises.
12.9 SUBROGATION RIGHTS. In the event that the Indemnifying
Party shall be obligated to indemnify the Indemnified Party pursuant to this
Article 12, the Indemnifying Party shall, upon payment of such indemnity in
full, be subrogated to all rights of the Indemnified Party with respect to the
Loss to which such indemnification relates; provided, however, that the
Indemnifying Party shall only be subrogated to the extent of any amount paid by
it pursuant to this Article 12 in connection with such Loss.
12.10 ARBITRATION. All disputes arising under this Article 12
(other than claims in equity) shall be resolved by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
Arbitration shall be by a single arbitrator experienced in the matters at issue
and selected by Minotto (or a Person designated by Minotto or his successors
and assigns that is reasonably acceptable to Parent) and Parent in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
The arbitration shall be held in such place in Atlanta, Georgia as may be
specified by the arbitrator (or any place agreed to by Minotto (or a Person
designated by Minotto or his successors and assigns that is reasonably
acceptable to Parent), Parent and the arbitrator). The decision of the
arbitrator shall be final and binding as to any matters submitted under this
Article 12; provided, however, if necessary, such decision and satisfaction
procedure may be enforced by either Minotto (or a Person designated by Minotto
or his successors and assigns that is reasonably acceptable to Parent) or
Parent in any court of record having jurisdiction over the subject matter or
over any of the parties to this Agreement. All costs and expenses incurred in
connection with any such arbitration proceeding (including reasonable attorneys
fees) shall be borne by the party against which the decision is rendered, or,
if no decision is rendered, such costs and expenses shall be borne equally by
the Indemnifying Party as one party and the Indemnified Party as the other
party. If the arbitrator's decision is a compromise, the determination of
which party or parties bears the costs and expenses incurred in connection with
any such arbitration proceeding shall be made by the arbitrator on the basis of
the arbitrator's assessment of the relative merits of the parties' positions.
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ARTICLE 13
MISCELLANEOUS
13.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean
any tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial
portion of the assets of, such Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person; or
(iii) any other Person for which a Person described in clause (ii) acts
in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the disclosure memoranda and Exhibits delivered pursuant
hereto and incorporated herein by reference.
"ASSETS" of a Person shall mean all of the assets,
properties, businesses and rights of such Person of every kind, nature,
character and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such
Person and wherever located.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger
to be executed by the Company and filed with the Secretary of State of
the State of Georgia relating to the Merger as contemplated by Section
1.1 of this Agreement.
"CLAIM" means any action, administrative or other
proceeding, arbitration, cause of action, claim, demand, complaint,
criminal prosecution, inquiry, hearing, investigation (governmental or
otherwise), notice (written or oral) by any person alleging potential
liability or requesting information relating to or affecting the Parties
or the transactions contemplated by this Agreement; and
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"COMPANY COMMON STOCK" shall mean the no par value common
stock of the Company.
"COMPANY DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Basic American Medical Products, Inc. Disclosure
Memorandum" delivered prior to the date of this Agreement to Parent
describing in reasonable detail the matters contained therein and, with
respect to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made.
Information disclosed with respect to one Section shall not be deemed to
be disclosed for purposes of any other Section not specifically
referenced with respect thereto.
"COMPANY FINANCIAL STATEMENTS" shall mean (i) the draft
balance sheet (including related notes and schedules, if any) of the
Company as of December 31, 1994, and the related draft statements of
income, shareholders' equity and cash flows (including related notes and
schedules, if any) for the fiscal year ended December 31, 1994, and (ii)
if prepared, the balance sheets of the Company (including related notes
and
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<PAGE> 31
schedules, if any) and related statements of income, and cash flows
(including related notes and schedules, if any) prepared with respect to
periods ended subsequent to December 31, 1994.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument,
lease, obligation, plan, practice, restriction, understanding or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital stock,
Assets or business.
"DEFAULT" shall mean (i) any breach or violation of or
default under any Contract, Order or Permit, (ii) any occurrence of any
event that with the passage of time or the giving of notice or both
would constitute a breach or violation of or default under any Contract,
Order or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to a
right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability under,
any Contract, Order or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to
pollution or protection of human health or the environment (including
ambient air, surface water, ground water, land surface or subsurface
strata) and which are administered, interpreted or enforced by the
United States Environmental Protection Agency and state and local
agencies with jurisdiction over, and including common law in respect of,
pollution or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of
any Hazardous Material, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of any Hazardous Material.
"ENVIRONMENTAL LITIGATION" shall mean any Litigation against
the Company, the business or the assets of the Company (including,
without limitation, notice or other communication, written or oral, by
any Person alleging potential liability for investigatory costs, cleanup
costs, private or governmental response or remedial costs, natural
resources damages, property damages, personal injuries, or penalties)
arising out of, based upon, or resulting from (i) any Environmental
Matter or (ii) any circumstances or state of facts forming the basis of
any liability or alleged liability under, or violation or alleged
violation of, any Environmental Law.
"ENVIRONMENTAL MATTER" shall mean any matter or
circumstances related in any manner whatsoever to (i) the emission,
discharge, disposal, release or threatened release of any Hazardous
Substance into the environment, or (ii) the transportation, treatment,
storage, recycling or other handling of any Hazardous Substance or (iii)
the placement of structures or materials into waters of the United
States, or (iv) the presence of any Hazardous Substance, including, but
not limited to, asbestos, in any building, structure or workplace or on
any of the Real Property.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA AFFILIATE" shall have the meaning provided in Section
5.15 of this Agreement.
"EXHIBITS" shall mean the Exhibits so marked, copies of
which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or
document without being attached hereto.
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<PAGE> 32
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"HAZARDOUS SUBSTANCE" shall mean (i) any hazardous
substance, hazardous material, hazardous waste, regulated substance or
toxic substance (as those terms are defined by any applicable
Environmental Laws) and (ii) any chemicals, pollutants, contaminants,
petroleum, petroleum products, or oil.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean
those facts that are known or should reasonably have been known after
due inquiry by the Chairman, President, Chief Financial Officer, Chief
Accounting Officer, or any executive officer of such Person and the
knowledge of any such persons obtained or which would have been obtained
from a reasonable investigation.
"LAW" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest,
title retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, and (iii) Liens which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on a Party.
"LITIGATION" shall mean any action, arbitration, audit,
cause of action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any
Person alleging potential liability or requesting information relating
to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement.
"LOSS" means any and all direct or indirect demands, claims,
payments, obligations, recoveries, deficiencies, fines, penalties,
interest, assessments, actions, causes of action, suits, losses,
diminution in the value of the assets, punitive, exemplary or
consequential damages (including, but not limited to, lost income and
profits and interruptions of business), liabilities, costs, expenses
(including without limitation, (i) interest, penalties and reasonable
attorneys' fees and expenses, (ii) reasonable attorneys' fees and
expenses necessary to enforce rights to indemnification hereunder, and
(iii) consultant's fees and other costs of defense or
- 28 -
<PAGE> 33
investigation), and interest on any amount payable to a third party as a
result of the foregoing. This definition shall include all Losses
whether accrued, absolute, contingent, known, unknown, or otherwise as
of the Closing or thereafter.
"MATERIAL" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in
question; provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event,
change or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (i) the
financial position, assets, liabilities (contingent or otherwise),
results of operation, business, or business prospects of such Party and
its Subsidiaries, if any, taken as a whole, or (ii) the ability of such
Party to perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this Agreement.
"MINORITY SHAREHOLDERS" shall mean all of the shareholders
of the Company immediately prior to the Effective Time, other than
Minotto.
"NYSE" shall mean the New York Stock Exchange, Inc.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi- judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency or Regulatory
Authority.
"PARENT CAPITAL STOCK" shall mean, collectively, the Parent
Common Stock, the Parent Preferred Stock and any other class or series
of capital stock of Parent.
"PARENT COMMON STOCK" shall mean the $2.50 par value common
stock of Parent.
"PARENT COMPANIES" shall mean, collectively, Parent and all
Parent Subsidiaries.
"PARENT DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Fuqua Enterprises, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to the Company describing
in reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced
with respect thereto.
"PARENT FINANCIAL STATEMENTS" shall mean (i) the
consolidated statements of condition (including related notes and
schedules, if any) of Parent as of June 30, 1995, and as of December 31,
1994 and 1993, and the related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) for the six months ended June 30, 1995, and for each
of the three years ended December 31, 1994, 1993 and 1992, as filed by
Parent in SEC Documents, and (ii) the consolidated statements of
condition of Parent (including related notes and schedules, if any) and
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to June 30,
1995.
"PARENT PREFERRED STOCK" shall mean the $1.00 par value
preferred stock of Parent.
"PARENT STOCK PLANS" shall mean the existing stock option
plans of Parent designated as follows: the Vista Resources, Inc. 1989
Stock Option Plan and the Vista Resources, Inc. 1992 Stock Option
- 29 -
<PAGE> 34
Plan.
"PARENT SUBSIDIARIES" shall mean the Subsidiaries of Parent,
identified in Section 14.1 of the Parent Disclosure Memorandum and any
corporation or other organization acquired as a Subsidiary of Parent in
the future and owned by Parent at the Effective Time.
"PARTY" shall mean either the Company or Parent, and
"PARTIES" shall mean both the Company and Parent and with respect to
Sections 13.2 through 13.7 and Sections 13.12 and 13.13 hereof, Minotto,
the Company and Parent.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"PERSON" shall mean a natural person or any legal,
commercial or governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture, limited partnership,
limited liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by the
Company to solicit the approval of its shareholders of the transactions
contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the
Federal Trade Commission, the United States Department of Justice, all
state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries (if any), the NYSE, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and
the rules and regulations of any Regulatory Authority promulgated
thereunder.
"SHAREHOLDERS" shall mean Minotto and the Minority
Shareholders.
"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of the Company to be held pursuant to Section 9.1 of this
Agreement, including any adjournment or adjournments thereof.
"SUB COMMON STOCK" shall mean the $.01 par value common
stock of Sub.
"SUBSIDIARIES" shall mean all those corporations,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned
- 30 -
<PAGE> 35
directly or indirectly by its parent.
"SURVIVING CORPORATION" shall mean the Company as the
surviving corporation resulting from the Merger.
"TAX" or "TAXES" shall mean any federal, state, county,
local, or foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, property, withholding, excise, occupancy, and
other taxes, assessments, charges, fares, or impositions, including
interest, penalties, and additions imposed thereon or with respect
thereto.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
<TABLE>
<S> <C>
Closing Section 1.2
Company Benefit Plans Section 5.15
Company Contracts Section 5.16
Company ERISA Plan Section 5.15
Company Pension Plan Section 5.15
Effective Time Section 1.3
ERISA Affiliate Section 5.15
Encumbrance Section 5.18
Intellectual Property Section 5.19
Merger Section 1.1
Merger Consideration Section 3.1
Real Property Section 5.18
Tax Opinion Section 9.1(h)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
13.2 EXPENSES.
(a) Each of the Parties shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that if the Merger is
consummated Minotto shall bear all direct costs and expenses incurred by the
Company in connection with the transactions contemplated hereby.
Notwithstanding the foregoing, with respect to the HSR filing fees, such fees
shall be split and paid equally between Minotto and Parent.
(b) Nothing contained in this Section 13.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
13.3 BROKERS AND FINDERS. Each of the Parties represents and
warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage fees, commissions,
or finders' fees in connection with this Agreement or the transactions
contemplated hereby. In the event of a claim by any broker or finder based
upon his or its representing or being retained by or allegedly representing or
being retained by the Company or Parent, Minotto and Parent, as the case may
be, agree to indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
- 31 -
<PAGE> 36
13.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral. Nothing in this
Agreement expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
13.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of the Company and Parent and Minotto,
whether before or after shareholder approval of this Agreement has been
obtained; provided, that after any such approval by the holders of Company
Common Stock, there shall be made no amendment that pursuant to applicable
provisions of the GBCC requires further approval by such shareholders without
the further approval of such shareholders.
13.6 WAIVERS.
(a) Prior to or at the Effective Time, Parent, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of
this Agreement by the Company or Minotto, to waive or extend the time for the
compliance or fulfillment by the Company or Minotto of any and all of their
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Parent under this Agreement, except any
condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by a duly authorized
officer of Parent.
(b) Prior to or at the Effective Time, the Company, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Parent, to waive or extend the time for the
compliance or fulfillment by Parent of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of the Company under this Agreement, except any condition which, if
not satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by a duly authorized officer of the
Company.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained
in this Agreement in one or more instances shall be deemed to be or construed
as a further or continuing waiver of such condition or breach or a waiver of
any other condition or of the breach of any other term of this Agreement.
13.7 ASSIGNMENT. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any Party hereto without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
13.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
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<PAGE> 37
The Company or Minotto: Basic American Medical Products, Inc.
4355 International Boulevard
Norcross, Georgia 30093
Telecopy Number: (770) 923-0816
Attention: Gene J. Minotto
Copy to Counsel: Palmer & Berman
352 Piedmont Road, N.E.
8 Piedmont Center
Suite 510
Atlanta, Georgia 30305
Telecopy Number: (404) 266-3737
Attention: Jeffrey N. Berman
Parent: Fuqua Enterprises, Inc.
One Atlantic Center
Suite 5000
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 815-4529
Attention: John J. Huntz, Jr.
Copy to Counsel: Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-7777
Attention: Bryan E. Davis
13.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Georgia, without regard
to any applicable conflicts of Laws.
13.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
13.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
13.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall
be considered the draftsman. The Parties acknowledge and agree that this
Agreement has been reviewed, negotiated and accepted by all Parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
13.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
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<PAGE> 38
13.14 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: BASIC AMERICAN MEDICAL PRODUCTS, INC.
/s/ Mark J. Minotto By: /s/ Gene J. Minotto
- ---------------------------- -----------------------------
Secretary Name: Gene J. Minotto
Title: President
[CORPORATE SEAL]
ATTEST: FUQUA ENTERPRISES, INC.
/s/ Mildred H. Hutcheson By: /s/ L. P. Klamon
- ---------------------------- -----------------------------
Secretary Name: Lawrence P. Klamon
Title: President and Chief Executive
Officer
[CORPORATE SEAL]
ATTEST: BA ACQUISITION CORPORATION
/s/ Brady W. Mullinax, Jr. By: /s/ L. P. Klamon
- ---------------------------- -------------------------------
Secretary Name: Lawrence P. Klamon
Title: President
[CORPORATE SEAL]
With respect to Articles 7, 12 and
13 only:
/s/ Gene J. Minotto (SEAL)
------------------------------------
Gene J. Minotto
- 34 -
<PAGE> 39
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
1 Form of Registration Rights Agreement
</TABLE>
- 35 -
<PAGE> 40
EXHIBIT 1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made this
____ day of October, 1995 by and among Fuqua Enterprises, Inc., a Delaware
corporation (the "Company"), and Gene J. Minotto (the "Basic Shareholder").
W I T N E S S E T H:
WHEREAS, the Company, BA Acquisition Corp., a Georgia corporation and
a wholly owned subsidiary of the Company (the "Subsidiary"), Basic American
Medical Products, Inc., a Georgia corporation ("Basic") and the Basic
Shareholder, have entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of October 6, 1995, providing for the acquisition of Basic
by the Company through a merger (the "Merger") of the Subsidiary into Basic
with Basic being the corporation surviving the Merger;
WHEREAS, the Basic Shareholder upon consummation of the Merger will
hold in the aggregate approximately 13.53% of the issued and outstanding common
stock, $2.50 par value, of the Company (the "Common Stock"); and
WHEREAS, the parties to the Merger Agreement and the Basic
Shareholder desire the Company to register the shares under the Securities Act
(as hereinafter defined) for resale by the Basic Shareholder and the execution
and delivery of this Agreement is a condition precedent to the consummation of
the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Certain Definitions.
For purposes of this Agreement, the following terms have the
following meanings when used herein:
(a) "Business Day" means any Monday, Tuesday, Wednesday,
Thursday or Friday that is not a day on which banking institutions in Atlanta,
Georgia are authorized by law, regulation or executive order to close.
(b) "Closing" means the date of the consummation of the
Merger as set forth in the Merger Agreement.
(c) "Commission" means the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(d) "Common Stock" means the Common Stock, par value
$2.50 per share, of the Company.
<PAGE> 41
(e) "Company" means Fuqua Enterprises, Inc., a Delaware
corporation, and its successors and assigns.
(f) "Demand Registration" means any registration of
Registrable Securities effected pursuant to Section 3 hereof.
(g) "Exchange Act" means the Securities Exchange Act of
1934, as amended (or any similar successor federal statute), and the rules and
regulations thereunder, as in effect from time to time.
(h) "Holder" means any Person that owns Registrable
Securities, including such successors and assigns as acquire Registrable
Securities, directly or indirectly, from such Person. For purposes of this
Agreement, the Company may deem and treat the registered holder of a
Registrable Security as the Holder and absolute owner thereof.
(i) "Initial Holder" means Gene J. Minotto.
(j) "Majority Registered Holders" means in the case of
any registration statement, the Holders of a majority of the Registrable
Securities proposed to be covered (or so covered) in such registration
statement.
(k) "Majority Sellers" means (i) in the case of any
offering or proposed offering pursuant to a shelf "draw-down" of Registrable
Securities registered pursuant to a Shelf Registration, the Holders of a
majority of the Registrable Securities so offered or proposed to be so offered,
and (ii) in the case of any other offering or proposed offering pursuant to any
Registration, the Majority Registered Holders of the applicable registration
statement.
(l) "Person" means any individual, partnership,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture, or other entity, or a government or
any political subdivision or agency.
(m) "Piggyback Registration" means any registration of
Registrable Securities effected pursuant to Section 4 hereof.
(n) "Registrable Securities" means (i) the 600,000 shares
of Common Stock issued to the Basic Shareholder in the Merger and (ii) any
securities issued or issuable in respect of or in exchange for any of the
shares of Common Stock referred to in clause (i) above by way of a stock
dividend or other distribution on the Common Stock, stock split or combination
of shares, recapitalization, reclassification, merger, consolidation or
exchange offer. For purposes of this Agreement, a Registrable Security ceases
to be a Registrable Security when either (1) it has been effectively registered
under the Securities Act and sold or distributed to any Person pursuant to an
effective registration statement covering it or (2) it has been sold or
distributed to any
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<PAGE> 42
Person pursuant to Rule 144.
(o) "Registration" means any Shelf Registration, Demand
Registration or Piggyback Registration.
(p) "Rule 10b-6" means Rule 10b-6 promulgated by the
Commission under the Exchange Act, as such Rule may be amended from time to
time, or any similar successor rule that may be promulgated by the Commission.
(q) "Rule 144," Rule 145," "Rule 415" and "Rule 424"
mean, respectively, Rule 144, Rule 145, Rule 415 and Rule 424, each promulgated
by the Commission under the Securities Act, in each case as amended from time
to time, or any similar successor rule thereto that may be promulgated by the
Commission.
(r) "Securities Act" means the Securities Act of 1933, as
amended (or any similar successor federal statute), and the rules and
regulations thereunder, as the same are in effect from time to time.
(s) "Shelf Period" means the period (i) beginning one
year after the Closing Date and (ii) ending four years after the Closing Date
(or, if earlier, on expiration of the period during which a Shelf Registration
must remain effective under this Agreement).
(t) "Shelf Registration" means any registration of
Registrable Securities effected pursuant to Section 2 hereof.
2. Shelf Registrations.
(a) Effective Registration. At any time after
commencement of the Shelf Period, upon written notice to the Company from one
or more Holders (the "Initiating Shelf Holders") of a majority of the
Registrable Securities, requesting that the Company effect, pursuant to this
Section 2(a) a Shelf Registration covering the Registrable Securities then
constituting no more than 50% of the Registrable Securities on any appropriate
form pursuant to Rule 415, the Company shall promptly (but in any event within
20 days) give written notice of such requested registration to all other
Holders and thereupon the Company shall as expeditiously as possible, use its
reasonable efforts to effect the registration under the Securities Act of:
(A) The Registrable Securities that the Initiating
Shelf Holders have requested the Company to register; and
(B) All other Registrable Securities the Holders of
which have made a written request to the Company for registration
thereof (which request shall specify such Registrable Securities and
the proposed amounts thereof) within 30 days after receipt of such
written notice from the Company,
- 3 -
<PAGE> 43
all to the extent requisite to permit the disposition by Holders of the
securities then constituting Registrable Securities so to be registered.
(b) Proration. To the extent that the amount of
Registrable Securities requested to be registered under the Shelf Registration
shall exceed 50% of the Registrable Securities, the amount of Registrable
Securities to be offered for the accounts of Holders shall be reduced pro rata
to the extent necessary so that amount of Registrable Securities to be
registered shall not exceed 50% of the Registrable Securities.
(c) Duration. The Company shall use its reasonable
efforts to have such "shelf" registration statement declared effective as soon
as practicable after its filing and to keep such registration statement
continuously effective until the fourth anniversary of the Closing Date or
until all Registrable Securities included therein have been sold, if earlier.
If necessary, the Company shall cause to be filed, and shall use its reasonable
efforts to have declared effective as soon as practicable following filing,
additional "shelf" registration statements or amendments as necessary to
maintain such effectiveness during the Shelf Period.
(d) Shelf "Draw-Downs". If any Holder effects, pursuant
to a Shelf Registration, a public offering of all or a part of its Registrable
Securities a shelf "draw-down") and wishes the Company to perform, in
connection with such shelf "draw-down," any procedures specified in Section
6(a) hereof in addition to those the Company is otherwise obligated to perform
with respect to such Shelf Registration pursuant to Sections 2(a) and 6(a)
hereof, such Holder shall deliver to the Company, at least five Business Days
before such "draw-down" is to be made, a written notice describing in
reasonable detail its proposed offering and requesting the performance of such
additional procedures pursuant to this Section 2(d) and such Section 6(a). The
Company shall be required to perform such additional procedures in advance of a
particular shelf "draw-down" only if such Holder shall have requested such
performance as provided above. In addition, the Company shall be required to
perform such additional procedures (other than those required under the
securities laws) in connection with a particular shelf "draw-down" only if one
or more Holders shall have notified the Company pursuant to this Section 2(d)
of their intention to offer to the public Registrable Securities with an
aggregate market value (on the date the written notice referred to above is
delivered) of at least $2 million pursuant to such "draw-down." During the
first three years of the Shelf Period a shelf "draw-down" that is an
underwritten offering shall constitute a Demand Registration for purposes of
the first sentence of Section 3(b).
(e) Inclusion of Other Securities. No Shelf Registration
shall include any securities other than Registrable Securities; provided that
this Agreement shall not prohibit the filing of other "shelf" registration
statements by the Company.
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<PAGE> 44
3. Demand Registrations.
(a) Effective Registration. At any time after one year
following the Closing Date, upon written notice to the Company from one or more
Holders (the "Initiating Demand Holders") of Registrable Securities holding in
the aggregate Registrable Securities with a market value (on the date the
written notice is delivered) of at least $2 million, requesting that the
Company effect, pursuant to this Section 3, the registration of any of such
Initiating Demand Holders' Registrable Securities under the Securities Act
(which notice shall specify the Registrable Securities so requested to be
registered, the proposed amounts thereof and the intended method or methods of
disposition by such Demand Initiating Holders), the Company shall promptly (but
in any event within 20 days) give written notice of such requested registration
to all Holders, and thereupon the Company shall, as expeditiously as possible,
use its reasonable efforts to effect the registration under the Securities Act
of:
(A) the Registrable Securities that the Initiating
Demand Holders have requested the Company to register, for
disposition in accordance with the intended method or methods of
disposition stated in their notice to the Company; and
(B) all other Registrable Securities the Holders of
which shall have made a written request to the Company for
registration thereof (which request shall specify such Registrable
Securities and the proposed amounts thereof) within 30 days after the
receipt of such written notice from the Company,
all to the extent requisite to permit the disposition by Holders of the
securities then constituting Registrable Securities so to be registered.
(b) Frequency; Duration. The Company shall not be
required to effect more than two Demand Registrations pursuant to this
Agreement. The Company shall not be required to effect a Demand Registration
pursuant to this Section 3: (i) if it shall have so effected a Demand
Registration during the previous 12 months; (ii) if the Initiating Demand
Holders shall have requested such Demand Registration after the third
anniversary of the Closing Date; or (iii) during the Shelf Period, unless the
requested Demand Registration is to be underwritten, on either a firm
commitment or best efforts basis, and the managing underwriter or underwriters
have requested in a written opinion to the Initiating Demand Holders and the
Company that a new registration statement be filed in the interest of the
proposed offering; provided, however, that a Demand Registration shall not be
deemed to have been effected for purposes of Section 3(b)(i) if the applicable
registration statement has not been declared effective and kept effective until
the earlier of (i) four months following the date on which such registration
statement was declared effective and (ii) the sale pursuant to such
registration statement of the Registrable Securities covered thereby.
(c) Inclusion of Other Securities. The Company shall not
register any securities other than Registrable Securities in any Demand
Registration without the
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<PAGE> 45
prior written consent of Holders of a majority of the Registrable Securities
requested to be included in such Demand Registration. If any securities other
than Registrable Securities are so registered, securities requested to be
registered by the Company for sale for its own account shall have absolute
priority over securities requested to be registered by third parties.
4. Piggyback Registrations.
(a) Effective Registration. If the Company proposes to
file a registration statement under the Securities Act with respect to any
class of equity securities (other than in connection with the registration of
equity securities issued or issuable pursuant to an employee stock option,
stock purchase, stock bonus or similar plan or pursuant to a merger, exchange
offer or transaction of the type specified in Rule 145(a) under the Securities
Act) at any time on or prior to the fifth anniversary of the Closing Date, then
the Company shall give written notice of such proposed filing to the Holders at
least 15 days before the anticipated filing date, and such notice shall offer
the Holders the opportunity to register such amount of Registrable Securities
as each such Holder may request. The Company shall use its reasonable efforts
to cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the inclusion therein of any Registrable Securities the
Holders of which request, within 5 days after receiving written notice of the
proposed filing from the Company, such inclusion, on the same terms and
conditions as any similar securities of the Company so included. Any Holder's
request for such inclusion may be withdrawn, in whole or in part, at any time
prior to the effective date of the registration statement for such offering.
(b) Cut-Backs. Notwithstanding the provisions of Section
4(a) hereof, if the managing underwriter or underwriters of a proposed
underwritten offering as described in such Section 4(a) deliver a written
opinion to the Holders requesting inclusion of their Registrable Securities
stating that the total amount or kind of securities that they and any other
Persons seek to include in such offering would materially and adversely affect
the success of such offering, then the amount or kind of Registrable Securities
to be offered for the accounts of Holders shall be reduced pro rata to the
extent necessary to reduce the total amount of Registrable Securities to be
included in such offering to that recommended by such managing underwriter or
underwriters (which amount may be zero); provided, however, that if the amount
of any kind of Registrable Securities to be offered for the accounts of Holders
is reduced in accordance with this Section 4(b), the Company may not include in
such offering any securities other than (i) Registrable Securities and (ii)
securities, if any, that the Company is offering for sale for its own account
in a primary underwritten offering.
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<PAGE> 46
5. Holdback Agreements.
(a) Restrictions on Public Sales by Holders of
Registrable Securities. To the extent not inconsistent with applicable law,
each Holder that is timely notified in writing by the managing underwriter or
underwriters shall not effect any public sale or distribution (including a sale
pursuant to Rule 144) of any issue being registered in an underwritten offering
(other than pursuant to an employee stock option, stock purchase, stock bonus
or similar plan, pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act or pursuant to a "shelf"
registration), any securities of the Company similar to any such issue or any
securities of the Company convertible into or exchangeable or exercisable for
any such issue, during the 10-day period prior to, and during the 90-day period
beginning on, the effective date of the applicable registration statement,
except as part of such registration.
(b) Restrictions on Public Sales by the Company. The
Company shall not effect any public sale or distribution of any issue being
registered in an underwritten offering (other than pursuant to an employee
stock option, stock purchase, stock bonus or similar plan or pursuant to a
merger, exchange offer or a transaction of the type specified in Rule 145(a)
under the Securities Act or pursuant to a "shelf" registration), any securities
of the Company similar to any such issue or any securities of the Company
convertible into or exchangeable or exercisable for any such issue, during the
10-day period prior to, and during the 30-day period beginning on, the
effective date of the applicable registration statement, except as part of such
registration.
6. Registration Procedures.
(a) Company Procedures. Whenever the Company is required
by this Agreement to effect the registration of any Registrable Securities
under the Securities Act pursuant to a registration statement, the Company
shall use its reasonable efforts to effect each such registration to permit the
sale of such Registrable Securities in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Company shall, as soon
as practicable:
(i) prepare and file with the Commission the
requisite registration statement to effect such registration and thereafter use
its reasonable efforts to cause such registration statement to be declared
effective as soon as practicable and to remain continuously effective for the
time period required by this Agreement to the extent permitted under the
Securities Act, provided that as soon as practicable but in no event later than
three Business Days before filing such registration statement, any related
prospectus or any amendment or supplement thereto, other than any amendment or
supplement made solely as a result of incorporation by reference of documents
filed with the Commission subsequent to the filing of such registration
statement (or, in the case of any prospectus supplement or post-effective
amendment relating to a proposed shelf "draw-down" pursuant to Section 2
hereof, two Business
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<PAGE> 47
Days before the filing thereof), the Company shall furnish to the Holders of
the Registrable Securities covered by such registration statement (or, in the
case of any prospectus supplement or post-effective amendment relating to a
proposed shelf "draw-down" pursuant to Section 2 hereof, to the Selling
Holders) and the underwriters, if any, copies of all such documents proposed to
be filed, which documents shall be subject to the review of such Holders and
underwriters; the Company shall not file any registration statement or
amendment thereto or any prospectus or any supplement thereto (other than any
amendment or supplement made solely as a result of incorporation by reference
of documents filed with the Commission subsequent to the filing of such
registration statement) to which the managing underwriters of the applicable
offering, if any, or the Majority Registered Holders (or, in the case of any
prospectus supplement or post-effective amendment relating to a proposed shelf
"draw-down" pursuant to Section 2 hereof, the Majority Sellers) shall have
reasonably objected in writing within two Business Days after receipt of such
documents to the effect that such registration statement or amendment thereto
or prospectus or supplement thereto does not comply in all material respects
with the requirements of the Securities Act (provided that the foregoing shall
not limit the right of any Holder whose Registrable Securities are covered by a
registration statement to reasonably object, within two Business Days after
receipt of such documents, to any particular information that is to be
contained in such registration statement, amendment, prospectus or supplement
and relates specifically to such Holder, including, without limitation, any
information describing the manner in which such Holder acquired such
Registrable Securities and the intended method or methods of distribution of
such Registrable Securities), and if the Company is unable to file any such
document due to the objections of such underwriters or such Holders, the
Company shall use its reasonable efforts to cooperate with such underwriters
and Holders to prepare, as soon as practicable, a document that is responsive
in all material respects to the reasonable objections of such underwriters and
Holders;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to such registration statement as may
be necessary to keep such registration statement continuously effective and
current for the period required by this Agreement to the extent permitted under
the Securities Act; and cause each related prospectus to be supplemented by any
prospectus supplement as may be required, and as so supplemented to be filed
pursuant to Rule 424; and otherwise comply with the provisions of the
Securities Act as may be necessary to facilitate the disposition of all
Registrable Securities covered by such registration statement during the
applicable period in accordance with the intended method or methods of
disposition by the selling Holders thereof set forth in such registration
statement or such prospectus or prospectus supplement;
(iii) notify the Holders and the managing
underwriters, if any, of the applicable offering (providing, if requested by
any such Persons, confirmation in writing) as soon as practicable after
becoming aware of: (A) the filing of any prospectus or prospectus supplement or
the filing or effectiveness (or anticipated date
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<PAGE> 48
of effectiveness) of such registration statement or any post-effective
amendment thereto; (B) any request by the Commission for amendments or
supplements to such registration statement or the related prospectus or for
additional information; (C) the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation
of any proceedings for that purpose; (D) the receipt by the Company of any
notification with respect to the suspension of the qualification or
registration (or exemption therefrom) of any Registrable Securities for sale in
any jurisdiction in the United States or the initiation or threatening of any
proceeding for such purposes; or (E) the happening of any event that makes any
statement made in such registration statement or in any related prospectus,
prospectus supplement, amendment or document incorporated therein by reference
untrue in any material respect or that requires the making of any changes in
such registration statement or in any such prospectus, supplement, amendment or
other such document so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein (in the case of any prospectus in
the light of the circumstances under which they were made) not misleading;
(iv) make every reasonable effort to obtain at the
earliest possible moment the withdrawal of any order or other action suspending
the effectiveness of any such registration statement or suspending the
qualification or registration (or exemption therefrom) of the Registrable
Securities for sale in any jurisdiction;
(v) if reasonably requested by the managing
underwriters, if any, of the applicable offering, or by the Majority Sellers,
as soon as practicable incorporate in a prospectus supplement or post-effective
amendment such information as such underwriters or the Majority Sellers, as the
case may be, agree should be included therein relating to the sale and offering
of the applicable Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being sold to
any underwriters, the purchase price being paid therefor by any such
underwriters and any other terms of the offering of the Registrable Securities;
and make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable following receipt of notice of the matters to
be incorporated therein;
(vi) as soon as practicable after filing such
documents with the Commission, furnish to the Holders and each of the
underwriters, if any, without charge, at least one manually signed or conformed
copy of such registration statement and any post-effective amendment thereto,
including financial statements and schedules (or, in the case of any
post-effective amendment relating to a shelf "draw-down" pursuant to Section 2
hereof, to the Selling Holders); and as soon as practicable after the request
of any Holder or underwriter, furnish to such Holder or underwriter, as the
case may be, at least one copy of any document incorporated by reference in
such registration statement or in any related prospectus, prospectus supplement
or amendment, together with all exhibits thereto (including those previously
furnished or
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<PAGE> 49
incorporated by reference);
(vii) deliver to the Holders and to each of the
underwriters, if any, without charge, as many copies of the prospectus or
prospectuses (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; subject to Section
6(b)(i) hereof, the Company consents to the use of any such prospectus or any
amendment or supplement thereto by the Holders and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
any such prospectus or any amendment or supplement thereto;
(viii) prior to any public offering of Registrable
Securities, register or qualify (or obtain an exemption therefrom), or
cooperate with the Holders, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption
therefrom) of, such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions in the United States as the
Holders or the underwriters, if any, shall reasonably request in writing; keep
each such registration or qualification (or exemption therefrom) effective
during the period during which such registration statement is required to be
kept effective pursuant to this Agreement, to the extent permitted under the
Securities Act; and do any and all other acts and things reasonably necessary
or advisable to facilitate the disposition in such jurisdictions of the
Registrable Securities covered by such registration statement; provided that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it would not be required to qualify but for this Section
6(a)(viii);
(ix) cooperate with Holders participating in such
registration and the underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing the Registrable Securities to be
sold; and enable such Registrable Securities to be in such denominations and
registered in such names as the underwriters, if any, may request at least two
Business Days prior to any sale of Registrable Securities to the underwriters;
(x) use its reasonable efforts to cause the
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities in the
United States as may be reasonably necessary to enable the Holders or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(xi) as soon as practicable after the occurrence of
any event described in Section 6(a)(iii)(E) hereof, prepare a supplement or
post-effective amendment to such registration statement or to the related
prospectus or any document incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such prospectus shall not contain
an untrue statement of a material fact or
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<PAGE> 50
omit to state any material fact necessary to make the statements therein not
misleading; if any event described in Section 6(a)(iii)(B) hereof occurs, use
its reasonable efforts to cooperate with the Commission to prepare, as soon as
practicable, any amendment or supplement to such registration statement or such
related prospectus and any other additional information, or to take other
action that may have been requested by the Commission;
(xii) use its reasonable efforts to cause all Common
Stock constituting Registrable Securities covered by such registration
statement to be listed on each securities exchange (or quotation system
operated by a national securities association) on which the Common Stock of the
Company is then listed (or included), if so requested by the Majority
Registered Holders or the underwriters, if any, and enter into customary
agreements including, if necessary, a listing application and indemnification
agreement in customary form, and provide a transfer agent for such Registrable
Securities no later than the effective date of such registration statement; use
its reasonable efforts to cause any other Registrable Securities covered by
such registration statement to be listed (or included) on each securities
exchange (or quotation system operated by a national securities association) on
which securities of the same class and series, if any, are then listed (or
included) (or on any exchange or quotation system on which any Person other
than a Holder shall have the right to have securities of the same class and
series, if any, listed or included), if so requested by the Majority Registered
Holders or the underwriters, if any, and enter into customary agreements
including, if necessary, a listing application and indemnification agreement in
customary form, and, if necessary, provide a transfer agent for such securities
no later than the effective date of such registration statement;
(xiii) provide a CUSIP number for the
Registrable Securities no later than the effective date of such registration
statement;
(xiv) enter into customary agreements (including, in
the case of an underwritten offering, an underwriting agreement in customary
form for the managing underwriters with respect to issuers of similar market
capitalization and reporting and financial histories) and take all such other
reasonable actions in connection therewith in order to expedite or facilitate
the disposition of the Registrable Securities included in such registration
statement and, in the case of an underwritten offering: (A) make
representations and warranties to each Holder of Registrable Securities
participating in such offering and to each of the underwriters, in such form,
substance and scope as are customarily made to the managing underwriters by
issuers of similar market capitalization and reporting and financial histories
and confirm the same to the extent customary if and when requested; (B) obtain
opinions of counsel to the Company and updates thereof addressed to each Holder
of Registrable Securities participating in such offering and to each of the
underwriters, such opinions and updates to be in customary form and covering
the matters customarily covered in opinions obtained in underwritten offerings
by the managing underwriters for issuers of similar market capitalization and
reporting and financial histories; (C) obtain "comfort" letters and
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<PAGE> 51
updates thereof from the Company's independent certified public accountants
addressed to each Holder of Registrable Securities participating in such
offering and to each of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "comfort" letters to
the managing underwriters in connection with underwritten offerings by them for
issuers of similar market capitalization and reporting and financial histories;
(D) provide, in the underwriting agreement to be entered into in connection
with such offering, indemnification provisions and procedures of the type
customarily contained in underwriting agreements for offerings by issuers of
similar market capitalization and reporting and financial histories; and (E)
deliver such customary documents and certificates as may be reasonably
requested by the Majority Sellers and the managing underwriters to evidence .
compliance with clause (A) of this paragraph (xiv) and with any customary
conditions contained in the underwriting agreement entered into by the Company
in connection with such offering;
(xv) make available, for inspection by the Holders
of the Registrable Securities included in such registration, any underwriter
participating in any disposition of Registrable Securities pursuant to such
registration statement, and any attorney, accountant or other representative
retained by such selling Holders or by any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such underwriter, attorney,
accountant or other representative in connection with such registration;
(xvi) otherwise use its reasonable efforts to comply
with all applicable rules and regulations of the Commission relating to such
registration and the distribution of the securities being offered (including,
without limitation, Rule 10b-6, with respect to which the Company shall also
use its reasonable efforts timely to apprise each Holder of any bids and
purchases by the Company, and of any known bids and purchases by each
"affiliated purchaser" (as defined in Rule 10b-6) of the Company, that would in
the opinion of the Company be prohibited under Rule 10b-6 in connection with a
"distribution" (as so defined) by such Holder of securities of the Company) and
make generally available to its security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act, no later than 60 days
after the end of any 12-month period (or 120 days, if such period is a fiscal
year) commencing at the end of any fiscal quarter in which the Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering, or, if not sold to underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of such registration statement, which earning
statements shall cover such 12-month periods;
(xvii) cooperate and assist in any filings required
to be made with the National Association of Securities Dealers, Inc. and in
the performance of any customary or required due diligence investigation by
any underwriter; and
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<PAGE> 52
(xviii) use its reasonable efforts to take all
other reasonable steps necessary and appropriate to effect such registration in
the manner contemplated by this Agreement.
(b) Holder Procedures.
(i) Each Holder agrees, by acquisition of the
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event described in Section 6(a)(iii)(B), 6(a)(iii)(C),
6(a)(iii)(D) or 6(a)(iii)(E) hereof, such Holder shall forthwith discontinue
disposition of any Registrable Securities (but, in the case of an event
described in Section 6(a)(iii)(D), in the affected jurisdiction or
jurisdictions only) covered by the affected registration statement or
prospectus until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 6(a)(iii) or 6(a)(xi) hereof or
until such Holder is (it being agreed by the Company that the underwriters, if
any, shall also be) advised in writing (the "Advice") by the Company that the
use of the applicable prospectus may be resumed. If the Company shall have
given any such notice during a period when a Shelf Registration or a Demand
Registration is in effect, the Shelf Period or four-month period mentioned in
Section 2(a) or 3(b) hereof, as the case may be, shall be extended by the
number of days from and including the date of the giving of such notice to and
including the date when each Holder of Registrable Securities included in such
Registration shall have received the copies of the supplemented or amended
prospectus contemplated by Section 6(a)(iii) or 6(a)(xi) hereof or the Advice,
as the case may be.
(ii) In connection with any underwritten public
offering of Registrable Securities pursuant to a Shelf Registration or Demand
Registration, the managing underwriter of such offering shall be a nationally
recognized investment banking firm selected by the Majority Sellers and shall
be reasonably acceptable to the Company.
7. Registration Expenses.
All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications or registrations (or the obtaining of exemptions therefrom)
of the Registrable Securities), printing expenses (including expenses of
printing prospectuses), messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), reasonable fees and
disbursements of its counsel and its independent certified public accountants
(including the reasonable expenses of any special audit or "comfort" letters
required by or incident to such performance or compliance), securities acts
liability insurance (if the Company elects to obtain such insurance),
reasonable fees and expenses of any special
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<PAGE> 53
experts retained by the Company in connection with any registration hereunder,
reasonable fees and expenses of other Persons retained by the Company,
reasonable fees and expenses of one counsel for the Holders, selected by the
Majority Sellers, incurred in connection with each registration hereunder, and
reasonable out-of-pocket expenses of the Holders (all such expenses being
herein referred to as "Registration Expenses"), shall be borne by the Company;
provided that Registration Expenses shall not include any underwriting
discounts, commissions or fees attributable to the sale of the Registrable
Securities.
8. Indemnification; Contribution.
(a) Indemnification by the Company. The Company shall
indemnify, to the full extent permitted by law, each Holder of Registrable
Securities, and if applicable, its officers, directors, employees and agents,
and if applicable, each Person who controls such Holder (within the meaning of
the Securities Act), against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any registration statement covering any Registrable
Securities, any related prospectus or preliminary prospectus, or any amendment
or supplement thereto, or any omission or alleged omission to state in any
thereof a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus or prospectus supplement, in
light of the circumstances under which they were made) not misleading, except
in each case insofar as the same arises out of or is based upon an untrue
statement or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact in such registration statement,
prospectus, preliminary prospectus, amendment or supplement, as the case may
be, made or omitted, as the case may be, in reliance upon and in conformity
with written information furnished to the Company by such Holder expressly for
use therein. This indemnity is in addition to any liability that the Company
may otherwise have. The Company shall also indemnify any underwriters of the
Registrable Securities and their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of Holders
and other specified Persons.
(b) Indemnification by Holders of Registrable Securities.
In connection with any registration statement covering Registrable Securities,
each Holder any of whose Registrable Securities are covered thereby shall
furnish to the Company in writing such information and affidavits with respect
to such Holder as the Company reasonably requests for use in connection with
such registration statement, any related prospectus or preliminary prospectus,
or any amendment or supplement thereto, and shall indemnify, to the full extent
permitted by law, the Company, the Company's directors, officers, employees and
agents and each Person who controls the Company (within the meaning of the
Securities Act), against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses) arising out of
or based upon any untrue or alleged untrue statement of a material fact
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<PAGE> 54
contained in any registration statement covering any Registrable Securities,
any related prospectus or preliminary prospectus, or any amendment or
supplement thereto, or any omission or alleged omission to state in any thereof
a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus or prospectus supplement, in
light of the circumstances under which they were made) not misleading, in each
case to the extent, but only to the extent, that the same arises out of or is
based upon an untrue statement or alleged untrue statement of a material fact
or an omission or alleged omission to state a material fact in such
registration statement or in such related prospectus, preliminary prospectus,
amendment or supplement, as the case may be, made or omitted, as the case may
be, in reliance upon and in conformity with written information furnished to
the Company by such Holder expressly for use therein. This indemnity is in
addition to any liability that a Holder may otherwise have. Each Holder
participating in an offering of Registrable Securities shall, if requested by
the managing underwriter or underwriters of such offering, also indemnify any
underwriters of such Registrable Securities and their officers and directors
and each Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Company and other specified Persons.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification under this Section 8 agrees to give prompt written
notice to the indemnifying party after the receipt by such Person of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such Person will
claim indemnification or contribution pursuant to this Agreement and, unless in
the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and the indemnifying party with respect to
such claim, permit the indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to such indemnified party. If the
indemnifying party is not entitled to, or elects not to, assume the defense of
a claim, it shall not be obligated to pay the reasonable fees and expenses of
more than one counsel with respect to such claim, unless in the reasonable
judgment of counsel to such indemnified party, expressed in a writing delivered
to the indemnifying party, a conflict of interest may exist between such
indemnified party and any other indemnified party with respect to such claim,
in which event the indemnifying party shall be obligated to pay the reasonable
fees and expenses of such additional counsel or counsels (which shall be
limited to one counsel per indemnified party). The indemnifying party shall
not be subject to any liability for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(d) Contribution.
(i) If the indemnification provided for in this
Section 8 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to
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<PAGE> 55
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties, relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c) hereof, any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding.
(ii) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(iii) If indemnification is available under this
Section 8, the indemnifying parties shall indemnify each indemnified party to
the full extent provided in Sections 8(a) and 8(b) hereof without regard to the
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 8(d).
9. Participation in Underwritten Registrations
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay such Person's pro rata portion of all
underwriting discounts and commissions.
10. Cooperation with the Company.
Each Holder by the acceptance of Registrable Securities agrees to use
its reasonable efforts to cooperate with the Company in all reasonable respects
in connection with the preparation and filing of Registrations hereunder in
which such
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<PAGE> 56
Registrable Securities are included or requested to be included.
11. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not
hereafter enter into any agreement with respect to any of its securities that
contains provisions more favorable to the holders thereof than the provisions
contained in this Agreement without providing for the granting of comparable
rights to the Holders in this Agreement.
(b) Remedies. Each Holder of Registrable Securities, in
addition to being entitled to exercise all rights in an action at law,
including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company shall have obtained the prior written
consent of (i) the Holders of a majority of the securities then constituting
Registrable Securities and (ii) each Holder materially and adversely affected
by such amendment, modification, supplement, waiver or departure.
(d) Notices. All notices, requests, waivers, releases,
consents, and other communications required or permitted by this Agreement
(collectively, "Notices") shall be in writing. Notices shall be deemed
sufficiently given for all purposes under this Agreement when delivered in
person, when dispatched by telegram or (upon written confirmation of receipt)
by electronic facsimile transmission or (upon written confirmation of receipt)
when dispatched by a nationally recognized overnight courier service, or five
Business Days after being deposited in the mail, postage prepaid, if mailed.
All Notices shall be delivered as follows:
(i) if to a Holder of Registrable Securities, at
the address indicated on Company's registrar relating to such securities or at
such other address as such Holder may have furnished to the Company in writing;
and
(ii) if to the Company, at:
Fuqua Enterprises, Inc.
1201 West Peachtree Street
Suite 5000
Atlanta, Georgia 30309
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<PAGE> 57
Attention: John J. Huntz, Jr.
Telephone Number: (404) 815-2000
Fax Number: (404) 815-4529
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Bryan E. Davis
Telephone Number: (404) 881-7000
Fax Number: (404) 881-7777
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties hereto, including any successors by merger to the Company.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings; Construction. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. Unless the context otherwise requires,
all references to Sections are to Sections of this Agreement, "or" is
inclusively disjunctive, and words in the singular include the plural and vice
versa. In computing any period of time specified in this Agreement, the date
of the act or event from which such period of time is to be measured shall be
included, any such period shall expire at 5:00 p.m., Atlanta time, on the last
day of such period, and any such period denominated in months shall expire on
the date in the last month of such period that has the same numerical
designation as the date of the act or event from which such period is to be
measured; provided, however, that if there is no date in the last month of such
period that has the same numerical designation as the date of such act or
event, such period shall expire on the last day of the last month of such
period.
(h) Certain Adjustments. Notwithstanding anything to the
contrary contained in this Agreement, the Board of Directors of the Company may
make or provide for such adjustments in the numbers of shares of Common Stock
or other Registrable Securities specified in any other provision of this
Agreement specifying a number or percentage of Registrable Securities, as the
Board may determine after consultation with the Initial Holder (or, if the
Initial Holder no longer holds any securities then constituting the Registrable
Securities, Holders holding a majority of the securities then constituting the
Registrable Securities), is equitably required to
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<PAGE> 58
prevent diminution or enlargement of the rights of Holders that otherwise would
result from any stock dividend, stock split, combination of shares,
recapitalization, or other similar change in the capital structure of the
Company.
(i) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Georgia,
without regard to the principles of conflicts of laws thereof.
(j) Severability. If one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect, for any reason, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be in any way affected or impaired thereby, and the provision held to be
invalid, illegal or unenforceable shall be reformed to the minimum extent
necessary, and in a manner as consistent with the purposes thereof as is
practicable, so as to render it valid, legal and enforceable, it being intended
that all of the rights and privileges of the Holders hereunder shall be
enforceable to the fullest extent permitted by law.
(k) Entire Agreement. This Agreement is intended by the
Company and the Initial Holder to be a final expression thereof and are
intended to be a complete and exclusive statement of the agreement and
understanding of the Company and the Initial Holder in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings among the Company and any
Holders with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
FUQUA ENTERPRISES, INC.
By: /s/ Lawrence P. Klamon
--------------------------------
Name: Lawrence P. Klamon
Title: President and Chief Executive Officer
/s/ Gene J. Minotto
-------------------------------- (SEAL)
GENE J. MINOTTO
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<PAGE> 1
EXHIBIT 2(b)
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
ATLANTIC AMERICAN CORPORATION
AND
FUQUA ENTERPRISES, INC.
DATED AS OF OCTOBER 16, 1995
13
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 American Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.04 Automated Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.05 Automobile Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.06 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.08 Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.09 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Fed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Georgia Insurance Code . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Florida Tax Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 Hart-Scott Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.16 InterRedec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.17 InterRedec Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.18 InterRedec Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.19 InterRedec Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.20 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.21 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22 1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23 1934 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.24 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.25 Pledged Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.26 Premier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.27 Prime Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.28 Purchaser Disclosure Memorandum . . . . . . . . . . . . . . . . . . . . . 3
1.29 Related Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.30 SAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.31 SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.32 Seller Disclosure Memorandum . . . . . . . . . . . . . . . . . . . . . . . 4
1.33 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.34 Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.35 Stock Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.36 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.37 Tax Allocation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.38 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.39 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 2 STOCK PURCHASE AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 Purchase and Sale of the Shares . . . . . . . . . . . . . . . . . . . . . 4
2.02 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.03 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 4
2.04 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.05 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.06 Deliveries and Proceedings at the Closing . . . . . . . . . . . . . . . . 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . 6
3.01 Organization and Good Standing of Seller; Power and Authority . . . . . . 6
3.02 Organization and Good Standing of American Southern; Power and Authority . 6
3.03 Capitalization and Ownership. . . . . . . . . . . . . . . . . . . . . . . 7
3.04 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.05 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.06 No Violation of Applicable Laws or Agreements. . . . . . . . . . . . . . . 7
3.07 SEC Filings and Financial Statements . . . . . . . . . . . . . . . . . . . 8
3.08 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . 9
3.09 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Pending Litigation or Proceedings . . . . . . . . . . . . . . . . . . . . 11
3.12 Compliance With Applicable Laws . . . . . . . . . . . . . . . . . . . . . 11
3.13 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Legal Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Investment Assets Custody . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Insurance Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Insurance Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.18 Title to Assets; Material Contracts . . . . . . . . . . . . . . . . . . . 12
3.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.20 Compensation Arrangements; Bank Accounts; Officers and Directors . . . . . 15
3.21 Transactions With Related Parties . . . . . . . . . . . . . . . . . . . . 15
3.22 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.23 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . 16
4.01 Purchaser's Organization and Good Standing; Power and Authority . . . . . 16
4.02 No Violation of Applicable Laws or Agreements . . . . . . . . . . . . . . 16
4.03 Pending Litigation or Proceedings . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
4.04 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.05 Investment Intent; Ability to Bear Risk . . . . . . . . . . . . . . . . . 17
4.06 SEC Filings and Financial Statements . . . . . . . . . . . . . . . . . . . 17
4.07 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . 18
4.08 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 5 CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . 18
5.01 Operation of Business Pending Closing . . . . . . . . . . . . . . . . . . 18
5.02 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.03 Supplements to Disclosure Memoranda . . . . . . . . . . . . . . . . . . . 19
5.04 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.05 Regulatory Approvals and Consents . . . . . . . . . . . . . . . . . . . . 24
5.06 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.07 Exclusive Dealings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.08 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.09 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10 Maintenance of Records . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.11 Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.13 GAAP Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 6 CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.01 Conditions to Obligations of Purchaser . . . . . . . . . . . . . . . . . . 26
6.02 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.01 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . 28
7.02 Indemnification by Purchaser . . . . . . . . . . . . . . . . . . . . . . . 29
7.03 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . 30
7.04 Sole Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.01 When Agreement May be Terminated . . . . . . . . . . . . . . . . . . . . . 32
8.02 Final Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.03 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 9 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.01 Agreement to Arbitrate . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.02 Initiating Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.03 Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.04 Costs 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.01 Nature and Survival of Representations . . . . . . . . . . . . . . . . . . 33
10.02 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.03 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.04 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.06 Invalid Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.07 Subsequent SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.08 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.09 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.12 Person and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.14 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.15 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
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<PAGE> 6
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of October 16,
1995 by and between ATLANTIC AMERICAN CORPORATION, a Georgia corporation
("Purchaser"), and FUQUA ENTERPRISES, INC. (formerly known as Vista Resources,
Inc.), a Delaware corporation ("Seller").
RECITALS
WHEREAS, Seller owns 100% of the issued and outstanding capital stock of
American Southern Insurance Company, a Georgia corporation ("American
Southern"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase, all of the capital stock of American Southern, in accordance with the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used herein, the following terms have the following respective meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):
1.01 "Agreement" means this Stock Purchase Agreement and the Exhibit
hereto, as the same may be supplemented, modified or amended from time to time.
1.02 "American Safety" means American Safety Insurance Company, a Georgia
corporation and wholly owned subsidiary of American Southern.
1.03 "Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, regulations and orders of all Governmental Authorities.
1.04 "Automated Systems" means Automated Systems of Georgia, Inc., a
Georgia corporation and wholly owned subsidiary of American Southern.
1.05 "Automobile Safety" means Automobile Safety Management, Inc., a
Delaware corporation and wholly owned subsidiary of American Southern.
<PAGE> 7
1.06 "Closing" means the consummation of the transactions described in this
Agreement, and "Closing Date" means the date upon which such consummation
occurs.
1.07 "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
1.08 "Companies" means American Southern collectively with the Subsidiaries.
1.09 "ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect from time to time.
1.10 "Fed" means the Board of Governors of the Federal Reserve System and
the Federal Reserve Bank of New York acting as bailee for the Board of
Governors.
1.11 "GAAP" means generally accepted accounting principles.
1.12 "Georgia Insurance Code" means Title 33 of the Official Code of
Georgia Annotated and all regulations promulgated thereunder.
1.13 "Florida Tax Litigation" means the premium tax litigation with respect
to the period from 1985 through 1990 involving American Southern and the State
of Florida Department of Revenue currently being litigated in the District
Court of Appeals, 1st District of Florida (Civil Action No. 95-2588).
1.14 "Governmental Authority" means any federal, state, county, local,
foreign or other governmental or public agency, instrumentality, commission,
authority, board or body.
1.15 "Hart-Scott Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and all regulations promulgated thereunder.
1.16 "InterRedec" means InterRedec Southern Company, Inc., a Delaware
corporation.
1.17 "InterRedec Escrow" means that certain Escrow Agreement dated as of
October 11, 1991 by and among Seller, InterRedec and First Union National Bank
of Georgia.
1.18 "InterRedec Note" means that certain Nonnegotiable Note dated October
11, 1991 made by Seller, payable to InterRedec.
1.19 "InterRedec Pledge" means that certain Pledge and Security Agreement
dated October 11, 1991 by and between Seller and InterRedec.
1.20 "Knowledge" (i) with respect to Seller, means those facts known, or
which should have been known with reasonable diligence, by any of the officers
or directors of the Companies; and (ii) with respect to Purchaser, means those
facts known, or which
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should have been known with reasonable diligence, by any of the officers or
directors of Purchaser.
1.21 "Material Adverse Effect" means a material adverse effect to the
property, results of operations or financial condition of (a) American Southern
and the Subsidiaries taken as a whole, or (b) Purchaser, as shall be applicable
in the context in which the term is used; provided, however, that a Material
Adverse Effect shall not include the effect of any matter which has or may have
an industry-wide effect, or any general economic conditions.
1.22 "1933 Act" means the Securities Act of 1933, as amended.
1.23 "1934 Act" means the Securities Exchange Act of 1934, as amended.
1.24 "Person" means an individual, corporation, partnership, association,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
1.25 "Pledged Shares" means the 149,998 shares of American Southern common
stock pledged to InterRedec by Seller pursuant to the InterRedec Pledge.
1.26 "Premier" means Premier Adjusting and Claims Service, Inc., a Georgia
corporation and wholly owned subsidiary of American Southern.
1.27 "Prime Rate" means the prime rate as published in the "Money Rates"
column of The Wall Street Journal, Eastern Edition; in the event that more than
one such rate is reported, the Prime Rate shall equal the average of such
rates.
1.28 "Purchaser Disclosure Memorandum" means the written information
entitled "Purchaser Disclosure Memorandum" delivered to Seller prior to the
date of this Agreement describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure is being
made. Information disclosed with respect to one Section shall be deemed to be
disclosed for purposes of all other Sections, provided that the relevance to
the Section from which any such matter is omitted is apparent from the
disclosure with respect to the Section in which such matter is included.
1.29 "Related Party" means Seller; any of the officers or directors of any
of the Companies; any affiliate of Seller, any Company or any of their
respective officers or directors; or any business or entity in which Seller,
any Company, or any affiliate of any such person has any direct or material
indirect interest.
1.30 "SAP" means the statutory accounting practices as prescribed or
permitted by the Georgia Insurance Department.
1.31 "SEC" means the Securities and Exchange Commission.
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1.32 "Seller Disclosure Memorandum" means the written information entitled
"Seller Disclosure Memorandum" delivered to Purchaser prior to the date of this
Agreement describing in reasonable detail the matters contained therein and,
with respect to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made.
Information disclosed with respect to one Section shall be deemed to be
disclosed for purposes of all other Sections, provided that the relevance to
the Section from which any such matter is omitted is apparent from the
disclosure with respect to the Section in which such matter is included.
1.33 "Shares" means 100% of the issued and outstanding shares of capital
stock of American Southern.
1.34 "Stockholders' Equity" means total assets minus total liabilities
of American Southern on a consolidated SAP basis.
1.35 "Stock Purchase Agreement" means that certain Stock Purchase Agreement
dated as of September 17, 1991, among Seller, Concorde Finance & Investment,
Inc., InterRedec, Inc., InterRedec and American Southern.
1.36 "Subsidiaries" means American Safety, Automated Systems, Automobile
Safety and Premier.
1.37 "Tax Allocation Agreement" means the tax allocation
agreement dated as of October 11, 1991 between Seller and American Southern.
1.38 "Tax Returns" means all returns or reports, including accompanying
schedules, with respect to Taxes.
1.39 "Taxes" means all federal, state, local and foreign income, premium,
payroll, withholding, excise, sales, use, real and personal property, use and
occupation, mercantile, capital stock, franchise and other taxes, including
interest and penalties thereon and all estimated taxes.
ARTICLE 2
STOCK PURCHASE AND CLOSING
2.01 Purchase and Sale of the Shares. Upon and subject to the terms and
conditions of this Agreement, Seller shall sell, and Purchaser shall purchase,
the Shares.
2.02 Consideration. The aggregate consideration (the "Purchase Price") to
be paid by Purchaser to Seller for the Shares shall be $34,000,000, subject to
adjustment as described in Section 2.04.
2.03 Payment of Purchase Price. Purchaser shall pay the Purchase Price as
follows:
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(a) at Closing, Purchaser shall execute and deliver to Seller a promissory
note (the "Purchaser Note") in substantially the form attached hereto as
Exhibit 2.03 in a principal amount equal to the total amount of the principal
plus accrued interest (as determined pursuant to Section 2(c) of the InterRedec
Note) owed by Seller under the InterRedec Note as of the Closing Date; and
(b) at Closing, Purchaser shall pay to Seller in cash the difference between
$34,000,000 and the principal amount of the Purchaser Note, by means of a wire
transfer of immediately available funds (U.S. Dollars) to an account designated
by Seller.
2.04 Post-Closing Adjustment.
(a) As soon as practicable, but in any event within thirty (30) days after
Closing, Purchaser shall, under the direction and supervision of Roy S.
Thompson, Jr., Scott G. Thompson and Calvin L. Wall, or any of them, prepare
and deliver to Seller a balance sheet of American Southern as of the Closing
Date (the "Closing Balance Sheet"), prepared in accordance with SAP reporting
practices consistently applied (but subject to the provisions of Section
5.04(i)). Without limiting the generality of the foregoing sentence, the
parties expressly agree that the Closing Balance Sheet shall include amounts
for insurance liability reserves calculated in a manner and using methodologies
and assumptions consistent in all respects with American Southern's practice of
calculating such reserves during the 24-month period immediately prior to the
Closing Date.
(b) Seller shall have fifteen (15) days after receipt of the Closing Balance
Sheet in which to review such Closing Balance Sheet, and during such 15-day
period, Purchaser shall make available to Seller and its representatives all
information regarding preparation of the Closing Balance Sheet as may be
reasonably requested by Seller, including, without limitation, access to all
employees, books, records and work papers. If within such 15-day period Seller
does not provide Purchaser with written notice of any objection to the Closing
Balance Sheet, the Closing Balance Sheet shall be deemed accepted by, and final
and binding upon, both parties. If Seller does provide Purchaser with written
notice of any objection within such 15-day period, then the parties shall in
good faith attempt to resolve such dispute within fifteen (15) days after
Purchaser's receipt of Seller's objection notice. If such dispute cannot be
resolved by the parties, the dispute shall be submitted to arbitration in
accordance with the provisions of Article 9 hereof, except that the third
arbitrator selected from a AAA list (as described in Section 9.02) must be an
independent certified public accountant knowledgeable about SAP.
(c) Once the Closing Balance Sheet has been deemed final and binding on the
parties, whether by failure of Seller to object, agreement of the parties or
arbitration, within five (5) business days thereafter, Seller shall pay to
Purchaser in immediately available funds the amount, if any, by which the
Stockholders' Equity reflected on the Closing Balance Sheet is less than
$26,800,000, plus interest thereon at the Prime Rate in
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effect on the Closing Date for the period of the Closing Date through the date
of payment. If such Stockholders' Equity as reflected on the Closing Balance
Sheet is equal to or greater than $26,800,000, neither party shall owe the
other any additional amounts.
(d) Notwithstanding anything to the contrary contained herein, the parties
agree that all payables of any of the Companies to Seller or any of its
affiliates shall be accrued on the Closing Balance Sheet and paid at Closing or
paid prior to Closing (in which case the Companies shall furnish Seller with
satisfactory evidence of such payment).
2.05 Closing. Closing shall be effective as of the close of business on the
last day of the month in which all of the conditions set forth in Article 6 are
satisfied or waived, and Closing shall take place at such time and place as the
parties may agree.
2.06 Deliveries and Proceedings at the Closing. At the Closing, the parties
shall execute and deliver each agreement and instrument required or
contemplated by this Agreement to be so executed and delivered and not
theretofore executed and delivered. In addition, at the Closing, (i) Purchaser
shall deliver to Seller the Purchase Price, and (ii) Seller shall deliver to
Purchaser the certificate or certificates evidencing the Shares, duly endorsed
in blank for transfer or accompanied by duly executed irrevocable stock powers
in blank, free and clear of all liens, encumbrances, pledges, options, voting
agreements, contractual rights or other claims whatsoever. All actions taken
at the Closing shall be deemed to occur simultaneously.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as of the date hereof as
follows:
3.01 Organization and Good Standing of Seller; Power and Authority. Seller
is a corporation duly organized, validly existing and in good standing under
the laws of Delaware. Seller has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of, and the performance by
Seller of its obligations under, this Agreement have been duly and validly
authorized by all necessary corporate action on the part of Seller. No other
corporate or shareholder proceedings on the part of Seller is necessary to
approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Seller and
constitutes Seller's valid and binding obligations, enforceable against Seller
in accordance with its terms.
3.02 Organization and Good Standing of American Southern; Power and
Authority. American Southern is a corporation duly organized, validly existing
and in good standing under the laws of Georgia. American Southern has all
requisite corporate power and authority to own or lease its properties and
assets as now owned or leased.
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The copies of American Southern's articles of incorporation and bylaws, as
amended to date, which have been delivered to Purchaser, are correct and
complete and are in full force and effect.
3.03 Capitalization and Ownership. American Southern's authorized capital
stock consists solely of 300,000 shares of common stock, par value $10 per
share, 300,000 of which are currently issued and outstanding and none of which
are held in its treasury. All of such outstanding shares of American Southern
have been duly authorized, validly issued and are fully paid and nonassessable.
Such issued and outstanding shares constitute the Shares, all of which are
owned beneficially and of record by Seller, free and clear of any liens,
encumbrances, pledges, options, voting agreements, contractual rights or other
claims whatsoever, other than the security interest created pursuant to the
InterRedec Pledge. As of the Closing, the Shares will be solely owned,
beneficially and of record, free and clear of all liens, encumbrances, pledges,
options, voting agreements, contractual rights or other claims whatsoever.
There are no outstanding options, warrants, preemptive rights, agreements,
calls, commitments or demands of any character relating to the capital stock of
American Southern and no securities convertible into or exchangeable for any of
such capital stock.
3.04 Subsidiaries. American Southern owns, free and clear of all liens and
encumbrances whatsoever, 100% of the issued and outstanding capital stock of
each Subsidiary. All of such outstanding shares of the Subsidiaries have been
duly authorized, validly issued and are fully paid and nonassessable. There
are no outstanding options, warrants, rights, agreements, calls, commitments or
demands of any character relating to the capital stock of any Subsidiary and no
securities convertible into or exchangeable for any of such capital stock.
Section 3.04 of the Seller Disclosure Memorandum accurately sets forth the
number of shares, classes and par values of the authorized and issued shares of
the Subsidiaries. American Southern does not, directly or indirectly, own any
stock of, or any other interest in, any Person other than the Subsidiaries,
except that American Southern may own interests held for investment purposes
not exceeding 10% of any such single Person. Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of its
incorporation, and each Subsidiary has all requisite corporate power and
authority to own or lease its properties and assets as now owned or leased.
The copies of the articles of incorporation and bylaws of each Subsidiary, as
amended to date, which have been delivered to Purchaser, are correct and
complete and are in full force and effect.
3.05 Qualification. Each of the Companies is duly qualified or licensed to
do business and is in good standing as a foreign corporation in each
jurisdiction in which such qualification or licensing is necessary under
Applicable Law, except where the failure to be so duly qualified or licensed or
in good standing would not have a Material Adverse Effect.
3.06 No Violation of Applicable Laws or Agreements. The execution and
delivery of this Agreement by Seller do not, and the consummation of the
transactions
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contemplated by this Agreement and the compliance with the terms, conditions
and provisions of this Agreement by Seller, will not (a) violate or conflict
with any provision of Seller's or the Companies' articles of incorporation or
bylaws; (b) except as set forth in Section 3.06 of the Seller Disclosure
Memorandum, violate, conflict with or result in the breach or termination of,
or otherwise give any contracting party (which has not consented to such
execution, delivery and consummation) the right to change the terms of, or to
terminate or accelerate the maturity of, or constitute a default under the
terms of, any indenture, mortgage, loan or credit agreement or any other
material agreement or instrument to which any of Seller or the Companies is a
party or by which any of them or any of their assets may be bound or affected,
or any Applicable Law; (c) result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the Companies'
assets or give to others any interests or rights therein; other than any such
conflicts, breaches, terminations, accelerations, defaults or violations that
would not, individually or in the aggregate, have a Material Adverse Effect.
3.07 SEC Filings and Financial Statements.
(a) Seller has heretofore delivered to Purchaser copies of Seller's (i)
Annual Report on Form 10-K for the fiscal year ended December 31, 1994, (ii)
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1995, and
(iii) all other reports, registration statements and other documents filed by
Seller with the SEC since December 31, 1994 (collectively, the "Seller SEC
Filings"). Since December 31, 1994, Seller has timely filed all reports,
registration statements and other documents required to be filed with the SEC
under the rules and regulations of the SEC, and all such reports, registration
statements and other documents have complied in all material respects, as of
their respective filing dates and effective dates, as the case may be, with all
applicable requirements of the 1933 Act or the 1934 Act. As of their
respective filing and effective dates, none of such reports, registration
statements or other documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) Seller has delivered, or prior to Closing will deliver, to Purchaser
complete and correct copies of the following financial statements:
(i) the Annual Statements of each of American Southern and American
Safety filed with the Georgia Insurance Department for the years ending
December 31, 1992, 1993 and 1994, together with the exhibits and schedules
thereto (collectively the "Annual Statements");
(ii) the Quarterly Statements of each of American Southern and American
Safety filed with the Georgia Insurance Department for the quarters ending
March 31, 1995 and June 30, 1995, together with the exhibits and schedules
thereto (collectively, the "Quarterly Statements");
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(iii) the audited balance sheets (on a SAP basis), statements of income,
statements of changes in capital and surplus, and statements of cash flows of
American Southern on an unconsolidated basis as of and for the years ended
December 31, 1992, 1993 and 1994 (such financial statements, including all
notes and schedules thereto and the independent auditors' report of Ernst &
Young LLP thereon, being the "Audited Statements") (the balance sheet as of
December 31, 1994 included in the Audited Statements is referred to herein as
the "1994 Balance Sheet"); and
(iv) the unaudited balance sheet (on a SAP basis) of American Southern
on a consolidated basis (consolidating American Southern with the Subsidiaries)
as of June 30, 1995 (the "Balance Sheet Date"), and the unaudited statement of
income of American Southern on a consolidated basis for the six-month period
ending on the Balance Sheet Date (collectively, the "Interim Unaudited
Statements").
The statutory financial statements contained in the Annual Statements (and
with respect to clause (ii) below, other items contained in the Annual
Statements) and the Audited Statements (i) have been prepared in conformity
with SAP using comparable estimates and assumptions applied on a consistent
basis with the December 31, 1994 financial statements, except that the
financial statements contained in the Quarterly Statements are unaudited, (ii)
are true, correct and complete and in accordance with the books and records of
each Company, respectively, and (iii) present fully and fairly, on a SAP basis,
the financial condition, assets and liabilities of each of American Southern
and American Safety, as the case may be, as of the respective dates thereof and
the results of operations and cash flows for the respective periods indicated.
The financial statements contained in the Quarterly Statements include all
adjustments necessary for a fair presentation of the financial position of each
Company, respectively, and the results of its operations for the interim period
presented, subject to normal recurring year-end adjustments and the omission of
footnote disclosures. The Interim Unaudited Statements have been prepared in
accordance with SAP applied on a consistent basis throughout the period
involved and present fairly the financial condition, assets and liabilities of
the Companies as of the respective dates thereof and the results of operations
for the period indicated, subject to normal recurring year-end adjustments and
the omission of footnote disclosures.
(c) Seller has delivered to Purchaser complete and correct copies of
the Insurance Holding Company System Registration Statement on Form B as filed
by American Southern on behalf of itself and American Safety for the years
ended December 31, 1992, 1993 and 1994. Such Forms B, as well as the Annual
Statements and the Quarterly Statements, when filed complied in all material
respects with the Georgia Insurance Code.
3.08 Absence of Certain Changes. Except as disclosed in Section 3.08 of
the Seller Disclosure Memorandum, since the Balance Sheet Date (i) there has
been no occurrence having, or which would reasonably be expected to result in,
a Material Adverse Effect upon the Companies, and (ii) none of the Companies
has taken any action
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that would be prohibited under Section 5.01 after the date of this Agreement.
Since the Balance Sheet Date, the business of the Companies has been conducted
only in the ordinary and usual course consistent with past practice, except
with respect to the transactions contemplated in this Agreement.
3.09 Reserves. All losses and loss adjustment expenses established and
reflected in the 1994 Balance Sheet in respect of the Companies' insurance
policies was determined in accordance with generally accepted actuarial
standards, was based on actuarial estimates and assumptions that were
reasonable and appropriate to the relevant insurance policies and were recorded
in compliance with the applicable requirements of the Georgia Insurance Code.
3.10 Tax Matters. Except as set forth in Section 3.10 of the Seller
Disclosure Memorandum:
(a) None of the Companies (i) is, or since Seller's acquisition of the
Shares has been, a member of an affiliated group of corporations within the
meaning of Section 1504 of the Code filing a consolidated or combined Tax
Return other than (A) the affiliated group of which Seller is the common parent
(the "Seller Group") with respect to federal Tax Returns, and (B) an affiliated
group or groups consisting solely of American Southern and one or more of the
Subsidiaries with respect to state Tax Returns (a "Subsidiary Group"); or (ii)
has any liability for Taxes of any Person other than the members of the Seller
or Subsidiary Group.
(b) Each Seller Group and Subsidiary Group has (i) timely filed all Tax
Returns required to be filed by it; (ii) paid all Taxes shown to have become
due pursuant to such filed Tax Returns; and (iii) paid all other Taxes for
which a notice of assessment or demand for payment has been received, except
where the failure to file such Tax Returns or pay such Taxes would not have a
Material Adverse Effect. All Tax Returns of each Seller Group and Subsidiary
Group (i) have been prepared in accordance with all Applicable Laws, and (ii)
accurately reflect the taxable income (or other measure of tax) of the
corporation or corporations filing the same, except where the failure to do so
has not had a Material Adverse Effect on the Companies. All Taxes of the
Companies for periods after December 31, 1994 have been paid or are adequately
reserved against on the GAAP and SAP books of the Companies. The Companies
have timely filed all information returns or reports, including Forms 1099,
that are required to be filed and have accurately reported all information
required to be included on such returns or reports. True copies of federal
income tax returns of the Companies included in the consolidated Tax Returns
for the Seller Group for each of the fiscal years ended December 31, 1992
through December 31, 1994 have been made available to Purchaser. True copies
of the state Tax Returns of the Companies filed most recently in each state,
respectively, in which the Companies have filed Tax Returns have been delivered
to Purchaser.
(c) There are no proposed assessments of Taxes against the Companies,
no proposed adjustments to any Tax Return pending against the Seller Group with
respect to
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the Companies' operations or assets, and no proposed adjustments to the manner
in which any Tax of the Seller Group is determined with respect to the
Companies' operations or assets. No claim has been made by a taxing authority
in a jurisdiction where the Companies do not file Tax Returns that any of the
Companies is or may be subject to taxation by that jurisdiction.
(d) Since Seller's acquisition of the Shares, none of the Companies has
(i) filed any consent agreement under Section 341(f) of the Code, (ii) executed
or been the subject of a waiver or consent extending any statute of limitation
for any Tax liability that remains outstanding, (iii) joined in or been
required to join in filing a consolidated or combined federal, state or local
Tax Return with any corporation other than a current or former member of the
Seller Group or Subsidiary Group, (iv) been the subject of a ruling of the
Internal Revenue Service or any state or local revenue authority that has
continuing application to the Companies, (v) been the subject of a closing
agreement with any taxing authority that has continuing effect, or (vi) granted
a power of attorney with respect to any Tax matters that has continuing effect.
During the immediately preceding three years, none of the Companies has agreed
to make nor is it required to make any adjustment under Section 481 of the Code
by reason of a change in accounting method or otherwise.
(e) Seller is not a "foreign person" within the meaning of Section
1445 of the Code.
(f) Seller has no Knowledge of any matter involving Taxes with respect
to the Seller Group that would make the Companies subject to joint and
severable liability of Seller and is reasonably likely to have a Material
Adverse Effect on the Companies.
3.11 Pending Litigation or Proceedings. Except for claims under
insurance contracts against the Companies in the ordinary course of business,
or as set forth in Section 3.11 of the Seller Disclosure Memorandum, there are
no claims, suits, actions, proceedings, arbitrations or investigations pending,
or to the Knowledge of Seller threatened, against or otherwise relating to or
involving any of the Companies or any of their properties, the outcome of which
would reasonably be expected to have a Material Adverse Effect or to affect the
ability of Seller to consummate the transactions contemplated by this
Agreement. Except as set forth in Section 3.11 of the Seller Disclosure
Memorandum, with respect to American Southern and American Safety (i) no
investigation or examination by any insurance regulatory authority is pending,
and (ii) no such investigation or examination has occurred since the date upon
which Seller acquired the Shares. Section 3.11 of the Seller Disclosure
Memorandum describes each instance in which either American Southern or
American Safety has been the subject of a fine or penalty by an insurance
regulatory authority since the date upon which Seller acquired the Shares.
3.12 Compliance With Applicable Laws. None of the Companies is in
violation of any Applicable Law, except for possible violations that would not,
individually or in the
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aggregate, have or be reasonably likely to have a Material Adverse Effect.
Each of the Companies holds all licenses, permits, registrations and other
authorizations required to conduct its business, and all such licenses,
permits, registrations and other authorizations are valid and in full force and
effect, except for those the absence of which are not reasonably likely to have
a Material Adverse Effect. Each of the Companies is in compliance with all
such licenses, permits, registrations and authorizations, except for possible
failures to be so in compliance which are not reasonably likely to have a
Material Adverse Effect.
3.13 Consents and Approvals. Except as set forth in Section 3.13 of the
Seller Disclosure Memorandum, except as required under the Hart-Scott Act, and
except for the approval of the Georgia Insurance Department, the execution,
delivery and performance of this Agreement by Seller and the consummation of
the transactions contemplated hereby do not require any consent, approval or
authorization of, or registration or filing with, any Person or Governmental
Authority.
3.14 Legal Investments. The bonds, stocks and other investments owned
beneficially or of record by the Companies are permissible investments for them
under the Georgia Insurance Code.
3.15 Investment Assets Custody. Section 3.15 of the Seller Disclosure
Memorandum contains a complete and correct list of all custodians and
depositories for investment assets of any of the Companies, and lists the
persons having signatory authority or access thereto on behalf of any of the
Companies.
3.16 Insurance Issued. All insurance policies and contracts issued by
American Southern or American Safety now in force (other than policies and
contracts issued under applicable surplus lines laws) are on forms and at rates
approved by the insurance regulatory authority of the state or jurisdiction
where issued or have been filed with and not objected to by such authority
within the period provided for objection.
3.17 Insurance Agents. Section 3.17 of the Seller Disclosure Memorandum
contains a complete and correct list of all insurance agencies and agents
authorized to write insurance on behalf of American Southern or American Safety
as of the date shown on such list. To the Knowledge of Seller, all such
agencies and agents are duly licensed with the insurance regulatory authority
of the state or jurisdiction in which such agency or agent writes insurance on
behalf of American Southern or American Safety.
3.18 Title to Assets; Material Contracts.
(a) Each of the Companies has (i) good and marketable title, or valid
and binding leasehold rights in the case of leased property, to all material
personal property owned or leased by it, and (ii) valid and binding leasehold
rights to all real property leased by it, free and clear of any lien,
encumbrance, mortgage, pledge, charge or security interest whatsoever, other
than those that would not, individually or in the
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aggregate, have a Material Adverse Effect. None of the Companies owns any real
property. Section 3.18(a) of the Seller Disclosure Memorandum contains a
complete and accurate list of all real property leased by any of the Companies,
including the date of expiration of each such lease. All material items of
personal property owned or leased by the Companies are in good condition and
repair, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with past practices. All of the assets that are
being used on a regular basis in the business are being conveyed to Purchaser.
(b) Section 3.18(b) of the Seller Disclosure Memorandum contains a
complete and correct list of (i) all reinsurance agreements; (ii) all loan or
credit agreements, mortgages, indentures, or other agreements for borrowed
money; (iii) all employment or compensation agreements with officers,
directors, employees, agents (other than insurance agents), consultants and
independent contractors; and (iv) all other contracts, leases, agreements or
legal commitments of any kind, oral or written, formal or informal, pursuant to
which any of the Companies owes more than $50,000 per calendar year (the
agreements described in (i)-(iv) and those that cannot be terminated upon 30
days notice without payment or penalty are collectively the "Material
Contracts"). Except as described in Section 3.18 of the Seller Disclosure
Memorandum, all Material Contracts are in full force and effect, and none of
the Companies is in default under, nor has any event occurred which with the
passage of time or giving of notice or both would result in any of the
Companies being in default under, any of the terms thereof.
3.19 Employee Benefit Plans.
(a) The only employee pension benefit plans (as defined in Section 3(2)
of ERISA), welfare benefit plans (as defined in Section 3(1) of ERISA), bonus,
stock purchase, stock ownership, stock option, deferred compensation, incentive
or other compensation plan or arrangement, and other employee fringe benefit
plans presently maintained by, or contributed to by the Companies or by Seller
for the benefit of any current or former employee of the Companies are those
listed in Section 3.19 of the Seller Disclosure Memorandum (the "Benefit
Plans"). None of the Benefit Plans are provided by Seller; all of such Benefit
Plans are provided by American Southern.
(b) American Southern and each of the Benefit Plans, are in compliance
in all material respects with the applicable provisions of ERISA and those
provisions of the Code applicable to the Benefit Plans.
(c) All contributions to, and payments from, the Benefit Plans which
may have been required to be made in accordance with the Benefit Plans and,
when applicable, Section 302 of ERISA or Section 412 of the Code, have, in all
material respects, been timely made.
(d) There are (i) no pending investigations by any Governmental
Authority involving the Benefit Plans, (ii) no termination proceedings
involving the Benefit Plans,
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(iii) to Seller's Knowledge, no threatened or pending claims (except for claims
for benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan which could give rise to any material liability
and (iv) no facts which could give rise to any material liability in the event
of such investigation, claim, suit or proceeding.
(e) Neither the Benefit Plans, American Southern nor any employee of
the foregoing, nor, to Seller's Knowledge, any trusts created thereunder, or
any trustee, administrator or other fiduciary thereof, has engaged in a
"prohibited transaction" (as such term is defined in Section 4975 of the Code
or Section 406 of ERISA) which could subject the Companies to the tax or
penalty on prohibited transactions imposed by such Section 4975 or the
sanctions imposed under Title I of ERISA. Neither the Benefit Plans nor any
such trust has been terminated nor to Seller's Knowledge have there been any
"reportable events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect to either thereof.
(f) No Benefit Plan subject to Title IV of ERISA has incurred any
material liability to the Pension Benefit Guaranty Corporation other than for
the payment of premiums, all of which have been paid when due. No Benefit Plan
has applied for or received a waiver of the minimum funding standards imposed
by Section 412 of the Code.
(g) At no time for which any relevant statute of limitations remains
open have (a) American Southern, (b) any employer that is, together with
American Southern, treated as a "single employer" under Section 414(b), 414(c)
or 414(m) of the Code (an "Affiliate"), or (c) any employer that was at any
time after September 2, 1984, an Affiliate of American Southern (a "Former
Affiliate"), incurred any liability which could subject Purchaser or American
Southern to liability under Section 4062, 4063 or 4064 of ERISA.
(h) At no time for which any relevant statute of limitations remains
open have American Southern or any Affiliate or Former Affiliate been required
to contribute to, or incurred any withdrawal liability within the meaning of
Section 4201 of ERISA, to any multiemployer pension plan, within the meaning of
Section 3(37) of ERISA, which liability has not been fully paid as of the date
hereof.
(i) American Southern has complied in all material respects with the
notice and continuation coverage requirements of Section 4980B of the Code and
the regulations thereunder with respect to each Benefit Plan that is, or was
during any taxable year of American Southern for which the statute of
limitations on the assessment of federal income taxes remains open, by consent
or otherwise, a group health plan within the meaning of Section 5000(b)(1) of
the Code.
(j) American Southern has not incurred and is not reasonably likely to
incur any liability that is or could reasonably be expected to become a
material liability of American Southern with respect to any plan or arrangement
that would be included within
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the definition of "Benefit Plan" hereunder but for the fact that such plan or
arrangement was terminated before the date of this Agreement.
(k) No payment which is or may be made by American Southern, or from
any Benefit Plan, to any employee, former employee, director or agent of
American Southern under the terms of any Benefit Plan, either alone or in
conjunction with any other payment, will or could be characterized as an excess
parachute payment under Section 28OG of the Code.
3.20 Compensation Arrangements; Bank Accounts; Officers and Directors.
Section 3.20 of the Seller Disclosure Memorandum sets forth the following
information:
(a) the name and current annual salary, including any bonus, if
applicable, of each of the present officers and employees of the Companies
whose current annual salary, including any promised or customary bonus, equals
or exceeds $100,000, together with a statement of the full amount of all cash
remuneration paid by the Companies to each such person and to any director of
the Companies, during the twelve-month period ending on August 31, 1995;
(b) the name of each bank in which any of the Companies has an account
or safe deposit box, the identifying numbers thereof, and the names of all
persons authorized to draw thereon or to have access thereto; and
(c) the name and title of each director and officer of each of the
Companies and of each trustee, fiduciary or plan administrator of each Benefit
Plan.
3.21 Transactions With Related Parties. Except as disclosed in Section
3.21 of the Seller Disclosure Memorandum, no Related Party:
(a) has borrowed money or loaned money to any of the Companies which
will not be repaid on or before Closing;
(b) has any contractual or other claim against any of the Companies; or
(c) had, since January 1, 1993, any interest in any property or assets
used by the Companies in its business.
3.22 Labor Relations. Except as disclosed in Section 3.22 of the Seller
Disclosure Memorandum, (a) no employee of any of the Companies is represented
by any union or other labor organization; (b) there is no unfair labor practice
complaint against any of the Companies pending or overtly threatened before the
National Labor Relations Board; and (c) there is no labor strike, dispute, slow
down or stoppage actually pending or, to the Knowledge of Seller, threatened
against or involving any of the Companies.
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3.23 Brokerage. None of Seller or the Companies has made any agreement
or taken any other action which might cause anyone to become entitled to a
broker's fee or commission as a result of the transactions contemplated hereby.
3.24 Insurance. All of the Companies' properties and assets of an
insurable nature and of a character usually insured by companies of similar
size and in similar businesses are insured by the Companies in such amounts and
against such losses, casualties or risks as is (a) usual in such companies and
for such properties, assets and businesses, or (b) required by any Applicable
Law. Section 3.24 of the Seller Disclosure Memorandum contains a complete and
accurate list of all insurance policies held or owned by the Companies relating
to their business now in force. All such policies are in full force and
effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date hereof as
follows:
4.01 Purchaser's Organization and Good Standing; Power and Authority.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Georgia. Purchaser has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of, and the
performance by Purchaser of its obligations under, this Agreement have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser. No other corporate or shareholder proceedings on the part of
Purchaser are necessary to approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes Purchaser's valid and
binding obligation, enforceable against Purchaser in accordance with its terms.
4.02 No Violation of Applicable Laws or Agreements. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions
and provisions of this Agreement by Purchaser, will not (a) violate or conflict
with any provision of Purchaser's articles of incorporation or bylaws; (b)
except as set forth in Section 4.02 of the Purchaser Disclosure Memorandum,
violate, conflict with or result in the breach or termination of, or otherwise
give any contracting party (which has not consented to such execution, delivery
and consummation) the right to change the terms of, or to terminate or
accelerate the maturity of, or constitute a default under the terms of, any
indenture, mortgage, loan or credit agreement or any other material agreement
or instrument to which Purchaser is a party or by which any of its assets may
be bound or affected, or any Applicable Law; (c) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of Purchaser's assets or give to others any interests or rights therein;
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other than any such conflicts, breaches, terminations, accelerations, defaults
or violations that would not, individually or in the aggregate, have a Material
Adverse Effect.
4.03 Pending Litigation or Proceedings. Except as set forth in Section
4.03 of the Purchaser Disclosure Memorandum, there are no claims, suits,
actions, proceedings, arbitrations or investigations pending or, to the
Knowledge of Purchaser, threatened, against or otherwise relating to or
involving Purchaser or any of its properties, the outcome of which would
reasonably be expected to have a Material Adverse Effect or to affect the
ability of Purchaser to consummate the transactions contemplated by this
Agreement.
4.04 Brokerage. Purchaser has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereby.
4.05 Investment Intent; Ability to Bear Risk. Purchaser is acquiring
the Shares for investment for its own account and not with a view to, or for
offer or sale in connection with, any public distribution thereof. Purchaser
has not been and is not involved with any Person concerning an Alternative
Transaction (as such term is defined in Section 5.07). Purchaser is familiar
with the property and casualty insurance business, and has the requisite
knowledge and experience to evaluate the merits and risks of its acquisition of
the Shares.
4.06 SEC Filings and Financial Statements.
(a) Purchaser has heretofore delivered to Seller copies of Purchaser's
(i) Annual Report on Form 10-K for the fiscal year ended December 31, 1994,
(ii) 1994 Annual Report to Shareholders, (iii) Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1995, and (iv) all other reports,
registration statements and other documents filed by Purchaser with the SEC
since December 31, 1994 (collectively, the "Purchaser SEC Filings"). Since
December 31, 1994, Purchaser has timely filed all reports, registration
statements and other documents required to be filed with the SEC under the
rules and regulations of the SEC, and all such reports, registration statements
and other documents have complied in all material respects, as of their
respective filing dates and effective dates, as the case may be, with all
applicable requirements of the 1933 Act or the 1934 Act. As of their
respective filing and effective dates, none of such reports, registration
statements or other documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited interim
consolidated financial statements of Purchaser contained or incorporated by
reference in the Purchaser SEC Filings have been prepared in conformity with
GAAP, and, together with the notes thereto, present fairly the consolidated
financial position of Purchaser and
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its subsidiaries at the dates shown and the consolidated results of their
operations, changes in stockholders' equity and cash flows for the periods then
ended. The unaudited interim consolidated financial statements as of, and for,
the period ending June 30, 1995 include all adjustments necessary for a fair
presentation of the financial position of Purchaser and its subsidiaries and
the results of their respective operations for the interim periods presented,
subject to normal, recurring year-end adjustments and the omission of footnote
disclosures.
4.07 Absence of Certain Changes. Except as disclosed in Section 4.07 of
the Purchaser Disclosure Memorandum or as specifically disclosed in the
Purchaser SEC Filings, since June 30, 1995 (i) there has been no occurrence
having, or which would reasonably be expected to result in, a Material Adverse
Effect upon Purchaser. Since June 30, 1995, the business of Purchaser has been
conducted only in the ordinary and usual course consistent with past practice,
except with respect to transactions contemplated in this Agreement.
4.08 Consents and Approvals. Except as set forth in Section 4.08 of the
Purchaser Disclosure Memorandum, except as required under the Hart-Scott Act,
and except for the approval of the Georgia Insurance Department, the execution,
delivery and performance of this Agreement by Purchaser and the consummation of
the transactions contemplated hereby do not require any consent, approval or
authorization of, or registration or filing with, any Person or Governmental
Authority.
ARTICLE 5
CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS
5.01 Operation of Business Pending Closing. Prior to the Closing Date,
except with the prior consent of Purchaser and except as necessary to effect
the transactions contemplated in this Agreement, (a) Seller shall cause the
Companies to conduct their business in the usual and ordinary course as
currently being conducted, and (b) without limiting the generality of the
foregoing clause (a), Seller shall cause each of the Companies not to do any of
the following:
(i) amend its articles of incorporation or bylaws, or merge,
consolidate, liquidate or dissolve;
(ii) issue any capital stock, any securities convertible or exchangeable
into capital stock, or any options, warrants or rights with respect to capital
stock, or split, subdivide or reclassify its capital stock;
(iii) declare or pay any dividend or make any other distribution on its
capital stock other than cash dividends on the Shares in an amount not
exceeding $300,000 per month;
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(iv) increase the compensation or benefits of officers or employees of
the Companies or pay any bonuses except for normal and customary increases made
or bonuses paid or accrued in accordance with past practices;
(v) except in the ordinary course of business, create or incur any lien,
encumbrance, mortgage, pledge, charge or security interest whatsoever on any of
its properties; or, except for the issuance of insurance contracts or policies
and the settlement of insurance claims in the ordinary course of business,
incur or assume any guaranty or other liability to discharge an obligation of
another, or incur or assume any obligations for money borrowed, or cancel or
discount any material debt owed to it;
(vi) enter into or terminate any Material Contract;
(vii) make any expenditure for fixed assets in excess of $25,000 for any
single item or $100,000 in the aggregate;
(viii) do or fail to do anything that will cause a breach of, or default
under, any Material Contract; or
(ix) make any change of a material nature in the Companies' accounting
procedures, methods, policies or practices or the manner in which the Companies
maintain their records.
5.02 Access to Information. Between the date hereof and the Closing
Date, Seller shall give, and shall cause the Companies to give, to Purchaser
and its authorized representatives, during normal business hours, access to all
of the Companies' properties, contracts, books and records, and Seller shall
furnish, and shall cause the Companies to furnish, to Purchaser and its
authorized representatives such additional financial, legal and other
information with respect to the Companies that Purchaser may reasonably
request. Purchaser shall use such information solely for the purpose of
conducting business, legal and financial reviews of the Companies and for such
other purposes as may be related to this Agreement. Purchaser shall maintain
the confidentiality of all such information (other than information that is in
the public domain or otherwise ascertainable from public or outside sources)
except to the extent that disclosure is required by judicial process or
governmental regulatory authorities, in which case Purchaser shall give Seller
prompt notice in order that Seller may seek to obtain a protective order.
5.03 Supplements to Disclosure Memoranda. At any time and from time to
time between the date hereof and the date that is two business days prior to
the Closing Date, Seller and Purchaser shall have the right and the continuing
obligation to supplement their respective Disclosure Memoranda with respect to
any matter arising or coming to the Knowledge of Seller or Purchaser after the
date hereof that, if existing, occurring or known at such date, would have been
required to be set forth or described in such Disclosure Memorandum. A party
receiving a supplemented Disclosure Memorandum within 10 days prior to the
anticipated Closing Date may unilaterally extend the time of the
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Closing up to 10 days from the receipt of the supplement for the sole purpose
of reviewing the supplemental Disclosure Memorandum. If, in the recipient
party's reasonable determination, any such supplements provided by the other
party reveal any Material Adverse Effect or any condition or event that would
be reasonably likely to result in a Material Adverse Effect, the recipient
party may terminate this Agreement.
5.04 Certain Tax Matters.
(a) Except as otherwise provided in this Section 5.04, all tax sharing
agreements, arrangements, policies and guidelines, formal or informal, express
or implied, that may exist between the Companies and Seller or their affiliates
and all obligations thereunder shall terminate as of the Closing Date, and the
Companies shall have no liability thereunder for any and all amounts due in
respect to periods prior to the Closing Date. Notwithstanding any other
provision of this Agreement, Seller and the Companies may make reasonable
payments pursuant to such tax sharing agreements and understandings prior to
the Closing Date in amounts consistent with past practices and procedures under
such tax sharing agreements and the Tax Allocation Agreement shall remain in
effect until any overpayments or underpayments are adjusted in accordance with
past practices and procedures.
(b) The Companies shall continue to be included, up to and including
the Closing Date, in the Seller Group's consolidated federal income Tax Return
and any required state or local consolidated or combined income Tax Returns
that include any of the Companies (all such Tax Returns including taxable
periods of the Companies ending on or before the Closing Date are hereinafter
referred to as "Pre-Closing Consolidated Returns").
Seller shall timely (which shall not preclude obtaining or filing
normal or customary extensions) prepare and file (or cause to be prepared and
filed) all Pre-Closing Consolidated Returns and all other Tax Returns required
to be filed on or before the Closing Date with respect to the Companies (the
"Seller Group Returns"). Seller shall timely pay (or cause to be paid) all
Taxes shown as due and payable on the Seller Group Returns ("Seller's Taxes").
Purchaser and Seller agree that if the Companies are permitted under
any Applicable Law relating to state or local income tax to treat the Closing
Date as the last day of a taxable period, Purchaser and Seller shall treat (and
cause their respective affiliates to treat) the Closing Date as the last day of
a taxable period, and any Tax Return for such a period shall be considered a
Seller Group Return for purposes hereof.
(c) Purchaser shall timely (which shall not preclude obtaining or
filing normal or customary extensions) prepare and file (or cause to be filed)
all Tax Returns required by Applicable Law for the Companies that are not
required to be prepared and filed by Seller pursuant to Section 5.04(b)
("Purchaser's Returns"). Any Purchaser's Return including a period prior to
the Closing Date shall be prepared in a manner consistent with prior
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practice and copies of such Purchaser's Returns shall be delivered to Seller.
Purchaser shall timely pay (or cause to be paid) all Taxes shown as due and
payable on the Purchaser's Returns ("Purchaser's Taxes").
(d) After the Closing Date, Seller shall submit to Purchaser blank Tax
Return workpaper packages reasonably necessary for Seller to prepare any Seller
Group Returns. Purchaser shall cause the Companies to prepare completely and
accurately all information that Seller shall reasonably request in such
workpaper packages and shall submit to Seller such packages within the later of
90 days after Purchaser's receipt thereof or 60 days after the close of the
taxable period to which a workpaper package relates. Each party shall
cooperate with the other in connection with any tax filing, investigation,
audit or other proceeding. Purchaser and Seller and their subsidiaries shall
preserve all information, returns, books, records and documents relating to any
liabilities for Taxes with respect to a taxable period until the later of the
expiration of all applicable statutes of limitation and extensions thereof, or
the conclusion of all litigation with respect to Taxes for such period.
(e) After the Closing Date, Seller shall indemnify and hold harmless
Purchaser from and against any Tax liability with respect to (i) any Seller's
Taxes; (ii) the Florida Tax Litigation; and (iii) any increase in Tax liability
resulting from the Companies being severally liable for any Taxes of the Seller
Group or any other consolidated group of which any of the Companies was a
member prior to the Closing Date pursuant to Treasury Regulations Section
1.1502-6 or any analogous state or local tax provision; provided that Seller's
liability under clause (ii) shall be subject to the limitation of paragraph
7.01(c) and shall be treated, solely for purposes of such subparagraph, as
Damages and Costs and, provided, further, that Seller shall have no
indemnification obligations with respect to amounts that have been accrued in
the Audited Statements and the Interim Unaudited Statements (as such terms are
defined in Section 3.07(b) hereof) and any regularly prepared financial
statements for a period after June 30, 1995. Subject to the provisions of the
third paragraph of Section 5.04(f), Seller shall pay such amounts as they are
obligated to pay to Purchaser under the preceding sentence within 15 days after
payment of any applicable Tax liability by Purchaser or the Companies and, to
the extent not paid by Seller within such 15-day period, shall thereafter
include interest thereon at the Prime Rate (reported as of the last day of such
15-day period).
After the Closing Date, Purchaser and the Companies shall indemnify and
hold harmless Seller and its affiliates from and against any Tax liability with
respect to Purchaser's Taxes that are allocable to or apportioned to a period
after the Closing Date. Purchaser shall pay such amounts within 15 days after
payment of any such Tax liability by Seller or any of their affiliates and to
the extent not paid by Purchaser within such 15-day period shall thereafter
include interest thereon at the Prime Rate (reported as of the last day of such
15-day period).
(f) In the event that Purchaser or any of the Companies receives
notice, whether orally or in writing, of any pending or threatened federal,
state, local, municipal or foreign tax examinations, claims settlements,
proposed adjustments, assessments or
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reassessments or related matters with respect to Taxes that could affect the
Seller Group, or if Seller receives notice of matters that could affect
Purchaser or the Companies, the party receiving notice shall notify in writing
the potentially affected party within 10 days thereof. The failure of any
party to give the notice required by this paragraph shall not impair that
party's rights under this Agreement except to the extent that the other parties
demonstrate that they have been damaged thereby.
Subject to Section 5.04(g), each of Seller and Purchaser (as applicable,
the "Controlling Party") shall have the right to control any audit or
examination by any taxing authority, initiate any claim for refund, file any
amended return, contest, resolve, settle and defend against any assessment,
notice of deficiency or other adjustment or proposed adjustment relating to or
with respect to those Tax Returns that each is required to prepare and file
pursuant to Sections 5.04(b) and (c); provided that, in the event that any such
adjustment could have an adverse effect on the Tax liability of the other party
(or affect the Purchaser by having an adverse effect on the Tax liability of
the Companies, or affect Seller by having an adverse effect on the Tax
liability of the Seller Group) (the "Affected Party"), the Controlling Party
(i) shall give the Affected Party written notice of any such adjustment, (ii)
shall permit the Affected Party to participate in the proceeding to the extent
the adjustment may adversely affect the Tax liability of the Affected Party and
(iii) shall not settle or otherwise compromise such proceeding without the
prior written consent of the Affected Party, which consent shall not be
unreasonably withheld or delayed. Except as specified in Section 5.04(g) or
the following sentence, Seller and Purchaser shall each be entitled to retain
for its own account any refunds of Taxes attributable to those Tax Returns that
each is required to prepare and file pursuant to Sections 5.04(b) and (c) and
shall pay to the other the amount of any refund to which the other is entitled
within 15 days after the receipt of such refund and, to the extent not paid
within such 15-day period, shall thereafter include interest at the Prime Rate
(reported as of the last day of such 15-day period). In the case of Purchaser,
a refund attributable to any Purchaser's Return including a period prior to the
Closing Date shall be divided between Purchaser and Seller by recomputing the
portion of Tax as readjusted that is allocable to a period prior to the Closing
Date.
Notwithstanding the foregoing, but subject to Section 5.04(g), Seller shall
have the exclusive right to direct and to control the Florida Tax Litigation
and to initiate any claim for refund, file any amended return and contest,
resolve, settle and defend against such litigation. Purchaser shall use its
best efforts to assist Seller in connection with the Florida Tax Litigation,
including, without limitation, providing Seller access to information relating
to the Florida Tax Litigation that is in Purchaser's or the Companies'
possession and making available the officers and employees of Purchaser and the
Companies to provide assistance and information in connection therewith and to
continue to have the Companies participate as litigants in the Florida Tax
Litigation.
(g) To the extent permitted under applicable law, neither Purchaser nor
the Companies shall carry back any tax attribute ("Purchaser Tax Attribute") to
a period ending on or before the Closing Date ("Pre-Closing Period").
Notwithstanding anything
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to the contrary contained in this Section 5.04(g), if the failure to carry back
a Purchaser Tax Attribute is not permitted by law or would be unreasonably
burdensome to Purchaser, Purchaser may request Seller to waive the restrictions
imposed by this Section 5.04(g), and Seller shall agree to such request unless
Seller's obligations hereunder would be unreasonably burdensome to Seller. If
Seller agrees to such request, and Purchaser carries back a Purchaser Tax
Attribute to a Pre-Closing Period, Seller shall promptly file (or cause to be
filed) a claim for refund and shall pay (or cause to be paid) to Purchaser the
full amount of any resulting Tax Benefit within 30 days of the date such Tax
Benefit is realized, but only to the extent that Seller would not otherwise
have been entitled to utilize such Tax Attribute. The Tax Benefit shall be
recomputed and any payment made in excess of the redetermined Tax Benefit shall
be refunded if and to the extent that Seller subsequently realizes tax
attributes that could have been utilized but for the carryback of Purchaser Tax
Attributes pursuant to this Section 5.04(g). Such recomputation shall assume
that the tax attributes of Seller were utilized first and that the Purchaser
Tax Attributes carried back by Purchaser were then utilized in accordance with
Applicable Law. For purposes hereof, "Tax Benefit" shall mean
(i) in the case of any Tax Return, the sum of the amount by which the
Tax liability is reduced (or the Tax refund is increased) plus any interest
(net of Taxes, if any, thereon) relating to such Tax liability (or Tax refund),
and in the case of a consolidated federal income Tax Return or unconsolidated,
combined, unitary or similar state, local or other Tax return, the sum of the
amount by which the Tax liability of the affiliated group of corporations is
reduced (or Tax refund is increased) plus any interest (net of Taxes, if any,
thereon) from such government or jurisdiction relating to such Tax liability or
Tax refund;
(ii) a Tax Benefit shall be deemed to have been realized (A) at the time
any refund of Taxes is received, (B) at the time any refund of Taxes is applied
against other Taxes due (which, in the case of refunds so applied in the course
of an audit or other proceeding, shall be the date on which the audit or other
proceeding is finalized) or (C) at the time a liability for Taxes is otherwise
reduced (which, in each case, shall be 2 1/2 months after the close of the year
in which such liability for Taxes arose); and
(iii) where a party has other losses, deductions, credits or similar
items available to it, losses, deductions, credits or items for which the other
party would be entitled to a payment under this Agreement shall be treated as
the last items utilized to produce a Tax Benefit.
(h) Purchaser and Seller agree that any indemnification payments made
pursuant to this Section 5.04 or Article 7 shall be treated for tax purposes as
an adjustment to the Purchase Price unless otherwise required by Applicable
Law.
(i) Notwithstanding SAP accrual requirements, in preparing the Closing
Balance Sheet, an accrual of liability for Taxes(to the extent not paid prior
to Closing), will be included in such Closing Balance Sheet and shall only
reflect (as a liability for
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amounts unpaid net of amounts prepaid) the portion of the Companies' Taxes
allocable to the period up to and including the Closing Date ("the Companies'
Accrued Taxes"). Such allocable portion shall, in the case of Taxes that are
based on income or gross receipts, be determined as if the Closing Date were
the last day of any applicable taxable period and, in the case of other Taxes,
be apportioned ratably on a daily basis. Except as specified in the preceding
sentence or the Tax Allocation Agreement, the Closing Balance Sheet
specifically shall not reflect a liability for Taxes allocable to Seller Group
Returns, which Taxes are solely the responsibility of Seller.
(j) Seller agrees that upon Purchaser's request it shall file, or
caused to be filed, all documents reasonably necessary for the making of an
election under Section 338(h)(10) of the Code (or, at Purchaser's request, any
analogous provision of any state or local tax law) and in such case shall file
or cause to be filed all tax returns consistent with such election or
elections. Seller agrees to provide Purchaser with all relevant information to
analyze the impact of a Section 338(h)(10) election. In the event Purchaser
determines to make such an election, Purchaser shall provide to Seller in
writing a determination of the allocation of the Purchase Price among the
assets of the Companies. Seller shall accept any such reasonable allocation by
Purchaser, and Seller, Purchaser and the Companies shall file all Tax Returns
in a manner consistent with such allocation.
5.05 Regulatory Approvals and Consents.
(a) As soon as practicable, but in any event within 30 days, after the
date hereof:
(i) Each of Purchaser and Seller will make all necessary filings under
the Hart-Scott Act. Each party shall pay the expenses of preparing its own
filing, and Purchaser shall pay the $45,000 filing fee.
(ii) Purchaser shall file with the Georgia Insurance Department all
Form(s) A required to request such Department's approval of the changes in
control of American Southern and American Safety that will be effected by the
transfer of the Shares. Seller shall cause the Companies to cooperate
reasonably with Purchaser in preparing the Form(s) A. Not less than 10 days
prior to making such filing, Purchaser shall deliver a copy of the filing
materials to American Southern, and American Southern shall be entitled to
provide comments thereon to Purchaser within 5 days after receipt. Seller
shall, and shall cause the Companies to, support such filing by Purchaser, so
long as it is consistent with this Agreement, and Purchaser shall use its best
efforts to obtain the approval of the Georgia Insurance Department for the
changes in control. All costs and fees of making such filings shall be paid by
Purchaser.
(b) Seller and Purchaser shall promptly advise the other of all oral,
and promptly provide each other with copies of all written, communications,
requests,
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inquiries or other notifications received from any Governmental Authorities
with respect to the transactions contemplated hereby.
(c) Seller shall take all reasonable action required to obtain prior to
Closing all consents with respect to the material agreements listed in Section
5.05(c) of the Seller Disclosure Memorandum. To the extent any such consent
has not been obtained, Seller shall continue its efforts to obtain such consent
after the Closing. In order, however, that the full value of every such
material agreement may be realized by Purchaser, at Purchaser's request,
direction and expense, Seller shall take all such action as shall be reasonably
necessary or appropriate (i) in order to preserve for the benefit of Purchaser
the rights and obligations of Seller under such agreements, and (ii) to
facilitate the collection of any monies due and payable, or to become due and
payable, to Seller pursuant to such agreements, and Seller shall remit such
monies to Purchaser within five business days of collection. Purchaser shall
be entitled to the benefits accruing after the Closing Date of any such
agreements, and Purchaser, at its expense, shall perform all of Seller's
obligations due to be performed under any such agreements to the extent (i)
Purchaser can perform such obligations without violating the terms of such
agreements, and (ii) Purchaser is being provided the benefits of such
agreements.
(d) Purchaser shall take all reasonable action required to obtain all
consents and approvals listed in Section 5.05(d) of the Purchaser Disclosure
Memorandum.
5.06 Best Efforts. Each of the parties hereto agrees to use its best
efforts to take, or to cause to be taken, all reasonable actions and to do, or
to cause to be done, all reasonable things necessary, proper or advisable under
Applicable Laws to consummate the transactions contemplated by this Agreement.
None of the parties hereto will intentionally take or intentionally permit to
be taken any action that would be in breach of the terms or provisions of this
Agreement or that would cause any of the representations contained herein to be
or become untrue.
5.07 Exclusive Dealings. Unless and until this Agreement is terminated
prior to Closing pursuant to Article 8, neither of the Seller nor any of
Seller's affiliates, officers, directors, agents or advisers shall, directly or
indirectly, solicit, encourage or initiate any discussions or negotiations
with, provide any information to, or otherwise cooperate in any other way with
any Person (other than Purchaser) concerning any direct or indirect purchase of
the Shares or of any substantial amount of the assets or properties of the
Companies (an "Alternative Transaction").
5.08 Expenses. Whether or not the Closing occurs, except as otherwise
stated herein, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
5.09 Resignations. At Closing, Seller will deliver written resignations
of the Companies' directors.
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5.10 Maintenance of Records. For a period of 7 years after Closing, or
for any longer period (i) as may be required by any federal, state, local or
foreign Governmental Authority, (ii) as may be reasonably necessary in respect
of the prosecution or defense of any suit, action, litigation or
administrative, arbitration or other proceeding or investigation that is
pending or threatened at the time of any notice to Purchaser while such records
are still maintained, or (iii) that is equivalent to the period established by
any applicable statute of limitations (or any extension or waiver thereof) with
respect to matters pertaining to Taxes, Purchaser shall maintain and shall
allow Seller, during normal business hours, through its employees and
representatives, the right, at Seller's expense, to examine and make copies of,
the books and records of the Companies pertaining to the Companies' business
prior to the Closing Date, for any reasonable business purpose.
5.11 Proposals. Purchaser shall promptly notify Seller of any inquiries
or proposals by any Person concerning an Alternative Transaction.
5.12 Press Releases. Except as otherwise required by Applicable Law,
Purchaser and Seller shall consult with each other in advance concerning any
proposed press release or public announcement pertaining to the transactions
contemplated by this Agreement, and no such release or announcement shall be
made unless both parties have agreed as to the timing, manner and content
thereof in their reasonable judgment.
5.13 GAAP Financial Statements. Promptly following the Closing,
Purchaser shall cause the Companies to prepare and deliver to Seller GAAP
financial statements of the Companies from January 1, 1995 through the Closing
Date.
ARTICLE 6
CONDITIONS TO CLOSING
6.01 Conditions to Obligations of Purchaser. The obligations of
Purchaser to proceed with the Closing under this Agreement are subject to the
fulfillment prior to or at Closing of the following conditions (any one or more
of which may be waived in whole or in part by Purchaser at Purchaser's option):
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects on and as of the
time of Closing, with the same force and effect as though such representations
and warranties had been made on, as of and with reference to such time and
Purchaser shall have received a certificate to such effect signed by an
authorized officer of Seller.
(b) Seller shall have performed in all material respects all of the
covenants and complied in all material respects with all of the provisions
required by this Agreement to be performed or complied with by it on or before
the Closing, and Purchaser shall have received a certificate to such effect
signed by an authorized officer of Seller.
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(c) The applicable waiting period under the Hart-Scott Act (and any
extension thereof) shall have expired or been terminated.
(d) The Georgia Insurance Department shall have approved the changes in
control of American Southern and American Safety effected by the transfer of
the Shares.
(e) Seller shall have obtained a release from the InterRedec Pledge and
the InterRedec Escrow of all of the shares subject to the InterRedec Pledge.
(f) No order of any court or administrative agency shall be in effect
which enjoins or prohibits the transactions contemplated hereby or which would
limit or materially adversely affect Purchaser's ownership or control of the
Companies or the business of the Companies, and there shall not have been
threatened, nor shall there be pending, any action or proceeding by or before
any Governmental Authority (i) challenging any of the transactions contemplated
by this Agreement or seeking monetary relief by reason of the consummation of
such transactions or (ii) which might have a Material Adverse Effect on the
future conduct of the business of the Companies.
(g) There shall not have occurred any Material Adverse Effect with
respect to the Companies, or any condition or event which is reasonably likely
to result in a Material Adverse Effect, subsequent to June 30, 1995.
6.02 Conditions to Obligations of Seller. The obligations of Seller to
proceed with the Closing under this Agreement are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of which
may be waived in whole or in part by Seller at Seller's option):
(a) The representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects on and as of the
time of Closing, with the same force and effect as though such representations
and warranties had been made on, as of and with reference to such time, and
Seller shall have received a certificate to such effect signed by an authorized
officer of Purchaser.
(b) Purchaser shall have performed in all material respects all of the
covenants and complied in all material respects with all of the provisions
required by this Agreement to be performed or complied with by it on or before
the Closing, and Seller shall have received a certificate to such effect signed
by an authorized officer of Purchaser.
(c) The applicable waiting period under the Hart-Scott Act (and any
extension thereof) shall have expired or been terminated.
(d) All consents listed on Schedule 5.05(d) shall have been obtained
and the Georgia Insurance Department shall have approved the changes in control
of American Southern and American Safety effected by the transfer of the
Shares.
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(e) Seller shall have obtained a release from the InterRedec Pledge and
the InterRedec Escrow of all of the Shares subject to such InterRedec Pledge.
(f) No order of any court or administrative agency shall be in effect
which enjoins or prohibits the transactions contemplated hereby, and there
shall not have been threatened, nor shall there be pending, any action or
proceeding by or before any Governmental Authority (i) challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by
reason of the consummation of such transactions or (ii) which might have a
Material Adverse Effect on the future conduct of the business of the Companies.
(g) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect with respect to Purchaser, or any condition or event
which is reasonably likely to result in a Material Adverse Effect, subsequent
to June 30, 1995.
ARTICLE 7
INDEMNIFICATION
7.01 Indemnification by Seller.
(a) Seller hereby agrees to indemnify and hold harmless Purchaser and
the Companies from and against (i) any loss, liability, claim, obligation,
damage or deficiency (any "Damage") of or to Purchaser or any of the Companies
(other than any relating to Taxes, for which indemnification provisions are set
forth in Section 5.04(e)) arising out of or resulting from any
misrepresentation, breach of warranty or nonfulfillment of any covenant or
agreement on the part of Seller contained in this Agreement or in any statement
or certificate furnished or to be furnished to Purchaser pursuant hereto or in
connection with the transactions contemplated hereby, and (ii) any actions,
judgments, costs and expenses (including reasonable attorneys' fees and all
other expenses incurred in investigating, preparing or defending any litigation
or proceeding, commenced or threatened) (any "Costs") incident to any of the
foregoing or the enforcement of this Section 7.01.
(b) No action or claim for Damages resulting from breaches of the
representations and warranties of Seller or pursuant to Section 5.04(e) shall
be brought or made after the third anniversary of the Closing Date, except
that such time limitation shall not apply to (i) any breach of the
representations contained in Sections 3.03 or 3.04 or (ii) any claims which
exist prior to the third anniversary of the Closing Date, and which have been
the subject of a written notice from Purchaser to Seller prior to such date,
which notice specified in reasonable detail the nature of the claim.
(c) Seller shall be liable to Purchaser only to the extent the
cumulative total of Damages and Costs under this Section 7.01 and Section
5.04(e) exceeds $200,000 (at which time rights to indemnification may be
asserted for such $200,000 amount and amounts in excess thereof) and in no
event shall Seller be liable under this Section 7.01 for
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any amount in excess of $5,000,000; provided, however, no limitation of
liability provided in this paragraph (c) shall apply to any Damage or Cost
arising out of or resulting from common law fraud in connection with the
transactions contemplated by this Agreement.
(d) Any indemnification payment by Seller under this Agreement shall be
reduced by the amount of any Purchaser's Tax Effect. For purposes hereof,
"Purchaser's Tax Effect" shall mean an amount equal to the amount of the
federal, state, local or foreign tax savings attributable to Purchaser's
payment of any Damage or Cost for which it receives an indemnification payment
under this Section 7.01 or under Section 5.04(e) (after taking into account the
tax effect, if any, of receipt of any indemnification payment). To the extent
the parties cannot agree whether any tax benefit exists or on the appropriate
treatment of any tax benefit, such disagreement shall be resolved by either an
accounting firm or a law firm with a nationally recognized tax practice
selected jointly by Purchaser and Seller. If such parties cannot agree on a
firm as specified in the prior sentence, the firm shall be selected jointly by
the independent auditors of such parties.
7.02 Indemnification by Purchaser.
(a) Purchaser hereby agrees to indemnify and hold harmless Seller from
and against (i) any Damage (other than any relating to Taxes, for which
indemnification provisions are set forth in Section 5.04(e)) arising out of or
resulting from any misrepresentation, breach of warranty or nonfulfillment of
any covenant or agreement on the part of Purchaser contained in this Agreement,
or in any statement or certificate furnished or to be furnished to Seller in
connection with the transactions contemplated hereby, and (ii) any Costs
incident to any of the foregoing or the enforcement of this Section.
(b) No action or claim for Damages resulting from breaches of the
representations and warranties of Purchaser shall be brought or made after the
third anniversary of the Closing Date, except that such time limitation shall
not apply to any claims which exist prior to the third anniversary of the
Closing Date and which have been the subject of a written notice from Seller to
Purchaser prior to such date, which notice specified in reasonable detail the
nature of the claim.
(c) Purchaser shall be liable to Seller only to the extent the
cumulative total of Damages and Costs under this Section 7.02 and Section
5.04(e) exceeds $200,000 (at which time rights to indemnification may be
asserted for such $200,000 amount and amounts in excess thereof) and in no
event shall Purchaser be liable under this Section 7.02 for any amount in
excess of $5,000,000; provided, however, no limitation of liability provided in
this paragraph (c) shall apply to any Damage or Cost arising out of or
resulting from common law fraud in connection with the transactions
contemplated by this Agreement or the failure of Purchaser to make payments
under the Purchaser Note in accordance with the terms thereof.
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(d) Any indemnification payment by Purchaser under this Agreement shall
be reduced by the amount of any Seller's Tax Effect. For purposes hereof,
"Seller's Tax Effect" shall mean an amount equal to the amount of the federal,
state, local or foreign tax savings attributable to Seller's payment of any
Damage or Cost for which it receives an indemnification payment under this
Section 7.02 or under Section 5.04(e) (after taking into account the tax
effect, if any, of receipt of any indemnification payment). To the extent the
parties cannot agree whether any tax benefit exists or on the appropriate
treatment of any tax benefit, such disagreement shall be resolved by either an
accounting firm or a law firm with a nationally recognized tax practice
selected jointly by Purchaser and Seller. If such parties cannot agree on a
firm as specified in the prior sentence, the firm shall be selected jointly by
the independent auditors of such parties.
7.03 Indemnification Procedures.
(a) If a claim is made, or any suit or action is commenced for which
defense or indemnity is claimed to be due under Section 5.04(e), 7.01 or 7.02,
or if knowledge is received of any other state of facts which, if not
corrected, may give rise to a right of defense or indemnification under Section
5.04(e), 7.01 or 7.02, the party seeking defense or indemnity ("Indemnified
Party") shall give written notice to the party claimed to be liable on the
defense or indemnity obligation ("Indemnifying Party") as soon as practicable
after, but in no event (i) more than 10 days following notice to the
Indemnified Party of any claim, suit or action for which defense or indemnity
will be sought, or (ii) more than 30 days following the Indemnified Party's
knowledge of any other state of facts which may give rise to a right to defense
or indemnity under Section 5.04(e), 7.01 or 7.02. A failure to give prompt
notice shall not relieve an Indemnifying Party of its obligation to defend or
indemnify, except to the extent the Indemnifying Party is prejudiced by such
failure. The Indemnified Party shall make available to the Indemnifying Party
and its counsel and accountants at reasonable times and for reasonable periods,
during normal business hours, all books and records of the Indemnified Party
relating to the matter for which defense or indemnity has been claimed, and
each party hereunder will render to the other such assistance as the other may
reasonably require in order to assure prompt and adequate defense of any suit,
claim or proceeding to which this Section 7.03 applies.
(b) If defense or indemnification is sought with respect to a claim,
suit or other proceeding against the Indemnified Party, the Indemnifying Party
shall have the right to defend, compromise and settle the matter in the name of
the Indemnified Party to the extent that the Indemnifying Party may be liable
to the Indemnified Party under Section 5.04(e), 7.01 or 7.02 hereof; provided,
however, that the Indemnifying Party shall not compromise or settle a suit,
claim or proceeding unless it assumes the obligation to indemnify for all
losses relating thereto. The Indemnifying Party shall notify the Indemnified
Party promptly if the Indemnifying Party elects to assume the defense of any
such claim, suit or action. In assuming the defense of a matter hereunder, the
Indemnifying Party shall have the right to select counsel, provided that the
Indemnified Party does not object to such counsel in a reasonable exercise of
its discretion. The Indemnified Party shall have the right to employ its own
counsel who may associate with
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the counsel designated by the Indemnifying Party (upon the Indemnifying Party's
assumption of the defense of the matter), but the fees and expenses of such
counsel shall be at the Indemnified Party's expense.
(c) The Indemnified Party may at any time notify the Indemnifying Party
of its intention to settle or compromise any claim, suit or action against the
Indemnified Party in respect of which indemnification payments may be sought
from the Indemnifying Party hereunder, but shall not settle nor compromise any
matter for which indemnification may be sought, notwithstanding this Section
7.03(c), in excess of $1,000 without the consent of the Indemnifying Party,
which shall not be unreasonably withheld. Any settlement or compromise of any
claim, suit or action in accordance with the preceding sentence, or any final
judgment or decree entered on or in, any claim, suit or action in which the
Indemnifying Party did not assume the defense in accordance herewith, shall be
deemed to have been consented to by, and shall be binding upon, the
Indemnifying Party as fully as if the Indemnifying Party had assumed the
defense thereof and a final judgment or decree had been entered in such suit or
action, or with regard to such claim, by a court of competent jurisdiction for
the amount of such settlement, compromise, judgment or decree.
(d) The Indemnifying Party shall be subrogated to any claims or rights
of the Indemnified Party as against any other persons with respect to any
amount paid by the Indemnifying Party under this Article 7 or under Section
5.04(e). The Indemnified Party shall cooperate with the Indemnifying Party, at
the Indemnifying Party's expense, in the assertion by the Indemnifying Party of
any such claim against other persons.
7.04 Sole Remedy.
(a) Purchaser's sole and exclusive remedy for any breach of this
Agreement by Seller shall be the provisions in Sections 5.04(e) and 7.01, and
Purchaser hereby waives any and all other remedies which may be available at
law or equity for any breach or alleged breach of this Agreement.
(b) Seller's sole and exclusive remedy for any breach of this Agreement
by Purchaser shall be the provisions in Sections 5.04(e) and 7.02, and Seller
hereby waives any and all other remedies which may be available at law or
equity for any breach or alleged breach of this Agreement.
(c) Notwithstanding anything to the contrary contained herein, if the
Closing occurs no claim for indemnification may be asserted under this
Agreement or any document delivered in connection herewith with respect to any
matter discovered or known to the party otherwise entitled to seek
indemnification on or before the Closing Date.
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ARTICLE 8
TERMINATION
8.01 When Agreement May be Terminated. This Agreement may be terminated
prior to Closing:
(a) By mutual written consent of Purchaser and Seller;
(b) By Seller in the event that it has not obtained a letter of credit
to be used as substitute collateral under the InterRedec Pledge by December 31,
1995 for the reasons described in the second sentence of Section 5.13(b); or
(c) In accordance with Section 5.03.
8.02 Final Termination. This Agreement will terminate on January 31,
1996 if the Closing has not yet occurred.
8.03 Effect of Termination. In the event of termination of this
Agreement by either Seller or Purchaser, as provided above, this Agreement
shall forthwith terminate and there shall be no liability on the part of any
party or any party's officers or directors, except for liabilities arising from
a breach of this Agreement prior to such termination; provided, however, that
the obligations of the parties set forth in Article 7 shall survive such
termination.
ARTICLE 9
ARBITRATION
9.01 Agreement to Arbitrate. Except as set forth in Sections 7.01(d)
and 7.02(d), any claim, controversy or dispute arising out of or relating to
this Agreement, on which an amicable understanding cannot be reached, to the
maximum extent allowed by applicable law and irrespective of the type of relief
sought, shall be submitted to and resolved by arbitration, and such arbitration
shall be the sole remedy for such matter. Such arbitration shall be heard and
conducted in Atlanta, Georgia and shall be conducted expeditiously and
confidentially in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA"), as such rules shall be in effect on
the date of delivery of demand for arbitration, with the exception that the
arbitrators may not award any punitive or exemplary damages or any damages
other than compensatory, and except as such rules may be otherwise inconsistent
with the express provisions of this Article 9.
9.02 Initiating Arbitration. To initiate arbitration, a party shall
notify the other party in writing of its desire to arbitrate, stating the
nature of its dispute and the remedy sought. The receiving party shall
acknowledge receipt of the notice in writing within 5 days, and thereafter the
parties shall attempt in good faith to resolve the dispute within 15 days. If
the dispute cannot be resolved within such 15-day period, any party may file a
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written demand for arbitration by filing a written notice with the AAA and with
the other party, complying with the AAA's prescribed procedures for such
notices. Within 15 days of delivery of such demand for arbitration, each party
shall appoint one arbitrator, and the arbitrators so selected shall, within 15
days of their appointment, appoint an additional arbitrator. In the event that
the arbitrators selected by the parties are unable to agree upon the selection
of the additional arbitrator after reasonable efforts within such 15-day
period, a list of 7 qualified and available persons shall be requested from the
AAA. The parties shall take turns striking one person each from the list with
the last remaining person being the additional selected arbitrator. Once
selected, the arbitration panel shall meet as expeditiously as possible, select
a chairman, schedule the arbitration hearing, and notify the parties in writing
of the date, time and place of the hearing. With respect to any arbitration
pursuant to Section 2.04, the provisions of Section 2.04 shall apply where
inconsistent with this Article 9.
9.03 Effect. All conclusions of law reached by the arbitrators shall be
made in accordance with the internal laws of the State of Georgia without
regard for its conflict of laws doctrine. Any award rendered by the
arbitrators shall be accompanied by a written opinion setting forth the
findings of fact and conclusions of law relied upon in reaching their decision.
The award rendered by the arbitrators shall be final, binding and
non-appealable, and judgment upon such award may be entered by any court having
jurisdiction thereof. The parties agree that the existence, conduct and
content of any such arbitration shall be kept confidential and no party shall
disclose to any person any information about such arbitration, except as may be
required by law or for financial reporting purposes in each party's financial
statements.
9.04 Costs. Each party shall pay the fees of its own arbitrator,
attorneys, expenses of witnesses and all other expenses in connection with the
presentation of such party's case. The remaining costs of the arbitration,
including, without limitation, fees of the additional arbitrator, costs of
records or transcripts and administrative fees, shall be paid as designated by
the arbitrators.
ARTICLE 10
MISCELLANEOUS
10.01 Nature and Survival of Representations. The representations,
warranties, covenants and agreements of Purchaser and Seller contained in this
Agreement shall survive the Closing and shall not merge in the performance of
any obligation by any party hereto. Seller acknowledges and agrees that prior
to Closing, Purchaser intends to perform such investigation of the Companies as
it deems necessary or appropriate; however, no investigation by Purchaser will
diminish or obviate any of the representations, warranties, covenants or
agreements made or to be performed by Seller pursuant to this Agreement, or
Purchaser's right to rely upon such representations, warranties, covenants and
agreements.
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10.02 Amendment. This Agreement may not be amended or modified without
the prior written consent of all parties.
10.03 Waiver. Failure to insist upon strict compliance with any of the
terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
10.04 Governing Law. Notwithstanding the place where this Agreement may
be executed by any of the parties, the parties expressly agree that this
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the State of Georgia, without regard for its conflict of laws
doctrine.
10.05 Notices. Any notice or other communication to be given hereunder
shall be in writing and shall be deemed sufficient when (i) mailed by United
States certified mail, return receipt requested, (ii) mailed by overnight
express mail, (iii) sent by facsimile or telecopy machine, followed by
confirmation mailed by first-class mail or overnight express mail, or (iv)
delivered in person, at the address set forth below, or such other address as a
party may provide to the other in accordance with the procedure for notices set
forth in this Section:
If to Purchaser:
Atlantic American Corporation
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319-3000
Attention: Hilton H. Howell, Jr.
Telephone: 404-266-5505
Telecopy: 404-231-2123
with a copy (which shall not constitute notice) to:
Heyman & Sizemore
2300 Cain Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303-1608
Attention: Neal H. Ray
Telephone: 404-521-2268
Telecopy: 404-521-2838
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If to Seller:
Fuqua Enterprises, Inc.
One Atlantic Center, Suite 5000
1201 West Peachtree Street
Atlanta, Georgia 30309-3400
Attention: John J. Huntz, Jr.
Telephone: 404-815-2000
Telecopy: 404-815-4529
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Bryan E. Davis
Telephone: 404-881-7000
Telecopy: 404-881-7777
10.06 Invalid Provision. If any provision of this Agreement shall be
determined by arbitrators (acting in accordance with Article 9) to be invalid
or unenforceable, this Agreement shall be deemed amended to delete such
provision and the remainder of this Agreement shall be enforceable by its
terms.
10.07 Subsequent SEC Filings. After the Closing, the parties agree to
furnish information to each other (on a GAAP and SAP basis) so that each party
may prepare any filings required to be made with the SEC or any other
Governmental Authorities. The parties shall each be responsible for their own
costs and expenses (including, without limitation professional fees and
expenses) incurred in preparing such filings.
10.08 Assignment. This Agreement may not be assigned or delegated by any
party without the prior written consent of all other parties.
10.09 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.
10.10 Further Assurances. Each party agrees to execute and deliver all
such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.
10.11 Headings. Headings and captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way
define, limit, extend or prescribe the scope of this Agreement or the intent of
any provision.
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10.12 Person and Gender. The masculine gender shall include the feminine
and neuter genders and the singular shall include the plural.
10.13 Entire Agreement. This Agreement, together with the Seller
Disclosure Memorandum, Purchaser Disclosure Memorandum and the Exhibit
referenced herein, constitute the entire agreement of the parties with respect
to matters set forth in this Agreement and supersede any prior understanding or
agreement, oral or written, with respect to such matters.
10.14 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. No party shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
10.15 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, and all such
counterparts shall constitute one and the same Agreement, binding on all the
parties notwithstanding that all the parties are not signatories to the same
counterpart.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
ATLANTIC AMERICAN CORPORATION
By: /s/ Hilton H. Howell, Jr.
-----------------------------
Attest:/s/ Janie L. Ryan Name: Hilton H. Howell, Jr.
------------------------------ Title: President
Secretary
FUQUA ENTERPRISES, INC.
By: /s/ Lawrence P. Klamon
-----------------------------
Attest:/s/ Mildred H. Hutcheson Name: Lawrence P. Klamon
----------------------------- Title: President and Chief
Secretary Executive Officer
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EXHIBIT 2.03
PROMISSORY NOTE
$_______________ Date:____________, 1995
FOR VALUE RECEIVED, the undersigned, ATLANTIC AMERICAN CORPORATION, hereby
promises to pay to the order of FUQUA ENTERPRISES, INC. (f/k/a Vista Resources,
Inc. and hereinafter, together with its successors and assigns, referred to as
the "Holder") at the offices of the Holder located at 1201 West Peachtree
Street, Suite 5000, Atlanta, Georgia 30309, or at such other place as the
Holder may designate in writing to the undersigned, an amount equal to the
aggregate amount of all payments of principal (including the Additional Amounts
and accrued interest added to principal in accordance with Section 2(c) of the
InterRedec Note both before and after the date hereof) and interest paid by the
Holder after the date hereof under that certain Nonnegotiable Note dated
October 11, 1991 ((the "InterRedec Note"); terms used herein and not defined
herein have their respective defined meaning as set forth in the InterRedec
Note) executed and delivered by the Holder in favor of InterRedec Southern
Company, Inc. (together with its successors and assigns including, but not
limited to, the Board of Governors of the Federal Reserve System or any person
or entity to whom the InterRedec Note may be pledged, "InterRedec"), a copy of
which is attached hereto as Exhibit A. Payments under this Note shall be due
and payable in the exact amounts and at the exact times as the amounts owing by
the Holder to InterRedec are originally scheduled to become due and payable
under the InterRedec Note; it being the intent of the undersigned and, by
acceptance hereof, the Holder, that the undersigned shall pay the Holder an
amount equal to each amount of principal (including the Additional Amounts and
accrued interest added to principal in accordance with Section 2(c) of the
InterRedec Note both before and after the date hereof) and interest paid from
the date hereof by the Holder to InterRedec (or its successors and assigns)
under the InterRedec Note simultaneously with each such payment by the Holder
to InterRedec.
The undersigned acknowledges that, as of the date hereof, the principal
amount (including the Additional Amounts that have now accrued pursuant to
paragraphs 2(c), 6, 7 and 8 of the InterRedec Note) due and owing by the Holder
under the InterRedec Note equals $___________, which amount includes $________
of accrued and unpaid interest added to the principal amount of the InterRedec
Note in accordance with Section 2(c) of the InterRedec Note.
The undersigned further acknowledges that the originally scheduled amounts
payable under the InterRedec Note may be reduced pursuant to paragraphs 10, 11
and 16 thereof. Whether and to what extent the amounts due and owing under the
InterRedec Note, and therefore this Note, are reduced pursuant to such
paragraphs shall be matters solely between the Holder and InterRedec and any
payment, agreement, settlement, arbitration or judicial award, or refund or
return of monies with respect to such matters
<PAGE> 44
shall, for purposes of this Note and the amounts owing by the undersigned
hereunder, be binding upon the undersigned and the undersigned shall not be
entitled to withhold or offset any amount owing hereunder in the event the
undersigned disputes the amount or time any payment is made by the Holder under
the InterRedec Note with respect to such matters. In this connection, if,
pursuant to paragraph 16 of the Note, the Holder has a claim for Damages (as
such term is used in the InterRedec Note) and the Holder pays an amount of
proceeds due under the InterRedec Note into escrow as contemplated therein, the
undersigned shall simultaneously pay an amount of proceeds due under this Note
into escrow pursuant to such terms and arrangements as the undersigned and the
Holder shall mutually and reasonably agree. To the extent any Damages paid
into escrow by the Holder are returned or refunded to the Holder (whether
pursuant to mutual agreement or arbitration or judicial award), the escrow
arranged between the Holder and the undersigned shall provide that the
undersigned shall be entitled to receive the same amount of funds so refunded
or returned to the Holder. To the extent InterRedec is entitled to receive
(whether by mutual agreement or arbitration or judicial award) any Damages paid
into escrow by the Holder, the escrow arrangements between the Holder and the
undersigned shall provide that the Holder shall be entitled to receive the same
amount of funds so received by InterRedec. Notwithstanding any provisions
contained herein to the contrary, any payment by InterRedec to the Holder that
is in satisfaction of a liability of American Southern that has been paid by
American Southern shall be promptly paid to the undersigned. Pursuant to
Sections 5.04(e) and 7.01 of the Stock Purchase Agreement (as defined below),
the undersigned may have a separate cause of action against the Holder with
respect to any such dispute relating to such matters.
The undersigned shall have the right at any time and from time to time to
prepay the indebtedness represented by this Note in whole or in part without
premium or penalty, but with accrued interest to the date of such prepayment on
the principal amount prepaid. By acceptance hereof, during the time this Note
is outstanding, the Holder agrees not to exercise its right to prepay all or a
portion of the principal of the InterRedec Note prior to its stated maturity
pursuant to paragraph 9 of the InterRedec Note.
If, pursuant to paragraph 12 of the InterRedec Note, InterRedec pays the
Holder any Offset Amount thereby increasing the outstanding amount of the
InterRedec Note, the Holder may, at its option, either (i) immediately pay such
amount directly to the undersigned whereupon the principal amount outstanding
under this Note shall be automatically increased by such amount or (ii) retain
such payment by InterRedec whereupon the outstanding amount of this Note shall
remain reduced by the amount of such amount retained.
In no event shall the amount of interest due or payable under this Note
exceed the maximum rate of interest allowed by applicable law and, in the event
any such payment is inadvertently paid by the undersigned or inadvertently
received by the Holder, then such excess sum shall be credited as a payment of
principal, unless the undersigned shall notify the Holder in writing that the
undersigned elects to have such excess sum returned to it forthwith. It is the
express intent of the parties hereto that the undersigned not pay and
-2-
<PAGE> 45
the Holder not receive, directly or indirectly, in any manner whatsoever,
interest in excess of that which may be lawfully paid by the undersigned under
applicable law.
Each of the following events shall constitute an "Event of Default" under
this Note: (i) failure of the undersigned to pay any amount due hereunder when
due and the continuance of such failure for a period of five business days
after written demand therefor, or the undersigned shall in any way fail to
comply with the other terms, covenants or conditions contained in this Note or
in the Stock Purchase Agreement; (ii) any oral or written representation or
warranty made at any time by the undersigned to the Holder under the Stock
Purchase Agreement or otherwise shall prove to have been incorrect or
misleading in any material respect when made; (iii) the undersigned shall (a)
commence a voluntary case under the Bankruptcy Code of 1978, as amended or
other federal bankruptcy law (as now or hereafter in effect); (b) file a
petition seeking to take advantage of any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or composition
for adjustment of debts; (c) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an involuntary case under
such bankruptcy laws or other laws; (d) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the taking
of possession by, a receiver, custodian, trustee, or liquidator of itself or of
a substantial part of its property, domestic or foreign; (e) be unable to, or
admit in writing its inability to, pay its debts as they become due; (f) make a
general assignment for the benefit of creditors; or (g) make a conveyance
fraudulent as to creditors under any state or federal law; or (iv) a case or
other proceeding shall be commenced against the undersigned in any court of
competent jurisdiction seeking (a) relief under the Bankruptcy Code of 1978, as
amended or other federal bankruptcy law (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts or (b) the appointment of a
trustee, receiver, custodian, liquidator or the like for the undersigned or all
or any substantial part of the assets, domestic or foreign, of the undersigned.
Upon the occurrence of an Event of Default (other than an Event of Default
described in clause (iii) or (iv) of the definition thereof), at the option of
the Holder, and without demand or notice of any kind, all outstanding amounts
under this Note (as determined by the then outstanding amounts under the
InterRedec Note) may be immediately declared, and thereupon shall immediately
become, in default and due and payable and the Holder may exercise any and all
rights and remedies available to it at law, in equity or otherwise. Upon the
occurrence of an Event of Default described in clause (iii) or (iv) of the
definition thereof, all outstanding amounts owing under this Note (as
determined by the then outstanding amounts under the InterRedec Note), without
demand or notice of any kind, shall immediately become in default and due and
payable and the Holder may exercise any and all rights and remedies available
to it at law, in equity or otherwise.
Upon the occurrence of an Event of Default under this Note, interest shall
accrue on the outstanding principal amount of this Note (including all
Additional Amounts) at the
-3-
<PAGE> 46
lower of (i) the Prime Rate (as defined in the InterRedec Note) plus two
percentage points (2%) or eighteen percent (18%) per annum, such interest, and
such principal, being payable on demand.
The Holder shall maintain a ledger or other statement of account regarding
the amounts due under the InterRedec Note and therefore this Note; provided,
however, that the failure of the Holder to maintain such ledger or statement
shall in no way affect its rights or the undersigned's obligations hereunder.
The entries in such ledger or statement shall be binding and conclusive upon
the undersigned absent manifest error.
The undersigned shall pay all expenses incurred by the Holder in the
collection of this Note, including, without limitation, the reasonable fees and
disbursements of counsel to the Holder if this Note is collected by or through
an attorney-at-law. However, the undersigned shall not be liable for any costs
of collection, including attorneys' fees and disbursements, paid by the Holder
to InterRedec.
Time is of the essence of this Note.
The undersigned agrees that all of its payment obligations hereunder shall
be absolute, unconditional and, for the purposes of making payments hereunder,
the undersigned hereby waives any right to assert any setoff, counterclaim or
cross-claim including any right to setoff amounts due and owing hereunder by
reason of any claim for indemnification under the Stock Purchase Agreement.
Any such claim for indemnification shall be made in a separate cause of action
and shall not affect, impair, reduce or modify the amounts owing by the
undersigned hereunder.
No delay or failure on the part of the Holder in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial exercise
by the Holder of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
All amendments to this Note, and any waiver or consent of the Holder, must
be in writing and signed by the Holder and the undersigned.
The undersigned hereby waives presentment, demand, notice of dishonor,
protests and all other notices whatever.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF GEORGIA.
This Note is the Purchaser Note referred to in Section 2.03(a) of that
certain Stock Purchase Agreement dated as of October 16, 1995 (the "Stock
Purchase Agreement") by and between the initial Holder and the undersigned and
is subject to, and is entitled to the benefits of, the terms and provisions of
the Stock Purchase Agreement.
-4-
<PAGE> 47
This Note shall be binding upon the successors and assigns of the
undersigned. A Holder of this Note may assign or transfer this Note to any
person or entity without notice to, or the consent of, the undersigned.
Any notice to be given hereunder shall be in writing, shall be sent to such
person's address set forth below its signature hereto and shall be deemed
received (i) on the earlier of the date of receipt or the date three business
days after deposit of such notice in the United States mail, if sent postage
prepaid, certified mail, return receipt requested or (ii) when actually
received, if personally delivered or (iii) one business day after deposit of
such notice with a recognized overnight courier or (iv) when confirmation of
transmission has been received by the sender, if via facsimile transmission.
[SIGNATURES ON NEXT PAGE]
-5-
<PAGE> 48
[SIGNATURE PAGE TO AAC/FUQUA PROMISSORY NOTE DATED ______________, 1995]
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Promissory Note under seal as of the date and year first written above.
<TABLE>
<S> <C>
ATLANTIC AMERICAN CORPORATION
By:
-----------------------------
Name:
----------------------
Title:
---------------------
ATTEST:
By:
-----------------------------
Name:
----------------------
Title:
---------------------
[CORPORATE SEAL]
Address for Notices:
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319-3000
Attn.: Hilton H. Howell, Jr.
Telecopy No.: (404) 231-2123
Accepted:
FUQUA ENTERPRISES, INC.
By:
----------------------------
Name:
---------------------
Title:
--------------------
Address for Notices:
One Atlantic Center, Suite 5000
1201 West Peachtree Street
Atlanta, Georgia 30309
Attn.: John J. Huntz, Jr.
Telecopy No.: (404) 815-4529
</TABLE>
-6-
<PAGE> 49
EXHIBIT A
NONNEGOTIABLE NOTE
$8,000,000.00 October 11, 1991
FOR VALUE RECEIVED, the undersigned, Vista Resources, Inc. ("Vista"),
promises to pay to InterRedec Southern Company, Inc. ("InterRedec"), at such
place as InterRedec may designate in writing, the original principal sum of
Eight Million Dollars and no cents ($8,000,000.00), on October 11, 1996; plus
accrued and unpaid interest on the unpaid balance of such principal amount, at
the rate of interest and at the times described below, until full and final
payment.
1. Interest on the unpaid principal balance of this Note shall
accrue at an annual rate (computed on the basis of actual days elapsed over a
365-day year) of the Prime Rate (as defined below). Vista shall pay all costs
of collection, including reasonable attorney's fees, if this Note is collected
by legal action or through an attorney at law.
2. All principal and interest shall be paid in immediately
available funds and in lawful money of the United States of America as follows:
(a) Principal shall be due and payable in full on October
11, 1996, together with all accrued and unpaid interest.
(b) One-half of the interest accruing on the outstanding
principal amount of this Note from the date hereof until such
principal amount is paid in full shall be payable quarterly on the
last day of each calendar quarter (March 31, June 30, September 30,
and December 31) during the term of this Note.
(c) One-half of the interest accruing on the outstanding
principal amount of this Note from the date hereof until such
principal amount is paid in full shall be added to the principal
amount of this Note and shall be due and payable in full (without
interest) on October 11, 1996.
(d) Whenever a payment under this Note becomes due on a
day which is not a business day, the due date for such payment shall
be extended to the next succeeding business day, and interest
applicable to such amount shall accrue during any such extension.
3. "Prime Rate" shall mean the rate stated in the Wall Street
Journal on the first business day of each calendar month as the prime rate.
Any change in the interest rate hereunder resulting from a change in the Prime
Rate shall be effective as of the beginning of the first calendar day of each
calendar month on which the Prime Rate changes.
<PAGE> 50
4. The annual interest rate accruing on this Note on the date of
its execution equals eight percent (8%).
5. This Note is issued pursuant to, and shall be subject to and
have the benefits of, that certain Stock Purchase Agreement (the "Stock
Purchase Agreement"), dated as of September 17, 1991, by and among Vista;
Concorde Finance & Investment, Inc., a Delaware corporation; InterRedec;
InterRedec, Inc., a Delaware corporation; and American Southern Insurance
Company ("ASICo") and the related Pledge and Security Agreement dated of even
date by and between Vista and InterRedec.
6. In addition to any other amounts due and payable under this
Note, Vista promises to pay to InterRedec One Million Dollars and no cents
($1,000,000.00) on October 11, 1996 if the Earnings Before Taxes (as defined
below) of ASICo and its subsidiaries, on a consolidated basis, equal or exceed
Five Million Dollars and no cents ($5,000,000.00) for its fiscal year ending
December 31, 1992. Any additional amount due to InterRedec under this
Paragraph 6 shall accrue interest under this Note in accordance with Paragraph
1 of this Note from January 1, 1993 through October 11, 1996. (The additional
amount, if any, payable under this Paragraph 6 shall be referred to in this
Note as the "First Additional Amount.")
7. In addition to any other amounts due under this Note, Vista
promises to pay to InterRedec One Million Dollars and no cents ($1,000,000.00)
on October 11, 1996 if the Earnings Before Taxes (as defined below) of ASICo
and its subsidiaries, on a consolidated basis, equal or exceed Fifteen Million
Dollars and no cents ($15,000,000.00) on an aggregate basis for its fiscal
years ending December 31, 1992, December 31, 1993, and December 31, 1994. Any
additional amount due to InterRedec under this Paragraph 7 shall accrue
interest under this Note in accordance with Paragraph 1 of this Note from
January 1, 1995 through October 11, 1996. (The additional amount, if any,
payable under this Paragraph 7 shall be referred to in this Note as the "Second
Additional Amount"; and the First Additional Amount and the Second Additional
Amount collectively shall be referred to in this Note as the "Additional
Amounts".)
8. "Earnings Before Taxes" shall mean the pre-tax earnings of
ASICo and its subsidiaries, on a consolidated basis, as determined in
accordance with generally accepted accounting principles, consistently applied,
as adjusted, where not otherwise duplicative, (a) to eliminate any adjustments
to the value of assets or liabilities or other accounting adjustments resulting
from the application of "purchase accounting principles"; (b) to include
reasonable finance charges related to injections of capital in any form
contributed by Vista or any third party; and (c) to eliminate any payments or
expense accruals charged by or on behalf of any corporation or other entity
affiliated with American Southern other than its subsidiaries (other than
payments made directly to third parties relating to ASICo or its
subsidiaries.). (Notwithstanding that management fees and certain other
expenses are disregarded in computing the amount of Earnings
- 2 -
<PAGE> 51
Before Taxes, nothing in this Paragraph 8 shall be construed as denying Vista
the right to assess any such charges.)
9. Vista shall have the right at any time and from time to time
to prepay the indebtedness represented by this Note in whole or in part without
premium or penalty, but with accrued interest to the date of such prepayment on
the principal amount prepaid.
10. Upon the occurrence of any of the following events, the
principal amount of this Note shall automatically be reduced by an amount
determined under Section 3.03 of the Stock Purchase Agreement (an "Offset
Amount") for which InterRedec is determined to be obligated to Vista (and any
such Offset Amount shall first reduce the amount of any Additional Amounts
before reducing the original principal amount of this Note):
(a) Vista and InterRedec shall agree in writing
(including an agreement as to the amount owed by InterRedec to Vista)
that InterRedec is obligated to Vista for indemnification under the
Stock Purchase Agreement and InterRedec shall not have paid Vista such
amount within seven (7) days of the date of such agreement;
(b) Vista and InterRedec shall agree to arbitration
procedures with respect to a dispute concerning the indemnification
provisions of the Stock Purchase Agreement, the arbitrator thereunder
shall enter an award in Vista's favor, and InterRedec shall not have
paid Vista the amount of such award within (7) days of the date such
award is entered; or
(c) A court of competent jurisdiction shall enter a
judgment concerning the indemnification provisions of the Stock
Purchase Agreement in Vista's favor and InterRedec shall not have paid
Vista the amount of such judgment within seven (7) days of the date
such judgment is entered.
11. Upon the final assessment of any amount of Taxes (as defined
in the Stock Purchase Agreement) against ASICo or any of the Subsidiaries for
any taxable period ending on or before the date of the Closing, which final
assessment is paid by Purchaser or ASICo and is not reimbursed by any of the
Sellers within five (5) business days after receipt by Sellers of notice from
Purchaser or ASICo that it has paid such Taxes, the principal amount of this
Note shall automatically be reduced by the Offset Amount with respect to such
final assessment (and any such reduction shall first reduce the amount of any
Additional Amounts before reducing the original principal amount of this Note).
12. Notwithstanding anything in Paragraph 10 or 11 of this Note,
if, after the date on which the principal amount of this Note has been reduced
by an Offset Amount, InterRedec pays Vista the Offset Amount, then the
principal amount of this Note immediately shall be increased for all purposes
by the amount which InterRedec pays Vista.
- 3 -
<PAGE> 52
13. Notwithstanding any provision to the contrary in this
Note, no party shall be required to pay, and no party shall be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by law ("Excess Interest"). If any Excess Interest is provided for
or determined by a court of competent jurisdiction to have been provided for in
this Note, then any Excess Interest shall be refunded to the payor thereof, and
the interest rate provided for and this Note shall automatically be reduced to
the maximum lawful rate allowed from time to time under applicable law.
14. Upon the occurrence of and during the continuance of
one or more Events of Default under and as defined in the Pledge and Security
Agreement:
(a) the full amount of this Note may, at the
option of InterRedec, be declared and immediately become due and payable, and
InterRedec, subject to the limitations set forth in the Pledge and Security
Agreement, may exercise any rights available to it at law and in equity, or
available under any agreement, relating to this Note; and
(b) interest accruing under this Note shall
accrue at the lower of (1) the Prime Rate plus two percentage points (2%), or
(2) eighteen percent (18%) per annum.
15. If the amount of this Note shall become due and
payable pursuant to Paragraph 14 of this Note, Vista shall immediately pay the
outstanding amount due under this Note into an escrow account (and shall
deposit the First Additional Amount and the Second Additional Amount, if any,
directly into the escrow account within five (5) business days of the dates
such amounts are finally determined to be due pursuant to Section 17 of this
Agreement,) with a bank that is reasonably acceptable to the parties and
pursuant to an escrow agreement in a form reasonably satisfactory to the
parties. The escrow agreement shall provide that (a) Vista shall have the
right to receive escrowed funds under the circumstances it would be entitled to
exercise its offset rights hereunder, and (b) any remaining escrowed funds
shall be released to InterRedec on the stated maturity date of this Note,
except that if on such date there are one or more outstanding claims for
Damages (as defined in the Stock Purchase Agreement), an amount of the escrowed
funds which would otherwise be released to InterRedec, equal to the maximum
amount of such claims for Damages, shall remain in escrow until the resolution
of such claims.
16. If, at the maturity of this Note, there are one or
more outstanding claims for Damages (as that term is defined in the Stock
Purchase Agreement), an amount of the proceeds due under this Note equal to
maximum amount of such claims for Damages shall be paid into escrow pursuant to
such terms and arrangements as the parities shall mutually and reasonably
agree.
17. Vista shall deliver to InterRedec a written
computation of the Earnings Before Taxes by March 31, 1993, with respect to the
First Additional Amount, and March 31, 1995, with respect to the Second
Additional
- 4 -
<PAGE> 53
Amount. InterRedec shall be deemed to have accepted each such computation
provided unless, within forty-five (45) days after receipt of such written
computation, InterRedec notifies Vista of its objection in writing and, in that
event, Vista shall provide InterRedec with information pertinent to its
computation of Earnings Before Taxes for such years, together with such access
to the pertinent accounting records of American Southern and its subsidiaries
as InterRedec may reasonably request. If the parties are unable to resolve any
disputes relating to the computation of Earnings Before Taxes within thirty
(30) days of InterRedec's notice of objection to Vista's computation, the
parties shall promptly refer the matter for arbitration to a mutually agreed
major accounting firm of a national standing which, at the time of such
submission, does not represent or has not represented any of the parties
hereto, and the decision of such major accounting firm shall be rendered within
not more than twenty (20) days of submission and shall be final and binding on
the parties. The expense of such arbitration shall be borne equally by the
parties.
18. If, during the term of this Note, Vista sells all of
the outstanding stock or substantially all of the assets of ASICo to a third
party (a "Subsequent Purchaser"), Vista may assign all of its rights and
obligations under this Note, together with all of its rights and obligations
under the Stock Pledge and Security Agreement, to such Subsequent Purchaser;
provided, however, that Vista (1) must first obtain the written consent of
InterRedec to such assignment which, based upon InterRedec's judgment of the
creditworthiness of the Subsequent Purchaser, shall not unreasonably be
withheld, or (2) delivers to InterRedec a bank letter of credit in a form and
from a bank reasonably acceptable to InterRedec and in an amount which at all
times shall be at least equal to the outstanding principal amount of this Note.
19. The failure or forbearance of InterRedec to exercise
any right hereunder, or otherwise granted to it by law or another agreement,
shall not affect or release the liability of Vista, and shall not constitute a
waiver of such right unless so stated by InterRedec in writing.
20. This Note shall be governed by and construed in
accordance with the substantive laws of the State of Georgia.
This Note is executed under the hand and seal of Vista on the
date first-above written.
VISTA RESOURCES, INC.
[CORPORATE SEAL]
By: /s/ Samuel W. Norwood III
-------------------------------
Title: President and CEO
----------------------------
- 5 -
<PAGE> 54
Accepted by:
INTERREDEC, INC.
By: /s/ Bill W. Batastini
-------------------------------
Bill W. Batastini
Vice President
INTERREDEC SOUTHERN COMPANY, INC.
By: /s/ Bill W. Batastini
-------------------------------
Bill W. Batastini
Vice President
CONCORDE FINANCE & INVESTMENTS, INC.
By: /s/ Bill W. Batastini
-------------------------------
Bill W. Batastini
Vice President
- 6 -
<PAGE> 1
EXHIBIT 3
BYLAWS
OF
FUQUA ENTERPRISES, INC.
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. An annual meeting of
stockholders shall be held for the election of directors at such date, time and
place, either within or without the State of Delaware, as may be designated by
resolution of the Board of Directors from time to time. Any other proper
business may be transacted at the annual meeting.
Section 1.2 Special Meetings. Special meetings of
stockholders for any purpose or purposes may be called at any time by the Board
of Directors, the Chairman of the Board or the Vice Chairman, or by a committee
of the Board of Directors which has been duly designated by the Board of
Directors and whose powers and authority, as expressly provided in a resolution
of the Board of Directors, include the power to call such meetings.
Section 1.3. Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by law, the certificate
of incorporation or these bylaws, the written notice of any meeting shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the mail, postage prepaid,
directed to the stockholder at his address as it appears on the records of the
corporation.
Section 1.4. Adjournments. Any meeting of stockholders,
annual or special, may adjourn from time to time to reconvene at the same or
some other place, and notice need not be given of any such adjourned meeting if
the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact
any business which might have been transacted at the original meeting. If the
adjournment is for more than thirty days, or if after the
<PAGE> 2
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 1.5. Quorum. Except as otherwise provided by law,
the certificate of incorporation or these bylaws, at each meeting of
stockholders the presence in person or by proxy of the holders of shares of
stock having a majority of the votes which could be cast by the holders of all
outstanding shares of stock entitled to vote at the meeting shall be necessary
and sufficient to constitute a quorum. In the absence of a quorum, the
stockholders so present may, by majority vote, adjourn the meeting from time to
time in the manner provided in Section 1.4 of these bylaws until a quorum shall
attend. Shares of its own stock belonging to the corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of
the corporation to vote stock, including but not limited to its own stock, held
by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, and in his absence by the
President, or in his absence by a Vice President, or in the absence of the
foregoing persons by a chairman designated by the Board of Directors, or in the
absence of such designation by a chairman chosen at the meeting. The Secretary
shall act as secretary of the meeting, but in his absence the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Except as otherwise provided
by the certificate of incorporation, each stockholder entitled to vote at any
meeting of stockholders shall be entitled to one vote for each share of stock
held by him which has voting power upon the matter in question. Each
stockholder entitled to vote at a meeting of stockholders may authorize another
person or persons to act for him by proxy, but no such proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may revoke
any proxy which is not irrevocable by attending the meeting and voting in
person
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or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary of the corporation.
Voting at meetings of stockholders need not be by written ballot and need not
be conducted by inspectors of election unless so determined by the Board of
Directors, the Executive Committee or the holders of shares of stock having a
majority of the votes which could be cast by the holders of all outstanding
shares of stock entitled to vote thereon which are present in person or by
proxy at such meeting. At all meetings of stockholders for the election of
directors a plurality of the votes cast shall be sufficient to elect. All
other elections and questions shall, unless otherwise provided by law, the
certificate of incorporation or these bylaws, be decided by the vote of the
holders of shares of stock having a majority of the votes which could be cast
by the holders of all shares of stock entitled to vote thereon which are
present in person or represented by proxy at the meeting.
Section 1.8. List of Stockholders Entitled to Vote. The
Secretary shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof and may be inspected by any
stockholder who is present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger or to vote in
person or by proxy at any meeting of stockholders, and of the list of
stockholders or the books of the corporation.
Section 1.9. Action By Consent. Unless otherwise restricted
by the certificate of incorporation, any action required or permitted to be
taken at any annual or special meeting of the stockholders may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at
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which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE II
Board of Directors
Section 2.1. Number; Qualifications. The Board of Directors
shall consist of one or more members, the number thereof to be determined from
time to time by resolution of the Board of Directors. Directors need not be
stockholders.
Section 2.2 Election; Resignation; Removal; Vacancies. The
Board of Directors shall initially consist of the persons named as directors in
the certificate of incorporation, and each director so elected shall hold
office until the first annual meeting of stockholders or until his successor is
elected and qualified. At the first annual meeting of stockholders and at each
annual meeting thereafter, the stockholders shall elect directors, each of whom
shall hold office for a term of one year or until his successor is elected and
qualified. Any director may resign at any time upon written notice to the
corporation. Any newly created directorship or any vacancy occurring in the
Board of Directors for any reason may be filled by a majority of the remaining
members of the Board of Directors, although such majority is less than a
quorum, or by a sole remaining director, or by a plurality of the votes cast at
a meeting of stockholders, and each director so elected shall hold office until
the expiration of the term of office of the director whom he has replaced or
until his successor is elected and qualified.
Section 2.3. Regular Meetings. Regular meetings of the Board
of Directors may be held at such places within or without the State of Delaware
and at such times as the Board of Directors may from time to time determine,
and if so determined notices thereof need not be given.
Section 2.4 Special Meetings. Special meetings of the Board
of Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board of Directors, the Vice
Chairman, the President, or upon the written request of a majority of the
directors, unless the Board of Directors consists of one director, in which
case special meetings may be called by
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the sole director. Notice of a special meeting of the Board of Directors shall
be given to each director by the person or persons calling the meeting at least
twenty-four (24) hours before the special meeting.
Section 2.5. Telephonic Meetings Permitted. Members of the
Board of Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all
meetings of the Board of Directors a majority of the whole Board of Directors
shall constitute a quorum for the transaction of business. Except in cases in
which the certificate of incorporation or these bylaws otherwise provide, the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 2.7. Organization. Meetings of the Board of
Directors shall be presided over by the Chairman of the Board, and in his
absence by the President, or in their absence by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.8. Action by Consent. Unless otherwise restricted
by the certificate of incorporation or these bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board
of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are directed to be filed with the minutes
of proceedings of the Board of Directors or such committee.
Section 2.9 Compensation of Directors. Directors shall not
receive any stated salary for their services as directors, but by resolution of
the Board of Directors a fixed fee and expenses of attendance may be allowed
for attendance at each regular or special meeting of the Board of Directors;
provided, that nothing herein shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor; provided further that the Chairman of the Board of Directors may
receive a stated salary for his services, established by resolution of the
Board of Directors.
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Members of special or standing committees may be allowed like compensation for
attending committee meetings.
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, to consist of one or more of the directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of
a member of the committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in place of any such absent or disqualified member. Any such
committee, to the extent permitted by law and to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
Section 3.2 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board of Directors may
make, alter and repeal rules for the conduct of its business. In the absence
of such rules each committee shall conduct its business in the same manner as
the Board of Directors conducts its business pursuant to Article III of these
bylaws.
ARTICLE IV
Officers
Section 4.1 Executive Officers; Election; Qualifications;
Term of Office; Resignation; Removal; Vacancies. The Board of Directors shall
elect a Chairman of the Board of Directors, Vice Chairman and a President from
among its members to serve as executive officers. The Board of Directors shall
also elect a Secretary and a Treasurer to serve as executive officers. The
Board of Directors may also choose one or more Vice Presidents, one or more
Assistant Secretaries and one or more Assistant Treasurers. Each such officer
shall hold office until the first meeting of the Board of Directors after the
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annual meeting of stockholders next succeeding his election, and until his
successor is elected and qualified or until his earlier resignation or removal.
Any officer may resign at any time upon written notice to the corporation. The
Board of Directors may remove any officer with or without cause at any time.
Any number of offices may be held by the same person. Any vacancy occurring in
any office of the corporation by death, resignation, removal or otherwise may
be filled for the unexpired portion of the term by the Board of Directors at
any regular or special meeting.
Section 4.2. Chairman of the Board of Directors. The
Chairman of the Board shall preside at all meetings of the Board of Directors
and all meetings of the stockholders at which he shall be present.
Section 4.3 Vice Chairman. In the absence or disability of
the Chairman of the Board of Directors, the Vice Chairman shall perform all the
duties of the Chairman, and when so acting, shall have the powers of the
Chairman.
Section 4.4. President. The President shall be the Chief
Executive Officer of the corporation and shall give general supervision and
direction to the affairs of the corporation, subject to the direction of the
Board of Directors.
Section 4.5. Vice-Presidents. In the absence or disability
of the President, a Vice-President designated by the Board of Directors or, in
the absence of such designation, the Vice-President first nominated to that
office and then available, shall perform all of the duties of the President,
and when so acting, shall have the powers of the President. All Vice
Presidents may sign, with the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, certificates of stock of the corporation;
and shall perform such other duties as from time to time may be assigned to
them by the Board of Directors.
Section 4.6. Secretary. The Secretary shall keep the minutes
of all meetings of the stockholders and of the Board of Directors, in books
provided for that purpose. He shall give, or cause to be given, all notices
required by law or by these bylaws. He shall be custodian of the records and
of the seal or seals of the corporation. He shall, when authorized by the
Board of Directors or the Chairman of the Board, affix the seal of the
corporation to all documents requiring it, and he may attest the same. He may
sign with the Chairman of the Board, the President or a Vice-President,
certificates of stock of the
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corporation. In general, he shall perform all duties incident to the office of
a secretary of a corporation, and such other duties as from time to time may be
assigned to him by the Board of Directors.
Section 4.7. Treasurer. The Treasurer shall have charge of
and be responsible for all funds, securities, receipts and disbursements of the
corporation, and shall deposit, or cause to be deposited, in the name of the
corporation, all moneys or other valuable effects in such banks, trust
companies or other depositories as shall from time to time be selected by the
Board of Directors. He shall, whenever requested, render to the Chairman of
the Board or the Board of Directors an account of the financial condition of
the corporation. He may sign, with the Chairman of the Board, the President or
a Vice-President, certificates of stock of the corporation. In general, he
shall perform all the duties incident to the office of a treasurer of a
corporation, and such other duties as may be assigned to him by the Board of
Directors.
Section 4.8. Assistant Officers. The Board of Directors may
elect one or more Assistant Secretaries and one or more Assistant Treasurers.
Each Assistant Secretary, if any, and each Assistant Treasurer, if any, shall
hold office for such period and shall have such authority and perform such
duties as the Board of Directors may prescribe.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock shall be
entitled to have a certificate signed by or in the name of the corporation by
the Chairman or Vice Chairman of the Board of Directors, if any, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the corporation, certifying the
number of shares owned by him in the corporation. Any of or all the signatures
on the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the
date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by
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it, alleged to have been lost, stolen or destroyed, and the corporation may
require the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
Section 5.3. Fixing Date for Determination of Stockholders of
Record. In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors and which record date: (1) in the case of
determination of stockholders entitled to vote at any meeting of stockholders
or adjournment thereof, shall, unless otherwise required by law, not be more
than sixty nor less than ten days before the date of such meeting; (2) in the
case of determination of stockholders entitled to express consent to corporate
action in writing without a meeting, shall not be more than ten days from the
date upon which the resolution fixing the record date is adopted by the Board
of Directors; and (3) in the case of any other action, shall not be more than
sixty days prior to such other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting when no prior action
of the Board of Directors is required by law, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution
taking such prior action; and (3) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating
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thereto. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Article VI
Indemnification
Section 6.1 Right to Indemnification. The corporation shall
indemnify and hold harmless, to the fullest extent permitted by applicable law
as it presently exists or may hereafter be amended, any person who was or is
made or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or non-profit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The corporation
shall be required to indemnify a person in connection with a proceeding
initiated by such person only if the proceeding was authorized by the Board of
Directors of the corporation.
Section 6.2 Prepayment of Expenses. The corporation shall
pay the expenses incurred in defending any proceeding in advance of its final
disposition, provided, however, that the payment of expenses incurred by a
director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the director or officer to repay
all amounts advanced if it should be ultimately determined that the director or
officer is not entitled to be indemnified under this Article or otherwise.
Section 6.3. Claims. If a claim for indemnification or
payment of expenses under this Article is not paid in full within sixty days
after a written claim therefor has been received by the corporation the
claimant may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the corporation shall
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have the burden of proving that the claimant was not entitled to the requested
indemnification or payment of expenses under applicable law.
Section 6.4. Non-Exclusivity of Rights. The rights conferred
on any person by this Article VI shall not be exclusive of any other rights
which such person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, these bylaws, agreement, vote of stockholders
or disinterested directors or otherwise.
Section 6.5. Other Indemnification. The corporation's
obligation, if any, to indemnify any person who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or non-profit entity shall be
reduced by any amount such person may collect as indemnification from such
other corporation, partnership, joint venture, trust, enterprise or non-profit
enterprise.
Section 6.6. Amendment or Repeal. Any repeal or modification
of the foregoing provisions of this Article VI shall not adversely affect any
right or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
Section 6.7. Insurance. The corporation may maintain
insurance, at its expense, to protect itself and any director, officer,
employee or agent of the corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss,
whether or not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General Corporation
Law.
ARTICLE VII
Miscellaneous
Section 7.1. Fiscal Year. The fiscal year of the corporation
shall end on the 31st day of December in each year, or on such other day as
shall be determined from time to time by resolution of the Board of Directors.
Section 7.2. Seal. The corporate seal shall have the name of
the corporation inscribed thereon and shall be in such form as may be approved
from time to time by the Board of Directors.
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Section 7.3. Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Any written waiver of notice, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
Section 7.4. Form of Records. Any records maintained by the
corporation in the regular course of its business, including its stock ledger,
books of account, and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs, or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 7.5. Amendment of Bylaws. These bylaws may be
altered or repealed, and new bylaws made, by the Board of Directors, but the
stockholders may make additional bylaws and may alter and repeal any bylaws
whether adopted by them or otherwise.
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EXHIBIT 10(a)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made this
8th day of November, 1995 by and among Fuqua Enterprises, Inc., a Delaware
corporation (the "Company"), and Gene J. Minotto (the "Basic Shareholder").
W I T N E S S E T H:
WHEREAS, the Company, BA Acquisition Corp., a Georgia corporation and
a wholly owned subsidiary of the Company (the "Subsidiary"), Basic American
Medical Products, Inc., a Georgia corporation ("Basic") and the Basic
Shareholder, have entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of October 6, 1995, providing for the acquisition of Basic
by the Company through a merger (the "Merger") of the Subsidiary into Basic
with Basic being the corporation surviving the Merger;
WHEREAS, the Basic Shareholder upon consummation of the Merger will
hold in the aggregate approximately 13.53% of the issued and outstanding common
stock, $2.50 par value, of the Company (the "Common Stock"); and
WHEREAS, the parties to the Merger Agreement and the Basic
Shareholder desire the Company to register the shares under the Securities Act
(as hereinafter defined) for resale by the Basic Shareholder and the execution
and delivery of this Agreement is a condition precedent to the consummation of
the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Certain Definitions.
For purposes of this Agreement, the following terms have the
following meanings when used herein:
(a) "Business Day" means any Monday, Tuesday, Wednesday,
Thursday or Friday that is not a day on which banking institutions in Atlanta,
Georgia are authorized by law, regulation or executive order to close.
(b) "Closing" means the date of the consummation of the
Merger as set forth in the Merger Agreement.
(c) "Commission" means the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(d) "Common Stock" means the Common Stock, par value
$2.50 per share, of the Company.
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(e) "Company" means Fuqua Enterprises, Inc., a Delaware
corporation, and its successors and assigns.
(f) "Demand Registration" means any registration of
Registrable Securities effected pursuant to Section 3 hereof.
(g) "Exchange Act" means the Securities Exchange Act of
1934, as amended (or any similar successor federal statute), and the rules and
regulations thereunder, as in effect from time to time.
(h) "Holder" means any Person that owns Registrable
Securities, including such successors and assigns as acquire Registrable
Securities, directly or indirectly, from such Person. For purposes of this
Agreement, the Company may deem and treat the registered holder of a
Registrable Security as the Holder and absolute owner thereof.
(i) "Initial Holder" means Gene J. Minotto.
(j) "Majority Registered Holders" means in the case of
any registration statement, the Holders of a majority of the Registrable
Securities proposed to be covered (or so covered) in such registration
statement.
(k) "Majority Sellers" means (i) in the case of any
offering or proposed offering pursuant to a shelf "draw-down" of Registrable
Securities registered pursuant to a Shelf Registration, the Holders of a
majority of the Registrable Securities so offered or proposed to be so offered,
and (ii) in the case of any other offering or proposed offering pursuant to any
Registration, the Majority Registered Holders of the applicable registration
statement.
(l) "Person" means any individual, partnership,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture, or other entity, or a government or
any political subdivision or agency.
(m) "Piggyback Registration" means any registration of
Registrable Securities effected pursuant to Section 4 hereof.
(n) "Registrable Securities" means (i) the 600,000 shares
of Common Stock issued to the Basic Shareholder in the Merger and (ii) any
securities issued or issuable in respect of or in exchange for any of the
shares of Common Stock referred to in clause (i) above by way of a stock
dividend or other distribution on the Common Stock, stock split or combination
of shares, recapitalization, reclassification, merger, consolidation or
exchange offer. For purposes of this Agreement, a Registrable Security ceases
to be a Registrable Security when either (1) it has been effectively registered
under the Securities Act and sold or distributed to any Person pursuant to an
effective registration statement covering it or (2) it has been sold or
distributed to any
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Person pursuant to Rule 144.
(o) "Registration" means any Shelf Registration, Demand
Registration or Piggyback Registration.
(p) "Rule 10b-6" means Rule 10b-6 promulgated by the
Commission under the Exchange Act, as such Rule may be amended from time to
time, or any similar successor rule that may be promulgated by the Commission.
(q) "Rule 144," Rule 145," "Rule 415" and "Rule 424"
mean, respectively, Rule 144, Rule 145, Rule 415 and Rule 424, each promulgated
by the Commission under the Securities Act, in each case as amended from time
to time, or any similar successor rule thereto that may be promulgated by the
Commission.
(r) "Securities Act" means the Securities Act of 1933, as
amended (or any similar successor federal statute), and the rules and
regulations thereunder, as the same are in effect from time to time.
(s) "Shelf Period" means the period (i) beginning one
year after the Closing Date and (ii) ending four years after the Closing Date
(or, if earlier, on expiration of the period during which a Shelf Registration
must remain effective under this Agreement).
(t) "Shelf Registration" means any registration of
Registrable Securities effected pursuant to Section 2 hereof.
2. Shelf Registrations.
(a) Effective Registration. At any time after
commencement of the Shelf Period, upon written notice to the Company from one
or more Holders (the "Initiating Shelf Holders") of a majority of the
Registrable Securities, requesting that the Company effect, pursuant to this
Section 2(a) a Shelf Registration covering the Registrable Securities then
constituting no more than 50% of the Registrable Securities on any appropriate
form pursuant to Rule 415, the Company shall promptly (but in any event within
20 days) give written notice of such requested registration to all other
Holders and thereupon the Company shall as expeditiously as possible, use its
reasonable efforts to effect the registration under the Securities Act of:
(A) The Registrable Securities that the Initiating
Shelf Holders have requested the Company to register; and
(B) All other Registrable Securities the Holders of
which have made a written request to the Company for registration
thereof (which request shall specify such Registrable Securities and
the proposed amounts thereof) within 30 days after receipt of such
written notice from the Company,
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all to the extent requisite to permit the disposition by Holders of the
securities then constituting Registrable Securities so to be registered.
(b) Proration. To the extent that the amount of
Registrable Securities requested to be registered under the Shelf Registration
shall exceed 50% of the Registrable Securities, the amount of Registrable
Securities to be offered for the accounts of Holders shall be reduced pro rata
to the extent necessary so that amount of Registrable Securities to be
registered shall not exceed 50% of the Registrable Securities.
(c) Duration. The Company shall use its reasonable
efforts to have such "shelf" registration statement declared effective as soon
as practicable after its filing and to keep such registration statement
continuously effective until the fourth anniversary of the Closing Date or
until all Registrable Securities included therein have been sold, if earlier.
If necessary, the Company shall cause to be filed, and shall use its reasonable
efforts to have declared effective as soon as practicable following filing,
additional "shelf" registration statements or amendments as necessary to
maintain such effectiveness during the Shelf Period.
(d) Shelf "Draw-Downs". If any Holder effects, pursuant
to a Shelf Registration, a public offering of all or a part of its Registrable
Securities a shelf "draw-down") and wishes the Company to perform, in
connection with such shelf "draw-down," any procedures specified in Section
6(a) hereof in addition to those the Company is otherwise obligated to perform
with respect to such Shelf Registration pursuant to Sections 2(a) and 6(a)
hereof, such Holder shall deliver to the Company, at least five Business Days
before such "draw-down" is to be made, a written notice describing in
reasonable detail its proposed offering and requesting the performance of such
additional procedures pursuant to this Section 2(d) and such Section 6(a). The
Company shall be required to perform such additional procedures in advance of a
particular shelf "draw-down" only if such Holder shall have requested such
performance as provided above. In addition, the Company shall be required to
perform such additional procedures (other than those required under the
securities laws) in connection with a particular shelf "draw-down" only if one
or more Holders shall have notified the Company pursuant to this Section 2(d)
of their intention to offer to the public Registrable Securities with an
aggregate market value (on the date the written notice referred to above is
delivered) of at least $2 million pursuant to such "draw-down." During the
first three years of the Shelf Period a shelf "draw-down" that is an
underwritten offering shall constitute a Demand Registration for purposes of
the first sentence of Section 3(b).
(e) Inclusion of Other Securities. No Shelf Registration
shall include any securities other than Registrable Securities; provided that
this Agreement shall not prohibit the filing of other "shelf" registration
statements by the Company.
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<PAGE> 5
3. Demand Registrations.
(a) Effective Registration. At any time after one year
following the Closing Date, upon written notice to the Company from one or more
Holders (the "Initiating Demand Holders") of Registrable Securities holding in
the aggregate Registrable Securities with a market value (on the date the
written notice is delivered) of at least $2 million, requesting that the
Company effect, pursuant to this Section 3, the registration of any of such
Initiating Demand Holders' Registrable Securities under the Securities Act
(which notice shall specify the Registrable Securities so requested to be
registered, the proposed amounts thereof and the intended method or methods of
disposition by such Demand Initiating Holders), the Company shall promptly (but
in any event within 20 days) give written notice of such requested registration
to all Holders, and thereupon the Company shall, as expeditiously as possible,
use its reasonable efforts to effect the registration under the Securities Act
of:
(A) the Registrable Securities that the Initiating
Demand Holders have requested the Company to register, for
disposition in accordance with the intended method or methods of
disposition stated in their notice to the Company; and
(B) all other Registrable Securities the Holders of
which shall have made a written request to the Company for
registration thereof (which request shall specify such Registrable
Securities and the proposed amounts thereof) within 30 days after the
receipt of such written notice from the Company,
all to the extent requisite to permit the disposition by Holders of the
securities then constituting Registrable Securities so to be registered.
(b) Frequency; Duration. The Company shall not be
required to effect more than two Demand Registrations pursuant to this
Agreement. The Company shall not be required to effect a Demand Registration
pursuant to this Section 3: (i) if it shall have so effected a Demand
Registration during the previous 12 months; (ii) if the Initiating Demand
Holders shall have requested such Demand Registration after the third
anniversary of the Closing Date; or (iii) during the Shelf Period, unless the
requested Demand Registration is to be underwritten, on either a firm
commitment or best efforts basis, and the managing underwriter or underwriters
have requested in a written opinion to the Initiating Demand Holders and the
Company that a new registration statement be filed in the interest of the
proposed offering; provided, however, that a Demand Registration shall not be
deemed to have been effected for purposes of Section 3(b)(i) if the applicable
registration statement has not been declared effective and kept effective until
the earlier of (i) four months following the date on which such registration
statement was declared effective and (ii) the sale pursuant to such
registration statement of the Registrable Securities covered thereby.
(c) Inclusion of Other Securities. The Company shall not
register any securities other than Registrable Securities in any Demand
Registration without the
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<PAGE> 6
prior written consent of Holders of a majority of the Registrable Securities
requested to be included in such Demand Registration. If any securities other
than Registrable Securities are so registered, securities requested to be
registered by the Company for sale for its own account shall have absolute
priority over securities requested to be registered by third parties.
4. Piggyback Registrations.
(a) Effective Registration. If the Company proposes to
file a registration statement under the Securities Act with respect to any
class of equity securities (other than in connection with the registration of
equity securities issued or issuable pursuant to an employee stock option,
stock purchase, stock bonus or similar plan or pursuant to a merger, exchange
offer or transaction of the type specified in Rule 145(a) under the Securities
Act) at any time on or prior to the fifth anniversary of the Closing Date, then
the Company shall give written notice of such proposed filing to the Holders at
least 15 days before the anticipated filing date, and such notice shall offer
the Holders the opportunity to register such amount of Registrable Securities
as each such Holder may request. The Company shall use its reasonable efforts
to cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the inclusion therein of any Registrable Securities the
Holders of which request, within 5 days after receiving written notice of the
proposed filing from the Company, such inclusion, on the same terms and
conditions as any similar securities of the Company so included. Any Holder's
request for such inclusion may be withdrawn, in whole or in part, at any time
prior to the effective date of the registration statement for such offering.
(b) Cut-Backs. Notwithstanding the provisions of Section
4(a) hereof, if the managing underwriter or underwriters of a proposed
underwritten offering as described in such Section 4(a) deliver a written
opinion to the Holders requesting inclusion of their Registrable Securities
stating that the total amount or kind of securities that they and any other
Persons seek to include in such offering would materially and adversely affect
the success of such offering, then the amount or kind of Registrable Securities
to be offered for the accounts of Holders shall be reduced pro rata to the
extent necessary to reduce the total amount of Registrable Securities to be
included in such offering to that recommended by such managing underwriter or
underwriters (which amount may be zero); provided, however, that if the amount
of any kind of Registrable Securities to be offered for the accounts of Holders
is reduced in accordance with this Section 4(b), the Company may not include in
such offering any securities other than (i) Registrable Securities and (ii)
securities, if any, that the Company is offering for sale for its own account
in a primary underwritten offering.
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<PAGE> 7
5. Holdback Agreements.
(a) Restrictions on Public Sales by Holders of
Registrable Securities. To the extent not inconsistent with applicable law,
each Holder that is timely notified in writing by the managing underwriter or
underwriters shall not effect any public sale or distribution (including a sale
pursuant to Rule 144) of any issue being registered in an underwritten offering
(other than pursuant to an employee stock option, stock purchase, stock bonus
or similar plan, pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act or pursuant to a "shelf"
registration), any securities of the Company similar to any such issue or any
securities of the Company convertible into or exchangeable or exercisable for
any such issue, during the 10-day period prior to, and during the 90-day period
beginning on, the effective date of the applicable registration statement,
except as part of such registration.
(b) Restrictions on Public Sales by the Company. The
Company shall not effect any public sale or distribution of any issue being
registered in an underwritten offering (other than pursuant to an employee
stock option, stock purchase, stock bonus or similar plan or pursuant to a
merger, exchange offer or a transaction of the type specified in Rule 145(a)
under the Securities Act or pursuant to a "shelf" registration), any securities
of the Company similar to any such issue or any securities of the Company
convertible into or exchangeable or exercisable for any such issue, during the
10-day period prior to, and during the 30-day period beginning on, the
effective date of the applicable registration statement, except as part of such
registration.
6. Registration Procedures.
(a) Company Procedures. Whenever the Company is required
by this Agreement to effect the registration of any Registrable Securities
under the Securities Act pursuant to a registration statement, the Company
shall use its reasonable efforts to effect each such registration to permit the
sale of such Registrable Securities in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Company shall, as soon
as practicable:
(i) prepare and file with the Commission the
requisite registration statement to effect such registration and thereafter use
its reasonable efforts to cause such registration statement to be declared
effective as soon as practicable and to remain continuously effective for the
time period required by this Agreement to the extent permitted under the
Securities Act, provided that as soon as practicable but in no event later than
three Business Days before filing such registration statement, any related
prospectus or any amendment or supplement thereto, other than any amendment or
supplement made solely as a result of incorporation by reference of documents
filed with the Commission subsequent to the filing of such registration
statement (or, in the case of any prospectus supplement or post-effective
amendment relating to a proposed shelf "draw-down" pursuant to Section 2
hereof, two Business
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<PAGE> 8
Days before the filing thereof), the Company shall furnish to the Holders of
the Registrable Securities covered by such registration statement (or, in the
case of any prospectus supplement or post-effective amendment relating to a
proposed shelf "draw-down" pursuant to Section 2 hereof, to the Selling
Holders) and the underwriters, if any, copies of all such documents proposed to
be filed, which documents shall be subject to the review of such Holders and
underwriters; the Company shall not file any registration statement or
amendment thereto or any prospectus or any supplement thereto (other than any
amendment or supplement made solely as a result of incorporation by reference
of documents filed with the Commission subsequent to the filing of such
registration statement) to which the managing underwriters of the applicable
offering, if any, or the Majority Registered Holders (or, in the case of any
prospectus supplement or post-effective amendment relating to a proposed shelf
"draw-down" pursuant to Section 2 hereof, the Majority Sellers) shall have
reasonably objected in writing within two Business Days after receipt of such
documents to the effect that such registration statement or amendment thereto
or prospectus or supplement thereto does not comply in all material respects
with the requirements of the Securities Act (provided that the foregoing shall
not limit the right of any Holder whose Registrable Securities are covered by a
registration statement to reasonably object, within two Business Days after
receipt of such documents, to any particular information that is to be
contained in such registration statement, amendment, prospectus or supplement
and relates specifically to such Holder, including, without limitation, any
information describing the manner in which such Holder acquired such
Registrable Securities and the intended method or methods of distribution of
such Registrable Securities), and if the Company is unable to file any such
document due to the objections of such underwriters or such Holders, the
Company shall use its reasonable efforts to cooperate with such underwriters
and Holders to prepare, as soon as practicable, a document that is responsive
in all material respects to the reasonable objections of such underwriters and
Holders;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to such registration statement as may
be necessary to keep such registration statement continuously effective and
current for the period required by this Agreement to the extent permitted under
the Securities Act; and cause each related prospectus to be supplemented by any
prospectus supplement as may be required, and as so supplemented to be filed
pursuant to Rule 424; and otherwise comply with the provisions of the
Securities Act as may be necessary to facilitate the disposition of all
Registrable Securities covered by such registration statement during the
applicable period in accordance with the intended method or methods of
disposition by the selling Holders thereof set forth in such registration
statement or such prospectus or prospectus supplement;
(iii) notify the Holders and the managing
underwriters, if any, of the applicable offering (providing, if requested by
any such Persons, confirmation in writing) as soon as practicable after
becoming aware of: (A) the filing of any prospectus or prospectus supplement or
the filing or effectiveness (or anticipated date
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<PAGE> 9
of effectiveness) of such registration statement or any post-effective
amendment thereto; (B) any request by the Commission for amendments or
supplements to such registration statement or the related prospectus or for
additional information; (C) the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation
of any proceedings for that purpose; (D) the receipt by the Company of any
notification with respect to the suspension of the qualification or
registration (or exemption therefrom) of any Registrable Securities for sale in
any jurisdiction in the United States or the initiation or threatening of any
proceeding for such purposes; or (E) the happening of any event that makes any
statement made in such registration statement or in any related prospectus,
prospectus supplement, amendment or document incorporated therein by reference
untrue in any material respect or that requires the making of any changes in
such registration statement or in any such prospectus, supplement, amendment or
other such document so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein (in the case of any prospectus in
the light of the circumstances under which they were made) not misleading;
(iv) make every reasonable effort to obtain at the
earliest possible moment the withdrawal of any order or other action suspending
the effectiveness of any such registration statement or suspending the
qualification or registration (or exemption therefrom) of the Registrable
Securities for sale in any jurisdiction;
(v) if reasonably requested by the managing
underwriters, if any, of the applicable offering, or by the Majority Sellers,
as soon as practicable incorporate in a prospectus supplement or post-effective
amendment such information as such underwriters or the Majority Sellers, as the
case may be, agree should be included therein relating to the sale and offering
of the applicable Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being sold to
any underwriters, the purchase price being paid therefor by any such
underwriters and any other terms of the offering of the Registrable Securities;
and make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable following receipt of notice of the matters to
be incorporated therein;
(vi) as soon as practicable after filing such
documents with the Commission, furnish to the Holders and each of the
underwriters, if any, without charge, at least one manually signed or conformed
copy of such registration statement and any post-effective amendment thereto,
including financial statements and schedules (or, in the case of any
post-effective amendment relating to a shelf "draw-down" pursuant to Section 2
hereof, to the Selling Holders); and as soon as practicable after the request
of any Holder or underwriter, furnish to such Holder or underwriter, as the
case may be, at least one copy of any document incorporated by reference in
such registration statement or in any related prospectus, prospectus supplement
or amendment, together with all exhibits thereto (including those previously
furnished or
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<PAGE> 10
incorporated by reference);
(vii) deliver to the Holders and to each of the
underwriters, if any, without charge, as many copies of the prospectus or
prospectuses (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; subject to Section
6(b)(i) hereof, the Company consents to the use of any such prospectus or any
amendment or supplement thereto by the Holders and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
any such prospectus or any amendment or supplement thereto;
(viii) prior to any public offering of Registrable
Securities, register or qualify (or obtain an exemption therefrom), or
cooperate with the Holders, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption
therefrom) of, such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions in the United States as the
Holders or the underwriters, if any, shall reasonably request in writing; keep
each such registration or qualification (or exemption therefrom) effective
during the period during which such registration statement is required to be
kept effective pursuant to this Agreement, to the extent permitted under the
Securities Act; and do any and all other acts and things reasonably necessary
or advisable to facilitate the disposition in such jurisdictions of the
Registrable Securities covered by such registration statement; provided that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it would not be required to qualify but for this Section
6(a)(viii);
(ix) cooperate with Holders participating in such
registration and the underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing the Registrable Securities to be
sold; and enable such Registrable Securities to be in such denominations and
registered in such names as the underwriters, if any, may request at least two
Business Days prior to any sale of Registrable Securities to the underwriters;
(x) use its reasonable efforts to cause the
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities in the
United States as may be reasonably necessary to enable the Holders or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(xi) as soon as practicable after the occurrence of
any event described in Section 6(a)(iii)(E) hereof, prepare a supplement or
post-effective amendment to such registration statement or to the related
prospectus or any document incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such prospectus shall not contain
an untrue statement of a material fact or
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<PAGE> 11
omit to state any material fact necessary to make the statements therein not
misleading; if any event described in Section 6(a)(iii)(B) hereof occurs, use
its reasonable efforts to cooperate with the Commission to prepare, as soon as
practicable, any amendment or supplement to such registration statement or such
related prospectus and any other additional information, or to take other
action that may have been requested by the Commission;
(xii) use its reasonable efforts to cause all Common
Stock constituting Registrable Securities covered by such registration
statement to be listed on each securities exchange (or quotation system
operated by a national securities association) on which the Common Stock of the
Company is then listed (or included), if so requested by the Majority
Registered Holders or the underwriters, if any, and enter into customary
agreements including, if necessary, a listing application and indemnification
agreement in customary form, and provide a transfer agent for such Registrable
Securities no later than the effective date of such registration statement; use
its reasonable efforts to cause any other Registrable Securities covered by
such registration statement to be listed (or included) on each securities
exchange (or quotation system operated by a national securities association) on
which securities of the same class and series, if any, are then listed (or
included) (or on any exchange or quotation system on which any Person other
than a Holder shall have the right to have securities of the same class and
series, if any, listed or included), if so requested by the Majority Registered
Holders or the underwriters, if any, and enter into customary agreements
including, if necessary, a listing application and indemnification agreement in
customary form, and, if necessary, provide a transfer agent for such securities
no later than the effective date of such registration statement;
(xiii) provide a CUSIP number for the
Registrable Securities no later than the effective date of such registration
statement;
(xiv) enter into customary agreements (including, in
the case of an underwritten offering, an underwriting agreement in customary
form for the managing underwriters with respect to issuers of similar market
capitalization and reporting and financial histories) and take all such other
reasonable actions in connection therewith in order to expedite or facilitate
the disposition of the Registrable Securities included in such registration
statement and, in the case of an underwritten offering: (A) make
representations and warranties to each Holder of Registrable Securities
participating in such offering and to each of the underwriters, in such form,
substance and scope as are customarily made to the managing underwriters by
issuers of similar market capitalization and reporting and financial histories
and confirm the same to the extent customary if and when requested; (B) obtain
opinions of counsel to the Company and updates thereof addressed to each Holder
of Registrable Securities participating in such offering and to each of the
underwriters, such opinions and updates to be in customary form and covering
the matters customarily covered in opinions obtained in underwritten offerings
by the managing underwriters for issuers of similar market capitalization and
reporting and financial histories; (C) obtain "comfort" letters and
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<PAGE> 12
updates thereof from the Company's independent certified public accountants
addressed to each Holder of Registrable Securities participating in such
offering and to each of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "comfort" letters to
the managing underwriters in connection with underwritten offerings by them for
issuers of similar market capitalization and reporting and financial histories;
(D) provide, in the underwriting agreement to be entered into in connection
with such offering, indemnification provisions and procedures of the type
customarily contained in underwriting agreements for offerings by issuers of
similar market capitalization and reporting and financial histories; and (E)
deliver such customary documents and certificates as may be reasonably
requested by the Majority Sellers and the managing underwriters to evidence .
compliance with clause (A) of this paragraph (xiv) and with any customary
conditions contained in the underwriting agreement entered into by the Company
in connection with such offering;
(xv) make available, for inspection by the Holders
of the Registrable Securities included in such registration, any underwriter
participating in any disposition of Registrable Securities pursuant to such
registration statement, and any attorney, accountant or other representative
retained by such selling Holders or by any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such underwriter, attorney,
accountant or other representative in connection with such registration;
(xvi) otherwise use its reasonable efforts to comply
with all applicable rules and regulations of the Commission relating to such
registration and the distribution of the securities being offered (including,
without limitation, Rule 10b-6, with respect to which the Company shall also
use its reasonable efforts timely to apprise each Holder of any bids and
purchases by the Company, and of any known bids and purchases by each
"affiliated purchaser" (as defined in Rule 10b-6) of the Company, that would in
the opinion of the Company be prohibited under Rule 10b-6 in connection with a
"distribution" (as so defined) by such Holder of securities of the Company) and
make generally available to its security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act, no later than 60 days
after the end of any 12-month period (or 120 days, if such period is a fiscal
year) commencing at the end of any fiscal quarter in which the Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering, or, if not sold to underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of such registration statement, which earning
statements shall cover such 12-month periods;
(xvii) cooperate and assist in any filings required
to be made with the National Association of Securities Dealers, Inc. and in
the performance of any customary or required due diligence investigation by
any underwriter; and
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<PAGE> 13
(xviii) use its reasonable efforts to take all
other reasonable steps necessary and appropriate to effect such registration in
the manner contemplated by this Agreement.
(b) Holder Procedures.
(i) Each Holder agrees, by acquisition of the
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event described in Section 6(a)(iii)(B), 6(a)(iii)(C),
6(a)(iii)(D) or 6(a)(iii)(E) hereof, such Holder shall forthwith discontinue
disposition of any Registrable Securities (but, in the case of an event
described in Section 6(a)(iii)(D), in the affected jurisdiction or
jurisdictions only) covered by the affected registration statement or
prospectus until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 6(a)(iii) or 6(a)(xi) hereof or
until such Holder is (it being agreed by the Company that the underwriters, if
any, shall also be) advised in writing (the "Advice") by the Company that the
use of the applicable prospectus may be resumed. If the Company shall have
given any such notice during a period when a Shelf Registration or a Demand
Registration is in effect, the Shelf Period or four-month period mentioned in
Section 2(a) or 3(b) hereof, as the case may be, shall be extended by the
number of days from and including the date of the giving of such notice to and
including the date when each Holder of Registrable Securities included in such
Registration shall have received the copies of the supplemented or amended
prospectus contemplated by Section 6(a)(iii) or 6(a)(xi) hereof or the Advice,
as the case may be.
(ii) In connection with any underwritten public
offering of Registrable Securities pursuant to a Shelf Registration or Demand
Registration, the managing underwriter of such offering shall be a nationally
recognized investment banking firm selected by the Majority Sellers and shall
be reasonably acceptable to the Company.
7. Registration Expenses.
All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications or registrations (or the obtaining of exemptions therefrom)
of the Registrable Securities), printing expenses (including expenses of
printing prospectuses), messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), reasonable fees and
disbursements of its counsel and its independent certified public accountants
(including the reasonable expenses of any special audit or "comfort" letters
required by or incident to such performance or compliance), securities acts
liability insurance (if the Company elects to obtain such insurance),
reasonable fees and expenses of any special
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<PAGE> 14
experts retained by the Company in connection with any registration hereunder,
reasonable fees and expenses of other Persons retained by the Company,
reasonable fees and expenses of one counsel for the Holders, selected by the
Majority Sellers, incurred in connection with each registration hereunder, and
reasonable out-of-pocket expenses of the Holders (all such expenses being
herein referred to as "Registration Expenses"), shall be borne by the Company;
provided that Registration Expenses shall not include any underwriting
discounts, commissions or fees attributable to the sale of the Registrable
Securities.
8. Indemnification; Contribution.
(a) Indemnification by the Company. The Company shall
indemnify, to the full extent permitted by law, each Holder of Registrable
Securities, and if applicable, its officers, directors, employees and agents,
and if applicable, each Person who controls such Holder (within the meaning of
the Securities Act), against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any registration statement covering any Registrable
Securities, any related prospectus or preliminary prospectus, or any amendment
or supplement thereto, or any omission or alleged omission to state in any
thereof a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus or prospectus supplement, in
light of the circumstances under which they were made) not misleading, except
in each case insofar as the same arises out of or is based upon an untrue
statement or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact in such registration statement,
prospectus, preliminary prospectus, amendment or supplement, as the case may
be, made or omitted, as the case may be, in reliance upon and in conformity
with written information furnished to the Company by such Holder expressly for
use therein. This indemnity is in addition to any liability that the Company
may otherwise have. The Company shall also indemnify any underwriters of the
Registrable Securities and their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of Holders
and other specified Persons.
(b) Indemnification by Holders of Registrable Securities.
In connection with any registration statement covering Registrable Securities,
each Holder any of whose Registrable Securities are covered thereby shall
furnish to the Company in writing such information and affidavits with respect
to such Holder as the Company reasonably requests for use in connection with
such registration statement, any related prospectus or preliminary prospectus,
or any amendment or supplement thereto, and shall indemnify, to the full extent
permitted by law, the Company, the Company's directors, officers, employees and
agents and each Person who controls the Company (within the meaning of the
Securities Act), against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses) arising out of
or based upon any untrue or alleged untrue statement of a material fact
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<PAGE> 15
contained in any registration statement covering any Registrable Securities,
any related prospectus or preliminary prospectus, or any amendment or
supplement thereto, or any omission or alleged omission to state in any thereof
a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus or prospectus supplement, in
light of the circumstances under which they were made) not misleading, in each
case to the extent, but only to the extent, that the same arises out of or is
based upon an untrue statement or alleged untrue statement of a material fact
or an omission or alleged omission to state a material fact in such
registration statement or in such related prospectus, preliminary prospectus,
amendment or supplement, as the case may be, made or omitted, as the case may
be, in reliance upon and in conformity with written information furnished to
the Company by such Holder expressly for use therein. This indemnity is in
addition to any liability that a Holder may otherwise have. Each Holder
participating in an offering of Registrable Securities shall, if requested by
the managing underwriter or underwriters of such offering, also indemnify any
underwriters of such Registrable Securities and their officers and directors
and each Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Company and other specified Persons.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification under this Section 8 agrees to give prompt written
notice to the indemnifying party after the receipt by such Person of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such Person will
claim indemnification or contribution pursuant to this Agreement and, unless in
the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and the indemnifying party with respect to
such claim, permit the indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to such indemnified party. If the
indemnifying party is not entitled to, or elects not to, assume the defense of
a claim, it shall not be obligated to pay the reasonable fees and expenses of
more than one counsel with respect to such claim, unless in the reasonable
judgment of counsel to such indemnified party, expressed in a writing delivered
to the indemnifying party, a conflict of interest may exist between such
indemnified party and any other indemnified party with respect to such claim,
in which event the indemnifying party shall be obligated to pay the reasonable
fees and expenses of such additional counsel or counsels (which shall be
limited to one counsel per indemnified party). The indemnifying party shall
not be subject to any liability for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(d) Contribution.
(i) If the indemnification provided for in this
Section 8 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to
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<PAGE> 16
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties, relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c) hereof, any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding.
(ii) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(iii) If indemnification is available under this
Section 8, the indemnifying parties shall indemnify each indemnified party to
the full extent provided in Sections 8(a) and 8(b) hereof without regard to the
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 8(d).
9. Participation in Underwritten Registrations
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay such Person's pro rata portion of all
underwriting discounts and commissions.
10. Cooperation with the Company.
Each Holder by the acceptance of Registrable Securities agrees to use
its reasonable efforts to cooperate with the Company in all reasonable respects
in connection with the preparation and filing of Registrations hereunder in
which such
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<PAGE> 17
Registrable Securities are included or requested to be included.
11. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not
hereafter enter into any agreement with respect to any of its securities that
contains provisions more favorable to the holders thereof than the provisions
contained in this Agreement without providing for the granting of comparable
rights to the Holders in this Agreement.
(b) Remedies. Each Holder of Registrable Securities, in
addition to being entitled to exercise all rights in an action at law,
including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company shall have obtained the prior written
consent of (i) the Holders of a majority of the securities then constituting
Registrable Securities and (ii) each Holder materially and adversely affected
by such amendment, modification, supplement, waiver or departure.
(d) Notices. All notices, requests, waivers, releases,
consents, and other communications required or permitted by this Agreement
(collectively, "Notices") shall be in writing. Notices shall be deemed
sufficiently given for all purposes under this Agreement when delivered in
person, when dispatched by telegram or (upon written confirmation of receipt)
by electronic facsimile transmission or (upon written confirmation of receipt)
when dispatched by a nationally recognized overnight courier service, or five
Business Days after being deposited in the mail, postage prepaid, if mailed.
All Notices shall be delivered as follows:
(i) if to a Holder of Registrable Securities, at
the address indicated on Company's registrar relating to such securities or at
such other address as such Holder may have furnished to the Company in writing;
and
(ii) if to the Company, at:
Fuqua Enterprises, Inc.
1201 West Peachtree Street
Suite 5000
Atlanta, Georgia 30309
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<PAGE> 18
Attention: John J. Huntz, Jr.
Telephone Number: (404) 815-2000
Fax Number: (404) 815-4529
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Bryan E. Davis
Telephone Number: (404) 881-7000
Fax Number: (404) 881-7777
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties hereto, including any successors by merger to the Company.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings; Construction. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. Unless the context otherwise requires,
all references to Sections are to Sections of this Agreement, "or" is
inclusively disjunctive, and words in the singular include the plural and vice
versa. In computing any period of time specified in this Agreement, the date
of the act or event from which such period of time is to be measured shall be
included, any such period shall expire at 5:00 p.m., Atlanta time, on the last
day of such period, and any such period denominated in months shall expire on
the date in the last month of such period that has the same numerical
designation as the date of the act or event from which such period is to be
measured; provided, however, that if there is no date in the last month of such
period that has the same numerical designation as the date of such act or
event, such period shall expire on the last day of the last month of such
period.
(h) Certain Adjustments. Notwithstanding anything to the
contrary contained in this Agreement, the Board of Directors of the Company may
make or provide for such adjustments in the numbers of shares of Common Stock
or other Registrable Securities specified in any other provision of this
Agreement specifying a number or percentage of Registrable Securities, as the
Board may determine after consultation with the Initial Holder (or, if the
Initial Holder no longer holds any securities then constituting the Registrable
Securities, Holders holding a majority of the securities then constituting the
Registrable Securities), is equitably required to
- 18 -
<PAGE> 19
prevent diminution or enlargement of the rights of Holders that otherwise would
result from any stock dividend, stock split, combination of shares,
recapitalization, or other similar change in the capital structure of the
Company.
(i) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Georgia,
without regard to the principles of conflicts of laws thereof.
(j) Severability. If one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect, for any reason, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be in any way affected or impaired thereby, and the provision held to be
invalid, illegal or unenforceable shall be reformed to the minimum extent
necessary, and in a manner as consistent with the purposes thereof as is
practicable, so as to render it valid, legal and enforceable, it being intended
that all of the rights and privileges of the Holders hereunder shall be
enforceable to the fullest extent permitted by law.
(k) Entire Agreement. This Agreement is intended by the
Company and the Initial Holder to be a final expression thereof and are
intended to be a complete and exclusive statement of the agreement and
understanding of the Company and the Initial Holder in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings among the Company and any
Holders with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
FUQUA ENTERPRISES, INC.
By:
--------------------------------
Name:
Title:
-------------------------------- (SEAL)
GENE J. MINOTTO
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<PAGE> 1
EXHIBIT 10(b)
==================================================================
CREDIT AGREEMENT
dated as of November 6, 1995
among
FUQUA ENTERPRISES, INC.
THE LENDERS LISTED HEREIN,
and
SUNTRUST BANK, ATLANTA
as Agent
==================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
Page
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<S> <C> <C>
ARTICLE I. DEFINITIONS; CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Accounting Terms and Determination . . . . . . . . . . . . . . . . . . . . . 20
Section 1.03. Other Definitional Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 1.04. Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE II. REVOLVING LOANS AND LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . 20
Section 2.01. Commitment; Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.02. Notes; Repayment of Principal. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.03. Voluntary Reduction of Revolving
Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.04. Mandatory Reduction of Revolving Credit
Commitments Upon Asset Sale. . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.05. Letter of Credit Subfacility . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.06. Notice of Issuance of Letter of Credit;
Agreement to Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.07. Payment of Amounts drawn under Letter
of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.08. Payment by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.09. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.10. Indemnification; Nature of Agent's
Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE III. GENERAL LOAN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.01. Funding Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.02. Disbursement of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.03. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.04. Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.05. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.06. Voluntary Prepayments of Borrowings. . . . . . . . . . . . . . . . . . . . . 33
Section 3.07. Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.08. Interest Rate Not Ascertainable, etc . . . . . . . . . . . . . . . . . . . . 36
Section 3.09. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.10. Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.11. Lending Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.12. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.13. Assumptions Concerning Funding of
</TABLE>
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<TABLE>
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Eurodollar Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.14. Apportionment of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.15. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.16. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 3.17. Notice of Capital Adequacy and
Increased Costs Claims; Limitation
on Payment Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IV. CONDITIONS TO BORROWINGS AND LETTERS
OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.01. Conditions Precedent to Initial Loans
and Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.02. Conditions to All Loans and Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.01. Corporate Existence; Compliance with
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.02. Corporate Power; Authorization . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.03. Enforceable Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.04. No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.05. No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.06. Investment Company Act, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.07. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.08. Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . 47
Section 5.09. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.10. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.11. No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.12. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.13. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.14. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.15. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 5.16. Patents, Trademarks, Licenses, Etc. . . . . . . . . . . . . . . . . . . . . 51
Section 5.17. Ownership of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.18. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.19. Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.20. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.21. Payment or Dividend Restrictions . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.22. Intercompany Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.23. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VI. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.01. Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.02. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.03. Payment of Taxes and Claims, Etc. . . . . . . . . . . . . . . . . . . . . . 54
Section 6.04. Keeping of Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.05. Visitation, Inspection, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.06. Insurance; Maintenance of Properties . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
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Section 6.07. Reporting Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.08. Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.09. Notices Under Certain Other Indebtedness . . . . . . . . . . . . . . . . . . 60
ARTICLE VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.01. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.02. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.03. Mergers, Asset Sales, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.04. Dividends, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.05. Investments, Loans, Acquisitions Etc . . . . . . . . . . . . . . . . . . . . 65
Section 7.06. Sale and Leaseback Transactions. . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.07. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.08. Issuance of Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.09. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.10. Limitation on Payment Restrictions
Affecting Consolidated Companies . . . . . . . . . . . . . . . . . . . . 66
Section 7.11. Actions Under Certain Documents. . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.12. Changes in Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE VIII. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.01. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.02. Covenants Without Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.03. Other Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.04. Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.05. Non-Payments of Other Indebtedness . . . . . . . . . . . . . . . . . . . . . 68
Section 8.06. Defaults Under Other Agreements;
Change in Control Provisions . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.07. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.08. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.09. Money Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.10. Ownership of Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.11. Change in Control of Borrower. . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.12. Default Under Other Credit Documents . . . . . . . . . . . . . . . . . . . . 71
ARTICLE IX. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.01. Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.02. Authorization of Agent with Respect
to the Security Documents. . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.03. Nature of Duties of Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.04. Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.05. Certain Rights of the Agent. . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.06. Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.07. Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.08. The Agent in its Individual
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Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.09. Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.10. Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE X. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 10.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 10.02. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 10.03. No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . 77
Section 10.04. Payment of Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 10.05. Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.06. Benefit of Agreement; Assignments
and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.07. Governing Law; Submission to
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.08. Independent Nature of Lenders' Rights. . . . . . . . . . . . . . . . . . . . 83
Section 10.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.10. Effectiveness; Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.12. Independence of Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.13. Change in Accounting Principles,
Fiscal Year or Tax Laws. . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.14. Headings Descriptive; Entire Agreement . . . . . . . . . . . . . . . . . . . 84
SCHEDULES
---------
SCHEDULE 1.01 Intercompany Loans
SCHEDULE 5.01 Organization and Ownership of
Subsidiaries
SCHEDULE 5.05 Certain Pending and Threatened
Litigation
SCHEDULE 5.08(a) Environmental Compliance
SCHEDULE 5.08(b) Environmental Notices
SCHEDULE 5.08(c) Environmental Permits
SCHEDULE 5.11 Burdensome Restrictions
SCHEDULE 5.12 Tax Filings and Payments
SCHEDULE 5.15 Employee Benefit Matters
SCHEDULE 5.16 Patent, Trademark, License, and
Other Intellectual Property
Matters
SCHEDULE 5.17 Ownership of Properties
SCHEDULE 5.18 Existing Indebtedness
SCHEDULE 5.20 Labor and Employment Matters
SCHEDULE 5.21 Dividend Restrictions
SCHEDULE 6.08 Financial Covenant Calculations
Second Quarter 1995
SCHEDULE 7.01 Outstanding Indebtedness
SCHEDULE 7.02 Existing Liens
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SCHEDULE 7.05 Existing Investments
SCHEDULE 8.11 Existing Shareholders
EXHIBITS
--------
EXHIBIT A - Form of Revolving Credit Note
EXHIBIT B - Form of Borrowing Certificate
EXHIBIT C - Form of Conversion/Continuation
Certificate
EXHIBIT D - Form of Closing Certificate
EXHIBIT E - Form of Opinion of Alston & Bird
EXHIBIT F - Form of Compliance Certificate
EXHIBIT G - Form of Assignment and Acceptance
EXHIBIT H - Form of Note Assignment
EXHIBIT I - Form of Intercompany Note
</TABLE>
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT made and entered into as of November 6,
1995, by and among FUQUA ENTERPRISES, INC., a Delaware corporation, formerly
known as Vista Resources, Inc. (the "Borrower"), SUNTRUST BANK, ATLANTA,
formerly known as Trust Company Bank, a banking corporation organized under the
laws of the State of Georgia ("SunTrust"), the other banks and lending
institutions listed on the signature pages hereof, and any assignees of
SunTrust or such other banks and lending institutions which become "Lenders" as
provided herein (SunTrust, and such other banks, lending institutions, and
assignees referred to collectively herein as the "Lenders"), SUNTRUST BANK,
ATLANTA, in its capacity as agent for the Lenders and each successor agent for
such Lenders as may be appointed from time to time pursuant to Article IX
hereof (the "Agent");
W I T N E S S E T H:
WHEREAS, at the request of the Borrower, the Lenders have
agreed to provide certain credit facilities to the Borrower, on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, Borrower, the Lenders and the Agent agree,
upon the terms and subject to the conditions set forth herein as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
SECTION 1.01. DEFINITIONS. In addition to the other terms
defined herein, the following terms used herein shall have the meanings herein
specified (to be equally applicable to both the singular and plural forms of
the terms defined):
"Acquisition" shall mean any transaction, or any series of
related transactions, by which the Borrower and/or any of its Subsidiaries
directly or indirectly (a) acquires any ongoing business or all or
substantially all of the assets of any Person or division or Asset Group
thereof, whether through purchase of assets, merger or otherwise, (b) acquires
(in one transaction or as the most recent transaction in a series of
transactions) control of a majority of the securities of a Person which have
ordinary voting power for the election of directors or
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(c) otherwise acquires control of 51% ownership interest in any such Person.
"Adjusted LIBO Rate" shall mean, with respect to each
Interest Period for a Eurodollar Advance, the rate obtained by dividing (A)
LIBOR for such Interest Period by (B) a percentage equal to 1 minus the then
stated maximum rate (stated as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable to any Lender (or assignee thereof) which is a
member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or against any successor category of
liabilities as defined in Regulation D). As of the date of this Agreement,
such stated maximum rate is 0.
"Advance" shall mean any principal amount advanced and
remaining outstanding at any time under the Revolving Loans, which Advance
shall be made or outstanding as a Base Rate Advance or Eurodollar Advance, as
the case may be.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person.
"Agent" shall mean SunTrust Bank, Atlanta a Georgia banking
corporation, and any successor agent appointed pursuant to Article IX hereof.
"Agreement" shall mean this Credit Agreement, either as
originally executed or as hereafter amended, restated, supplemented or
otherwise modified from time to time.
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"Applicable Commitment Percentage" shall mean, with respect to
any calculation of the Commitment Fee hereunder, (i) through December 31, 1995,
fifteen one hundredths of one percent (0.15%) per annum, and (ii) thereafter,
the percentage per annum determined by reference to the following subparagraphs
(a) through (c), whichever is applicable:
<TABLE>
<CAPTION>
If Borrower's Consolidated
Funded Debt to Consolidated The Applicable
EBITDA is: Commitment Percentage is:
--------------------------- -------------------------
<S> <C>
(a) Less than 1.50:1.00 .125%
(b) greater than or equal
to 1.50:1.00 but
less than or equal to
2.50:1.00 .15%
(c) greater than 2.50:1.00 .1875%
</TABLE>
The Applicable Commitment Percentage shall be recalculated as and when the
Applicable Margin is recalculated in the manner set forth in the definition of
the Applicable Margin.
"Applicable Margin" shall mean, (i) with respect to all
Eurodollar Advances outstanding pursuant to the Revolving Credit Commitments
through December 31, 1995, one half of one percent (0.50%) per annum, (ii) with
respect to all Base Rate Advances outstanding pursuant to the Revolving Credit
Commitments through December 31, 1995, zero percent (0%) per annum, and (iii)
with respect to all Advances outstanding pursuant to the Revolving Credit
Commitments thereafter, the relevant percentage indicated below for Borrower's
Consolidated Funded Debt to Consolidated EBITDA ratio, as determined quarterly
for the immediately preceding four fiscal quarters based upon the financial
statements delivered to the Lenders pursuant to Section 6.07(a) or Section
6.07(b) hereof, as the case may be, with such Applicable Margin to be effective
as of the first day of the second fiscal quarter immediately following the
fiscal quarter for which such financial statements are delivered (for example,
the Applicable Margin effective as of January 1, 1996 will be calculated based
upon the financial statements delivered with respect to, and the four
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fiscal quarters ending on, September 30, 1995):
<TABLE>
<CAPTION>
If Borrower's Consolidated The Applicable Margin is:
Funded Debt to Consolidated
EBITDA is: Base Rate Eurodollar
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<S> <C> <C>
(a) Less than 1.50:1.00 -.50% .40%
(b) greater than or equal
to 1.50:1.00 but
less than or equal to 0
2.50:1.00 .50%
(c) greater than 2.50:1.00 0 .70%
</TABLE>
"Asset Group" shall mean any asset or group of assets with
identifiable net income (or loss).
"Asset Sale" shall mean the disposition whether by sale,
transfer, exchange or other disposition of any or all of the assets of Borrower
or any of its Subsidiaries (including the stock of Subsidiaries) in which the
Net Proceeds of such disposition, or related series of such dispositions,
exceeds $100,000, other than (i) sales of inventory in the ordinary course of
business, and (ii) damage, destruction, condemnation, theft or similar loss of
such assets.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and another financial institution in
accordance with the terms of this Agreement and substantially in the form of
Exhibit G.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as
amended and in effect from time to time (11 U.S.C. Section 101 et seq.).
"Base Rate" shall mean (with any change in the Base Rate to be
effective as of the date of change of either of the following rates) the higher
of (i) the rate which the Agent publicly announces from time to time as its
prime lending rate, as in effect from time to time, and (ii) the Federal Funds
Rate, as in effect from time to time, plus one-half of one percent (0.50%) per
annum. The Agent's prime lending rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to customers;
the Agent may make commercial loans or other loans at rates of interest at,
above or below the Agent's prime lending rate.
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"Base Rate Advance" shall mean an Advance made or outstanding
as a Revolving Loan, bearing interest based on the Base Rate.
"Borrower" shall mean Fuqua Enterprises, Inc., a Delaware
corporation, its successors and permitted assigns.
"Borrowing" shall mean the incurrence by Borrower under any
Facility of Advances of one Type concurrently having the same Interest Period
or the continuation or conversion of an existing Borrowing or Borrowings in
whole or in part.
"Business Day" shall mean any day excluding Saturday, Sunday
and any other day on which banks are required or authorized to close in
Atlanta, Georgia and, if the applicable Business Day relates to Eurodollar
Advances, any day on which trading is not carried on by and between banks in
deposits of the applicable currency in the applicable interbank Eurocurrency
market.
"Buyer Note" shall mean that certain promissory note to be
issued pursuant to the Stock Purchase Agreement dated as of October 16 1995 by
and between the Borrower and Atlantic American Corporation in an amount equal
to the amount owing by Borrower pursuant to the Seller Note, to be made by
Atlantic American Corporation in favor of the Borrower and to mature on the
same date as the Seller Note.
"Capital Lease" shall mean, as applied to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee which would, in accordance with GAAP, be required to be classified and
accounted for as a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder which
would, in accordance with GAAP, appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Equivalents" shall mean: (i) securities issued,
guaranteed or insured by the United States or any of its agencies with
maturities of not more than one year from the date acquired; (ii) certificates
of deposit with maturities of not more than one year from the dated issued by a
U.S. federal or state chartered commercial bank of recognized standing, which
has a capital an unimpaired surplus in excess of $500,000,000.00 and which bank
or its holding company has a short-term commercial paper rating of at least A-2
or the equivalent by S&P or at least P-2 or the equivalent by Moody's; (iii)
reverse repurchase agreements with terms of not more than seven days from the
date acquired, for securities of the type described in (i) above and entered
into
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only with commercial banks having the qualifications described in (ii) above;
(iv) commercial paper or finance company paper issued by any Person
incorporated under the laws of the United States of any state thereof and rated
at least A-2 or the equivalent by S&P or at least P-2 or the equivalent by
Moody's, in each case with maturities of not more than one year from the date
acquired; and (v) investments in money market funds registered under the
Investment Company Act of 1940, which have net assets of at least
$500,000,000.00 and at least eighty-five percent (85%) of whose assets consist
of securities and other obligations of the type described in clauses (i)
through (iv) above.
"Change in Control Provision" shall mean any term or provision
contained in any indenture, debenture, note, or other agreement or document
evidencing or governing Indebtedness of Borrower evidencing debt or a
commitment to extend loans in excess of $500,000 which requires, or permits the
holder(s) of such Indebtedness of Borrower to require that such Indebtedness of
Borrower be redeemed, repurchased, defeased, prepaid or repaid, either in whole
or in part, or the maturity of such Indebtedness of Borrower to be accelerated
in any respect, as a result of a change in ownership of the capital stock of
Borrower or voting rights with respect thereto.
"Closing Date" shall mean November __, 1995 or such later date
on which the initial Loans are made and the conditions set forth in Section
4.01 and 4.02 are satisfied.
"Commitment" shall mean, for any Lender at any time, its
Revolving Credit Commitment.
"Commitment Fee" shall have the meaning ascribed to it in
Section 3.05(a).
"Consolidated Companies" shall mean, collectively, Borrower
and all of its Subsidiaries the accounts of which are consolidated with those
of the Borrower in its consolidated financial statements in accordance with
GAAP.
"Consolidated EBIT" shall mean, with reference to any period,
the sum of Consolidated Net Income (Loss) for such period plus, to the extent
deducted in determining Consolidated Net Income (Loss), (i) provision for taxes
based on income made by the Consolidated Companies during such period and (ii)
Consolidated Interest Expense. For the purposes of calculating Consolidated
EBIT, (a) any Person who becomes a Subsidiary on or prior to the date of
determination shall be deemed to have been a Subsidiary for the entire period
for which such calculation is being made; and (b) any Asset Group acquired by
the Borrower or a Subsidiary on or prior to the date of determination shall be
deemed to have
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been owned during the entire period for which such calculation is being made;
provided that, in the event that the Person or Asset Group to be included
herein pursuant to subsections (a) and (b) for the relevant fiscal period had
not been, prior to its acquisition by a Consolidated Company, obtaining annual
audited financial statements, prepared by a nationally recognized accounting
firm, for a period of at least three years, the EBIT of such Person or Asset
Group shall be included in this definition only if the Borrower provides the
Lenders with evidence of the calculation of the EBIT of such Person or Asset
Group which is acceptable to the Required Lenders in their reasonable
discretion.
"Consolidated EBITDA" shall mean, with reference to any
period, an amount equal to the sum of Consolidated EBIT plus to the extent
deducted in determining Consolidated Net Income (Loss), depreciation and
amortization expense of the Consolidated Companies for such period as
determined in accordance with GAAP. For the purposes of calculating
Consolidated EBITDA, (a) any Person who becomes a Subsidiary on or prior to the
date of determination shall be deemed to have been a Subsidiary for the entire
period for which such calculation is being made; and (b) any Asset Group
acquired by the Borrower or a Subsidiary on or prior to the date of
determination shall be deemed to have been owned during the entire period for
which such calculation is being made; and; provided that, in the event that the
Person or Asset Group to be included herein pursuant to subsections (a) and (b)
for the relevant fiscal period had not been, prior to its acquisition by a
Consolidated Company, obtaining annual audited financial statements, prepared
by a nationally recognized accounting firm, for a period of at least three
years, the EBITDA of such Person or Asset Group shall be included in this
definition only if the Borrower provides the Lenders with evidence of the
calculation of the EBITDA of such Person or Asset Group which is acceptable to
the Required Lenders in their reasonable discretion.
"Consolidated Funded Debt" shall mean, as at any date of
determination, the total of all Funded Debt (including the current portions
thereof) of the Consolidated Companies outstanding on such date, determined in
accordance with GAAP on a consolidated basis, after eliminating all
intercompany items; provided, that, for purposes of calculating Consolidated
Funded Debt, the Borrower's obligations pursuant to the Seller Note and any
stand-by letter of credit facility established solely to support such Seller
Note (which letter of credit and accompanying documentation has been approved
in writing by the Required Lenders) shall not be included in Consolidated
Funded Debt unless and until one or more of the following events shall occur:
(x) the Seller Note and any reimbursement obligations pursuant to any letter of
credit facility established in support thereof shall not have been paid in full
or tendered for payment into escrow in accordance with the
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terms of the agreements governing the Seller Note, by November 1, 1996, (y) any
default shall occur pursuant to the Buyer Note which default is not cured
within any applicable grace period or waived in writing by the Borrower, or (z)
the Agent and the Required Lenders shall deem, in good faith, that the prospect
of repayment of the Buyer Note in full (or the tender of payment thereof for
placement into escrow) on its scheduled due date has been substantially
impaired; provided that, during any period that Wachovia Bank of Georgia, N.A.
is a party to this Agreement and also has in place the primary credit facility
to Atlantic American Corporation, the Agent and the Required Lenders shall not
be entitled to make such a determination unless an event of default has
occurred pursuant to such credit facility.
"Consolidated Interest Expense" shall mean, with reference to
any period, the total interest expense (not net of interest income) of the
Consolidated Companies for such period (including, without limitation, interest
expense attributable to Capital Leases), determined in accordance with GAAP on
a consolidated basis.
"Consolidated Net Income (Loss)" shall mean, with reference to
any period, the net income (or deficit) of the Consolidated Companies for such
period (taken as a cumulative whole), determined in accordance with GAAP on a
consolidated basis, provided that the following shall be excluded if and to the
extent otherwise included in net income of the Borrower and any of its
Subsidiaries for such period:
(a) the income (or deficit) of any Person accrued prior
to the date it became a Subsidiary or was merged into or consolidated
with the Borrower or a Subsidiary of the Borrower unless, pursuant to
the definition of Consolidated EBITDA, such Person is deemed to be a
Subsidiary of the Borrower for such period;
(b) the income (or deficit) of any Asset Group accrued
prior to the date such Asset Group was acquired by the Borrower or a
Subsidiary of the Borrower unless, pursuant to the provisions of the
definition of Consolidated EBITDA, such Asset Group is deemed to have
been owned by the Borrower or a Subsidiary of the Borrower for such
period; and
(c) any aggregate net gain (or aggregate net loss) during
such period arising from the sale, exchange, or other disposition of
assets of the Borrower or any of its Subsidiaries outside of the
ordinary course of business.
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"Contractual Obligation" of any Person shall mean any
provision of any security issued by such Person or of any agreement, instrument
or undertaking under which such Person is obligated or by which it or any of
the property owned by it is bound.
"Credit Documents" shall mean, collectively, this Agreement,
the Notes, the Note Assignment, the Intercompany Loan Documents, the Letters of
Credit and all other instruments, documents, certificates, agreements and
writings executed in connection herewith.
"Credit Parties" shall mean, collectively, each of the
Borrower and any Subsidiary of the Borrower executing an Intercompany Note.
"Default" shall mean any condition or event which, with notice
or lapse of time or both, would constitute an Event of Default.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful
money of the United States of America.
"Environmental Laws" shall mean all federal, state, local and
foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect (including,
without limitation, those with respect to asbestos or asbestos containing
material or exposure to asbestos or asbestos containing material), relating to
pollution or protection of the environment and relating to public health and
safety, relating to (a) emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals or industrial toxic or hazardous
constituents, substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any petroleum
product or other waste, chemicals or substances regulated by any Environmental
Law into the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), (b) the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport or handling of any Hazardous Substance, petroleum including crude oil
or any fraction thereof, any petroleum product or other waste, chemicals or
substances regulated by any Environmental Law, or (c) underground storage tanks
and related piping, and emissions, discharges and releases or threatened
releases therefrom, such Environmental Laws to include, without limitation (i)
the Clean Air Act (42 U.S.C. Section 7401 et seq.), (ii) the Clean Water Act
(33 U.S.C. Section 1251 et seq.), (iii) the Resource Conservation and Recovery
Act (42 U.S.C. Section 6901 et seq.), (iv) the
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Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), (v) the
Comprehensive Environmental Response Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act (42 U.S.C. Section 9601 et
seq.), and (vi) all applicable national and local laws or regulations with
respect to environmental control.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each
trade or business (whether or not incorporated) which is a member of a group of
which that Person is a member and which is under common control within the
meaning of the regulations promulgated under Section 414(b) or (c) of the Tax
Code (and for purposes of Tax Code Section 412 or 4980B, a member which is
under common control within the meaning of the regulations promulgated under
Section 414(m) or (o) of the Tax Code).
"Eurodollar Advance" shall mean an Advance made or outstanding
as a Revolving Loan, bearing interest based on the Adjusted LIBO Rate.
"Event of Default" shall have the meaning provided in Article
VIII.
"Executive Officer" shall mean with respect to any Person, the
President, Vice Presidents (including Executive Vice Presidents, Senior Vice
Presidents and other designations within that office), Chief Financial
Officer, Treasurer and any Person holding comparable offices or duties.
"Existing Indebtedness" shall mean the Indebtedness of the
Consolidated Companies to be paid on the Closing Date with the proceeds of the
initial Borrowings under the Revolving Credit Commitments as more particularly
described on Schedule 5.18.
"Facility" or "Facilities" shall mean the Revolving Credit
Commitments or the Letter of Credit Subfacility, as the context may indicate.
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with member banks
of the Federal Reserve System arranged by Federal funds brokers, as published
for such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of Atlanta, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by
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the Agent from three Federal funds brokers of recognized standing selected by
the Agent.
"Fee Letter" shall mean that certain engagement letter dated
as of September 15, 1995 by and among Borrower, SunTrust Corporate Finance,
Inc. and the Agent.
"Funded Debt" shall mean, with respect to any Person, all
Indebtedness for money borrowed, Indebtedness evidenced or secured by purchase
money Liens, Capital Leases, conditional sales contracts and similar title
retention debt instruments, (including any current maturities of such
Indebtedness) which by its terms matures more than one year from the date of
creation thereof or which is renewable or extendible at the option of the
obligor to a date beyond one year from the date of determination. The
calculation of Funded Debt shall include (i) all Funded Debt of the
Consolidated Companies, plus (ii) all Funded Debt of other Persons to the
extent guaranteed by a Consolidated Company, to the extent supported by a
letter of credit issued for the account of a Consolidated Company, or as to
which and to the extent which a Consolidated Company or its assets otherwise
have become liable for payment thereof, plus (iii) the redemption amount with
respect to the stock of any Consolidated Company required to be redeemed during
the next succeeding twelve months, plus (iv) Indebtedness outstanding pursuant
to the line of credit established by SunTrust for the benefit of the Borrower
as permitted by Section 7.01 hereof.
"Fuqua Family" shall mean, collectively, (a) J.B. Fuqua, (b)
any of his immediate family members consisting of his spouse and his lineal
descendants (whether natural or adopted) and their spouses, and (c) any trusts
established for the sole benefit of, or partnerships or foundations controlled
by, any of the foregoing. As of the Closing Date, the Persons comprising the
Fuqua Family and who beneficially own any Voting Stock of the Borrower are set
forth on Schedule 8.11 attached hereto.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Guaranty" shall mean any contractual obligation, contingent
or otherwise, of a Person with respect to any Indebtedness of another Person,
including without limitation, any such Indebtedness, directly or indirectly
guaranteed, endorsed,
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co-made or discounted or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable, including
contractual obligations (contingent or otherwise) arising through any agreement
to purchase, repurchase, or otherwise acquire such Indebtedness or any security
therefor, or any agreement to provide funds for the payment or discharge
thereof (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain solvency, assets, level of income,
or other financial condition, or to make any payment other than for value
received. The amount of any Guaranty shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
guaranty is made (subject to any limitations contained in the terms of such
Guaranty) or, if not so stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"Hazardous Substances" shall have the meaning assigned to that
term in the Comprehensive Environmental Response Compensation and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization Acts of
1986.
"Intercompany Loan Documents" shall mean, collectively, the
Intercompany Notes and all related loan, subordination, and other agreements
relating in any manner to the Intercompany Loans.
"Intercompany Loans" shall mean, collectively, (i) the loans
more particularly described on Schedule 1.01 and (ii) those loans or other
extensions of credit made by one Consolidated Company to another Consolidated
Company satisfying the terms and conditions set forth in Section 7.01 or as may
otherwise be approved in writing by the Required Lenders.
"Intercompany Note" shall mean a promissory note made by one
of the Consolidated Company to another Consolidated Company substantially in
the form of Exhibit I attached hereto, to evidence an Intercompany Loan.
"Indebtedness" of any Person shall mean, without duplication
(i) all obligations of such Person which in accordance with GAAP would be shown
on the balance sheet of such Person as a liability (including, without
limitation, obligations for borrowed money and for the deferred purchase price
of property or services, and obligations evidenced by bonds, debentures, notes
or other similar instruments); (ii) all Capital Lease Obligations; (iii) all
Guaranties of such Person (including the stated amount of undrawn letters of
credit); (iv) Indebtedness of others secured by any Lien upon property owned by
such Person, whether or not assumed; and (v) obligations or other liabilities
under currency
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contracts, Interest Rate Contracts, or similar agreements or combinations
thereof. Notwithstanding the foregoing, in determining the Indebtedness of any
Person, there shall be included all obligations of such Person of the character
referred to in clauses (i) through (v) above deemed to be extinguished under
GAAP but for which such Person remains legally liable.
"Interest Coverage Ratio" shall mean, as of any date of
determination, the ratio of (i) Consolidated EBIT to (ii) Consolidated Interest
Expense, in each case, calculated for the immediately preceding four fiscal
quarters of the Consolidated Companies.
"Interest Period" shall mean as to any Eurodollar Advances,
the interest period selected by the Borrower pursuant to Section 3.04(a)
hereof.
"Interest Rate Contract" shall mean all interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
interest rate insurance and other agreements and arrangements designed to
provide protection against fluctuations in interest rates, in each case as the
same may be from time to time amended, restated, renewed, supplemented or
otherwise modified.
"Investment" shall mean, when used with respect to any Person,
any direct or indirect advance, loan or other extension of credit (other than
the creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any Person, or any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in, capital stock,
partnership interests, bonds, notes, debentures or other securities issued by
any other Person other than an Acquisition.
"Investment Grade" shall mean, instruments rated at least Baa3
or the equivalent by Moody's and at least BBB- or the equivalent by S&P.
"Lender" or "Lenders" shall mean SunTrust, the other banks and
lending institutions listed on the signature pages hereof, and each assignee
thereof, if any, pursuant to Section 10.06(c).
"Lending Office" shall mean for each Lender, the office such
Lender may designate in writing from time to time to Borrower and the Agent
with respect to each Type of Loan.
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"Letter of Credit" shall mean each stand-by letter of credit
issued by the Agent on or after the Closing Date in accordance with Article II
hereof for the purposes of securing the obligations of the Borrower with
respect to workers' compensation insurance, for trade credit or for other
general corporate purposes; provided that, the stated amount of such Letters of
Credit shall not exceed, at any time outstanding, the amount of the Letter of
Credit Subfacility.
"Letter of Credit Exposure" shall mean, with respect to each
Lender, its Pro Rata Share of the aggregate Letter of Credit Obligations.
"Letter of Credit Fee" shall have the meaning set forth in
Section 3.05(b) hereof.
"Letter of Credit Obligations" shall mean, with respect to
Letters of Credit, as at any date of determination, the sum of (i) the maximum
aggregate amount which at such date of determination is available to be drawn
(assuming the conditions for drawing thereunder have been met) under all
Letters of Credit then outstanding, plus (ii) the aggregate amount of all
drawings under Letters of Credit honored by the Agent not theretofore
reimbursed by the Borrower (it being understood that for purposes of any
request for a Revolving Loan pursuant to Section 2.07, there shall be excluded
from the amount determined in accordance with the preceding clause (ii) an
amount equal to the proceeds of such Revolving Loan).
"Letter of Credit Subfacility" shall mean, the portion of the
Revolving Credit Commitments which may be utilized either for Revolving Loans
or Letter of Credit Obligations which amount shall not exceed $12,000,000.
"LIBOR" shall mean, for any Interest Period, with respect to
Eurodollar Advances the offered rate for deposits in U.S. Dollars, for a period
comparable to the Interest Period and in an amount comparable to the Agent's
portion of such Advances, appearing on the Reuters Screen LIBO Page as of 11:00
A.M. (London, England time) on the day that is two London Business Days prior
to the first day of the Interest Period. If two or more of such rates appear
on the Reuters Screen LIBO Page, the rate for that Interest Period shall be the
arithmetic mean of such rates. If the foregoing rate is unavailable from the
Reuters Screen for any reason, then such rate shall be determined by the Agent
from Telerate Page 3750 or, if such rate is also unavailable on such service,
then on any other interest rate reporting service of recognized standing
designated in writing by the Agent to Borrower and the other Lenders; in any
such case rounded, if necessary, to the next higher 1/16 of 1.0%, if the rate
is not such a multiple.
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"Lien" shall mean any mortgage, pledge, security interest,
lien, charge, hypothecation, assignment, deposit arrangement, title retention,
preferential property right, trust or other arrangement having the practical
effect of the foregoing and shall include the interest of a vendor or lessor
under any conditional sale agreement, capitalized lease or other title
retention agreement.
"Loans" shall mean, collectively, the Revolving Loans.
"Margin Regulations" shall mean Regulation G, Regulation T,
Regulation U and Regulation X of the Board of Governors of the Federal Reserve
System, as the same may be in effect from time to time.
"Materially Adverse Effect" shall mean any materially adverse
change in (i) the business, results of operations, financial condition, assets
or prospects of the Consolidated Companies, taken as a whole, (ii) the ability
of Borrower to perform its obligations under this Agreement, or (iii) the
enforceability of the Credit Documents. Notwithstanding the foregoing, the
disposition by the Borrower of American Southern Insurance Company and any
adverse effect on the business, results of operations, financial condition,
assets or prospects of the Consolidated Companies directly resulting from such
disposition (other than matters relating to the nonpayment of the Buyer Note),
shall not be considered to have a Materially Adverse Effect.
"Maturity Date" shall mean the earlier of (i) November 6,
1998, and (ii) the date on which all amounts outstanding under this Agreement
have been declared or have automatically become due and payable pursuant to the
provisions of Article VIII.
"Moody's" shall mean Moody's Investors Services, Inc. and each
of its successors.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean, with respect to any Asset Sale, (i)
all cash, including cash receivables (when so received) by way of deferred
payment pursuant to a promissory note, a receivable or otherwise (other than
interest payable thereon) received by any Consolidated Company as a result of
or in connection with such transaction and (ii) 75% of all cash proceeds of any
sale or other liquidation of any non-cash proceeds received as consideration of
any Asset Sale (when so received), in each case, net of reasonable sale
expenses, fees and commissions incurred, and any income taxes reasonably
estimated in good faith
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by the Borrower and its accountants to be payable by any Consolidated Company
in connection with such Asset Sale and other taxes thereon to the extent such
other taxes are actually paid by any Consolidated Company, and net of any
payment required to be made with respect to the outstanding principal amount
of, premium or penalty, if any, and interest on any Indebtedness (other than
the Loans) secured by a Lien (to the extent permitted by Section 7.02) upon the
asset sold in such Asset Sale; provided that, with respect to Asset Sales
resulting from the sale or other disposition which the Borrower certifies to
the Lenders at the time of the Asset Sale that the Borrower intends to replace
with assets of similar type, value and quality within twelve (12) months of
such Asset Sale, the Net Proceeds of such Asset Sale shall not be deemed to
have been received until such date and shall then be reduced by the amount of
Net Proceeds actually used by the Consolidated Companies for such replacement.
"Notes" shall mean, collectively, the Revolving Credit Notes.
"Note Assignment" shall mean that certain note assignment
originally executed by the Borrower, substantially in the form of Exhibit H
attached hereto, as from time to time executed by other Consolidated Companies
by joinder, whereby the Consolidated Companies party thereto assign to the
Agent, for the benefit of the Lenders, all of the right, title and interest in
and to the Intercompany Loan Documents, as security for the Obligations.
"Notice of Borrowing" shall have the meaning provided in
Section 3.01(a).
"Notice of Conversion/Continuation" shall have the meaning
provided in Section 3.01(b).
"Obligations" shall mean all amounts owing to the Agent or any
Lender pursuant to the terms of this Agreement or any other Credit Document,
including, without limitation, all Loans (including all principal and interest
payments due thereunder), all obligations pursuant to the Letters of Credit,
fees, expenses, indemnification and reimbursement payments, indebtedness,
liabilities, and obligations of the Credit Parties, direct or indirect,
absolute or contingent, liquidated or unliquidated, now existing or hereafter
arising, together with all renewals, extensions, modifications or refinancings
thereof.
"Payment Office" shall mean with respect to payments of
principal, interest, fees or other amounts relating to the Revolving Loans, the
Letter of Credit Obligations and all other Obligations, the office specified as
the "Payment Office" for the
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Agent on the signature page of the Agent, or such other location as to which
the Agent shall have given written notice to the Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Permitted Liens" shall mean those Liens expressly permitted
by Section 7.02.
"Person" shall mean any individual, partnership, firm,
corporation, association, joint venture, trust or other entity, or any
government or political subdivision or agency, department or instrumentality
thereof.
"Plan" shall mean any "employee benefit plan" (as defined in
Section 3(3) of ERISA), including, but not limited to, any defined benefit
pension plan, profit sharing plan, money purchase pension plan, savings or
thrift plan, stock bonus plan, employee stock ownership plan, Multiemployer
Plan, or any plan, fund, program, arrangement or practice providing for medical
(including post-retirement medical), hospitalization, accident, sickness,
disability, or life insurance benefits.
"Pro Rata Share" shall mean, with respect to each of the
Revolving Credit Commitments of each Lender, each Loan to be made by, each
Letter of Credit issued thereunder and each payment (including, without
limitation, any payment of principal, interest or fees) to be made to each
Lender, the percentage designated as such Lender's Pro Rata Share of such
Commitments, such Loans, such Letters of Credit or such payments, as
applicable, set forth under the name of such Lender on the respective signature
page for such Lender, in each case as such Pro Rata Share may change from time
to time as a result of assignments or amendments made pursuant to this
Agreement.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be in effect from time
to time.
"Required Lenders" shall mean at any time, the Lenders holding
at least 66 2/3% of the amount of committed funds under the Commitments,
whether or not advanced or, following the termination of all of the
Commitments, the Lenders holding at least 66 2/3% of the aggregate outstanding
Advances and Letter of Credit Obligations at such time.
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"Requirement of Law" for any Person shall mean the articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other governmental authority, in
each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuter Monitor
Money Rates Service (or such other page as may replace that page on that
service for the purpose of displaying rates comparable to LIBOR).
"Revolving Credit Notes" shall mean, collectively, the
promissory notes evidencing the Revolving Loans in the form attached hereto as
Exhibit A, either as originally executed or as hereafter amended, modified or
supplemented.
"Revolving Loans" shall mean, collectively, the revolving
loans made to the Borrower by the Lenders pursuant to Section 2.01.
"Revolving Credit Commitment" shall mean, at any time for any
Lender, the amount of such commitment set forth opposite such Lender's name on
the signature pages hereof, as the same may be increased or decreased from time
to time as a result of any reduction thereof pursuant to Sections 2.03 or 2.11
any assignment thereof pursuant to Section 10.06(c), or any amendment thereof
pursuant to Section 10.02.
"Security Documents" shall mean, collectively, the Note
Assignment and each other guaranty agreement, mortgage, deed of trust, security
agreement, pledge agreement, or other security or collateral document
guaranteeing or securing the Obligations, now or hereafter executed, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
"Seller Note" shall mean that certain promissory note, dated
as of October 11, 1991, made by the Borrower in favor of InterRedec Southern
Company, Inc. in the original principal amount of $8,000,000, as increased to
approximately $11,200,000 pursuant to the terms thereof (without giving effect
to any set-off rights thereunder), due on October 11, 1996.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc. and its successors.
"Subordinated Debt" shall mean all Indebtedness of Borrower
subordinated to all obligations of Borrower or any other
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Credit Party arising under this Agreement, the Notes, and the Note Assignment,
created, incurred or assumed on terms and conditions satisfactory in all
respects to the Agent and the Required Lenders, including without limitation,
with respect to interest rates, payment terms, maturities, amortization
schedules, covenants, defaults, remedies, and subordination provisions, as
evidenced by the written approval of the Agent and Required Lenders.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without limitation, partnerships, joint
ventures, and associations) regardless of its jurisdiction of organization or
formation, at least a majority of the total combined voting power of all
classes of voting stock or other ownership interests of which shall, at the
time as of which any determination is being made, be owned by such Person,
either directly or indirectly through one or more other Subsidiaries.
"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings or other charges
of whatever nature, including without limitation, income, receipts, excise,
property, sales, transfer, license, payroll, withholding, social security and
franchise taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and all interest,
penalties, additions to tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to LIBOR).
"Total Capitalization" shall mean, as of any date of
determination, the sum of (i) Consolidated Funded Debt plus (ii) shareholder's
equity of the Borrower as determined in accordance with GAAP after subtraction
of all treasury stock.
"Type" of Borrowing shall mean a Borrowing consisting of Base
Rate Advances or Eurodollar Advances.
"Voting Stock" shall mean securities of any class or classes,
the holders of which are entitled to elect all of the corporate directors (or
Persons performing similar functions).
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SECTION 1.02. ACCOUNTING TERMS AND DETERMINATION. Unless
otherwise defined or specified herein, all accounting terms shall be construed
herein, all accounting determinations hereunder shall be made, all financial
statements required to be delivered hereunder shall be prepared, and all
financial records shall be maintained in accordance with, GAAP.
SECTION 1.03. OTHER DEFINITIONAL TERMS. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article, Section, Schedule, Exhibit and like
references are to this Agreement unless otherwise specified.
SECTION 1.04. EXHIBITS AND SCHEDULES. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
ARTICLE II.
REVOLVING LOANS AND LETTERS OF CREDIT
SECTION 2.01. COMMITMENT; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein
set forth, each Lender severally agrees to make to Borrower from time to time
on and after the Closing Date, but prior to the Maturity Date, Revolving Loans
in an aggregate amount outstanding at any time not to exceed such Lender's
Revolving Credit Commitment minus such Lender's Letter of Credit Exposure.
Borrower shall be entitled to repay and reborrow Revolving Loans in accordance
with the provisions hereof.
(b) Each Revolving Loan shall, at the option of Borrower,
be made or continued as, or converted into, part of one or more Borrowings that
shall consist entirely of Base Rate Advances or Eurodollar Advances. The
aggregate principal amount of each Borrowing of Revolving Loans comprised of
Eurodollar Advances shall be not less than $1,500,000 or a greater integral
multiple of $250,000, and the aggregate principal amount of each Borrowing of
Revolving Loans comprised of Base Rate Advances shall be not less than $300,000
or a greater integral multiple of $50,000. Notwithstanding the foregoing, all
Revolving Loans made pursuant to Section 2.07 hereof shall be in an amount
equal to the draw upon the Letter of Credit to be repaid with such Revolving
Loan. At no time shall the number of Borrowings outstanding under this Article
II exceed six; provided that, for the purpose of determining the number of
Borrowings outstanding and the minimum amount for Borrowings resulting from
conversions or continuations,
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all Borrowings of Base Rate Advances under this Facility shall be considered as
one Borrowing.
(c) The proceeds of Revolving Loans shall be used solely
for the following purposes:
(i) Approximately $16,000,000 shall be used initially to
repay the Existing Indebtedness outstanding on the Closing Date; and
(ii) All other amounts shall be used by the Borrower as
working capital, to finance acquisitions permitted hereunder, for
other general corporate purposes of the Borrower and to make
Intercompany Loans to its Subsidiaries for use by such Subsidiaries as
working capital, to finance acquisitions permitted hereunder, to make
other Intercompany Loans as provided herein, and for other general
corporate purposes of such Subsidiaries.
SECTION 2.02. NOTES; REPAYMENT OF PRINCIPAL.
(a) The Borrower's obligations to pay the principal of,
and interest on, the Revolving Loans to each Lender shall be evidenced by the
records of the Agent and such Lender and by the Revolving Credit Note payable
to such Lender (or the assignor of such Lender) completed in conformity with
this Agreement.
(b) All Borrowings outstanding under the Revolving
Credit Commitments and all Letter of Credit Obligations shall be due and
payable in full on the Maturity Date.
SECTION 2.03. VOLUNTARY REDUCTION OF REVOLVING CREDIT
COMMITMENTS. Upon at least three (3) Business Days' prior telephonic notice
(promptly confirmed in writing) to the Agent, Borrower shall have the right,
without premium or penalty, to terminate the unutilized Revolving Credit
Commitments, in part or in whole, provided that (i) any such termination shall
apply to proportionately and permanently reduce the Revolving Credit
Commitments of each of the Lenders, and (ii) any partial termination pursuant
to this Section 2.03 shall be in an amount of at least $1,000,000 and integral
multiples of $1,000,000.
SECTION 2.04. MANDATORY REDUCTION OF REVOLVING CREDIT
COMMITMENTS UPON ASSET SALE. Promptly, and in any event within five (5)
Business Days, upon receipt of the Net Proceeds of any Asset Sale, the Borrower
shall permanently and proportionately reduce the Revolving Credit Commitments
by an amount equal to such Net Proceeds, if the aggregate amount of Net
Proceeds so received, when aggregated with the total amount of Net Proceeds
previously
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received by the Borrower on or after the Closing Date (or after the most recent
reduction of the aggregate Revolving Credit Commitments pursuant to this
Section 2.04), exceeds $1,000,000. The Borrower shall not be required to apply
the Net Proceeds of any sale or other disposition of American Southern
Insurance Company to the reduction of the Revolving Loan Commitments unless a
Default or Event of Default exists or has resulted from such Asset Sale. In
addition, with respect to Asset Sales resulting from the sale or other
disposition of assets acquired by a Consolidated Company in connection with an
Acquisition which assets the Borrower certifies in writing to the Lenders at
the time of such Asset Sale are being sold due to the fact that such assets
represent excess capacity or are otherwise redundant to the business of the
Consolidated Companies (a "Redundancy Sale"), the Net Proceeds of such
Redundancy Sale shall be applied to repay the outstanding Loans but shall not
permanently reduce the Revolving Credit Commitments unless and until the
aggregate amount of Net Proceeds of all Redundancy Sales since the Closing Date
exceeds $3,000,000. To the extent that the sum of the Borrowings outstanding
under the Revolving Credit Commitments plus the Letter of Credit Obligations
are in excess of the reduced amount of the Revolving Credit Commitments upon
such reduction, the Borrower shall immediately repay any such excess Borrowings
and, if the outstanding Letter of Credit Obligations still exceed the reduced
amount of the Revolving Credit Commitments, shall cash-collateralize such
excess Letter of Credit Obligations on terms and conditions reasonably
satisfactory to the Agent.
SECTION 2.05. LETTER OF CREDIT SUBFACILITY. Subject to, and
upon the terms and conditions, and in reliance upon the representations and
warranties of the Borrower set forth in this Agreement, in addition to
requesting that the Lenders make Revolving Loans pursuant to Section 2.01, the
Borrower may request, in accordance with the provisions of this Section 2.05
and Section 2.06, that on and after the Closing Date, the Agent issue a Letter
or Letters of Credit for the account of the Borrower; provided that (i) no
Letter of Credit shall have an expiration date that is later than ten days
prior to the Maturity Date; (ii) each Letter of Credit issued by the Agent
shall be in a stated amount of at least $250,000; (iii) the Borrower shall not
request that the Agent issue any Letter of Credit, if, after giving effect to
such issuance, the Letter of Credit Obligations plus the then outstanding
aggregate principal amount of Revolving Loans would exceed the aggregate amount
of the Revolving Credit Commitments; and (iv) the Borrower shall not request
the issuance of any Letter of Credit if, after giving effect to such issuance,
the aggregate Letter of Credit Obligations would exceed the Letter of Credit
Subfacility.
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SECTION 2.06. NOTICE OF ISSUANCE OF LETTER OF CREDIT; AGREEMENT TO ISSUE.
(a) Whenever the Borrower desires the issuance of a
Letter of Credit, it shall, in addition to any application and documentation
procedures customarily required by the Agent for the issuance of such Letter of
Credit, deliver to the Agent a written notice no later than 11:00 A.M.
(Atlanta, Georgia time) at least five (5) days in advance of the proposed date
of issuance. Each such notice shall specify (i) the proposed date of issuance
(which shall be a Business Day); (ii) the face amount of the Letter of Credit;
(iii) the expiration date of the Letter of Credit; and (iv) the name and
address of the beneficiary with respect to such Letter of Credit and shall
attach a precise description of the documentation and a verbatim text of any
certificate to be presented by the beneficiary of such Letter of Credit which
would require the Agent to make payment under the Letter of Credit, provided
that the Agent may require changes in any such documents and certificates in
accordance with its customary letter of credit practices, and provided further,
that no Letter of Credit shall require payment against a conforming draft to be
made thereunder on the same Business Day that such draft is presented if such
presentation is made after 11:00 A.M. (Atlanta, Georgia time). In determining
whether to pay under any Letter of Credit, the Agent shall be responsible only
to determine that the documents and certificate required to be delivered under
its Letter of Credit have been delivered, and that they comply on their face
with the requirements of the Letter of Credit. Promptly after receiving the
notice of issuance of a Letter of Credit, the Agent shall notify each Lender of
such Lender's respective participation therein, determined in accordance with
its respective Pro Rata Share of the Revolving Credit Commitments In the event
that the written request of the Borrower for a Letter of Credit hereunder is
delivered at least seven (7) Business Days prior to the proposed date of
issuance of such Letter of Credit and is accompanied by a request for a prior
review of such Letter of Credit, the Agent shall deliver to the Borrower for
the Borrower's review and comment, a copy of such proposed Letter of Credit at
least two (2) Business Days prior to the proposed date of issuance thereof.
(b) The Agent agrees, subject to the terms and conditions
set forth in this Agreement, to issue for the account of the Borrower a Letter
of Credit in a face amount equal to the face amount requested under paragraph
(a) above, following its receipt of a notice required by Section 2.06(a).
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Agent a
participation in such Letter of Credit and any drawing thereunder in an amount
equal to such Lender's Pro Rata Share of
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the Revolving Credit Commitments multiplied by the face amount of such Letter
of Credit. The Agent shall promptly forward a copy of each Letter of Credit
issued hereunder to each Lender and to the Borrower.
SECTION 2.07. PAYMENT OF AMOUNTS DRAWN UNDER LETTER OF CREDIT.
(a) In the event of any request for a drawing under any
Letter of Credit by the beneficiary thereof, the Agent shall notify the
Borrower and the Lenders as promptly as possible on the date on which the Agent
intends to honor such drawing, and the Borrower shall reimburse the Agent on
the day on which such drawing is honored in an amount, in same day funds, equal
to the amount of such drawing, provided that anything contained in this
Agreement to the contrary notwithstanding, unless the Borrower shall have
notified the Agent prior to 11:30 A.M. (Atlanta, Georgia time) on the Business
Day on which such drawing is honored, that the Borrower intends to reimburse
the Agent for the amount of such drawing in funds other than the proceeds of
Revolving Loans, the Borrower shall be deemed to have timely given a Notice of
Borrowing to the Agent requesting Revolving Loans which are Base Rate Advances
on the date on which such drawing is honored in an amount equal to the amount
of such drawing, and the Lenders shall by 1:00 P.M. (Atlanta, Georgia time) on
the date of such drawing, make Revolving Loans which are Base Rate Advances in
the amount of such drawing, the proceeds of which shall be applied directly by
the Agent to reimburse itself for the amount of such drawing, provided that for
the purposes solely of such Borrowing, the conditions and precedents set forth
in Sections 4.01 and 4.02 hereof shall not be applicable, and provided further
that if for any reason proceeds of the Revolving Loans are not received by the
Agent on such date in the amount equal to the amount of such drawing, the
Borrower shall reimburse the Agent on the Business Day immediately following
the date of such drawing in an amount, in Dollars and immediately available
funds, equal to the excess of the amount of such drawing over the amount of
such Revolving Loans, if any, which are so received, plus accrued interest on
the amount at the applicable rate of interest for Base Rate Advances.
(b) Notwithstanding any provision of this Agreement to
the contrary, to the extent that any Letter of Credit or portion thereof
remains outstanding on the Maturity Date, the parties hereby agree that the
beneficiary or beneficiaries thereof shall be deemed to have made a drawing of
all available amounts pursuant to such Letters of Credit on the Maturity Date,
which amounts shall be reimbursed to the Agent as set forth above and
thereafter held by the Agent as cash collateral for its remaining obligations
pursuant to such Letters of Credit.
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SECTION 2.08. PAYMENT BY LENDERS. In the event that the
Borrower shall fail to reimburse the Agent as provided in Section 2.07 by
borrowing Revolving Loans, or otherwise providing an amount equal to the amount
of any drawing honored by the Agent pursuant to any Letter of Credit issued by
it, the Agent shall promptly notify each Lender of the unreimbursed amount of
such drawing and of such Lender's respective participation therein. Each
Lender shall make available to the Agent an amount equal to its respective
participation, in Dollars and in immediately available funds, at the office of
the Agent specified in such notice not later than 1:00 P.M. (Atlanta, Georgia
time) on the Business Day after the date notified by the Agent. In the event
that any such Lender fails to make available to the Agent the amount of such
Lender's participation in such Letter of Credit, the Agent shall be entitled to
recover such amount on demand from such Lender together with interest as
provided for in Section 3.02(c). The Agent shall distribute to each other
Lender which has paid all amounts payable under this Section with respect to
any Letter of Credit, such Lender's Pro Rata Share of all payments received by
the Agent from the Borrower in reimbursement of drawings honored by the Agent
under such Letter of Credit when such payments are received.
SECTION 2.09 OBLIGATIONS ABSOLUTE. The obligation of the
Borrower to reimburse the Agent for drawings made under Letters of Credit
issued for the account of the Borrower and the Lenders' obligation to honor
their participations purchased therein shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including without limitation, the following circumstances:
(a) Any lack of validity or enforceability of any Letter
of Credit;
(b) The existence of any claim, set-off, defense or
other right which the Borrower or any Subsidiary or Affiliate of the
Borrower may have at any time against a beneficiary or any transferee
of any Letter of Credit (or any Persons or entities for whom any such
beneficiary or transferee may be acting), any Lender or any other
Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including without
limitation any underlying transaction between the Borrower or any of
its Subsidiaries and Affiliates and the beneficiary for which such
Letter of Credit was procured); provided that nothing in this Section
shall affect the right of the Borrower to seek relief against any
beneficiary, transferee, Lender or any other Person in any action or
proceeding or to bring a counterclaim in any suit involving such
Persons;
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(c) Any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent
or invalid in any respect or any statement therein being untrue or
inaccurate in any respect;
(d) Payment by the Agent under any Letter of Credit
against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of
Credit;
(e) Any other circumstance or happening whatsoever which
is similar to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall
have occurred and be continuing.
The provisions of this Section 2.09 are intended to apply only
to the obligation of the Borrower to reimburse the Agent for drawings honored
by the Agent under Letters of Credit and shall in no way impair the ability of
the Borrower to seek relief against the Agent for any gross negligence or
willful misconduct of the Agent in connection with any Letter of Credit,
including without limitation, any matters set forth in this Section 2.09 to the
extent that such matters constitute gross negligence or willful misconduct on
the part of the Agent.
SECTION 2.10. INDEMNIFICATION; NATURE OF AGENT'S DUTIES.
(a) In addition to amounts payable elsewhere provided
in this Agreement, without duplication, the Borrower hereby agrees to protect,
indemnify, pay and save the Agent and each Lender harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
reasonable expenses (including reasonable attorney's fees and disbursements)
which the Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit for the account
of the Borrower, other than as a result of the gross negligence or willful
misconduct of the Agent or such Lender, as the case may be; (ii) the failure of
the Agent to honor a drawing under any Letter of Credit due to any act or
omission (whether rightful or wrongful) of any present or future de jure or de
facto government or governmental authority; or (iii) any confirmation of any
Letter of Credit obtained by the Agent with the consent of the Borrower.
(b) As between the Borrower and the Agent, the Borrower
assumes all risk of the acts and omissions of, or misuse of, the Letters of
Credit issued by the Agent, by the respective beneficiaries of such Letters of
Credit, other than losses
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resulting from the gross negligence and willful misconduct of the Agent. In
furtherance and not in limitation of the foregoing but subject to the exception
for the Agent's gross negligence or willful misconduct set forth above, the
Agent shall not be responsible (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of such Letters of Credit,
even if it should in fact prove to be in any or all respects insufficient,
inaccurate, fraudulent or forged or otherwise invalid; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with the conditions required in order
to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex, telecopy or otherwise; (v) for good faith errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit; and (viii) for
any consequences arising from causes beyond the control of the Agent.
(c) Notwithstanding any other provision contained in this
Agreement, the Agent shall not be obligated to issue any Letter of Credit, nor
shall any Lender be obligated to purchase its participation in any Letter of
Credit to be issued hereunder, if the issuance of such Letter of Credit or
purchase of such participation shall have become unlawful or prohibited by
compliance by Agent or such Lender in good faith with any law, governmental
rule, guideline, request, order, injunction, judgment or decree (whether or not
having the force of law); provided that in the case of the obligation of a
Lender to purchase such participation, such Lender shall have notified the
Agent to such effect in writing at least ten (10) Business Days' prior to the
issuance thereof by the Agent, which notice shall relieve the Agent of its
obligation to issue such Letter of Credit pursuant to Section 2.05 and Section
2.06 hereof.
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ARTICLE III.
GENERAL LOAN TERMS
SECTION 3.01. FUNDING NOTICES.
(a) Whenever Borrower desires to make a Borrowing with
respect to the Revolving Credit Commitments (other than one resulting from a
conversion or continuation pursuant to Section 3.01(b)), it shall give the
Agent prior written notice (or telephonic notice promptly confirmed in writing)
of such Borrowing substantially in the form of Exhibit B, with appropriate
insertions (a "Notice of Borrowing"), such Notice of Borrowing to be given at
its Payment Office (x) prior to 11:00 A.M. (local time for the Agent) on the
Business Day which is the requested date of such Borrowing in the case of Base
Rate Advances, and (y) prior to 12:00 noon (local time for the Agent) three
Business Days prior to the requested date of such Borrowing in the case of
Eurodollar Advances. Notices received after 12:00 noon shall be deemed
received on the next Business Day. Each Notice of Borrowing shall be
irrevocable and shall specify the aggregate principal amount of the Borrowing,
the date of Borrowing (which shall be a Business Day), and whether the
Borrowing is to consist of Base Rate Advances or Eurodollar Advances and (in
the case of Eurodollar Advances) the Interest Period to be applicable thereto.
(b) Whenever Borrower desires to convert all or a portion
of an outstanding Borrowing under the Revolving Credit Commitments consisting
of Base Rate Advances into a Borrowing consisting of Eurodollar Advances, or to
continue outstanding a Borrowing consisting of Eurodollar Advances for a new
Interest Period, it shall give the Agent at least three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
such Borrowing to be converted into or continued as Eurodollar Advances. Such
notice, substantially in the form of Exhibit C attached hereto, with
appropriate insertions (a "Notice of Conversion/Continuation"), shall be given
prior to 12:00 noon (local time for the Agent) on the date specified at the
Payment Office of the Agent. Each such Notice of Conversion/Continuation shall
be irrevocable and shall specify the aggregate principal amount of the Advances
to be converted or continued, the date of such conversion or continuation and
the Interest Period to be applicable thereto. If, upon the expiration of any
Interest Period in respect of any Borrowing consisting of Eurodollar Advances,
Borrower shall have failed to deliver the Notice of Conversion/Continuation,
Borrower shall be deemed to have elected to convert or continue such Borrowing
to a Borrowing consisting of Base Rate Advances. So long as any Executive
Officer of Borrower has knowledge that any Default or Event of Default shall
have
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occurred and be continuing, no Borrowing may be converted into or continued as
(upon expiration of the current Interest Period) Eurodollar Advances unless the
Agent and each of the Lenders shall have otherwise consented in writing. No
conversion of any Borrowing of Eurodollar Advances shall be permitted except on
the last day of the Interest Period in respect thereof.
(c) Without in any way limiting Borrower's obligation to
confirm in writing any telephonic notice, the Agent may act without liability
upon the basis of telephonic notice believed by the Agent in good faith to be
from Borrower prior to receipt of written confirmation. In each such case,
Borrower hereby waives the right to dispute the Agent's record of the terms of
such telephonic notice.
(d) The Agent shall promptly (and in any event by the
same time on the next succeeding Business Day as such notice is received) give
each Lender notice by telephone (confirmed in writing) or by telex, telecopy or
facsimile transmission of the matters covered by the notices given to the Agent
pursuant to this Section 3.01 with respect to the Revolving Credit Commitments.
SECTION 3.02. DISBURSEMENT OF FUNDS.
(a) No later than 11:00 a.m. (local time for the Agent)
in the case of a Borrowing consisting of Eurodollar Advances and no later than
12:00 Noon (local time for the Agent) in the case of a Borrowing consisting of
Base Rate Advances on the date of each Borrowing pursuant to the Revolving
Credit Commitments (other than one resulting from a conversion or continuation
pursuant to Section 3.01(b)), each Lender will make available its Pro Rata
Share of the amount of such Borrowing in immediately available funds at the
Payment Office of the Agent. The Agent will make available to Borrower the
aggregate of the amounts (if any) so made available by the Lenders to the Agent
in a timely manner by crediting such amounts to Borrower's demand deposit
account maintained with the Agent or at Borrower's option, by effecting a wire
transfer of such amounts to Borrower's account specified by the Borrower, by
the close of business on such Business Day. In the event that the Lenders do
not make such amounts available to the Agent by the time prescribed above, but
such amount is received later that day, such amount may be credited to Borrower
in the manner described in the preceding sentence on the next Business Day
(with interest on such amount to begin accruing hereunder on such next Business
Day).
(b) Unless the Agent shall have been notified by any
Lender prior to the date of a Borrowing that such Lender does not intend to
make available to the Agent such Lender's portion of the Borrowing to be made
on such date, the Agent may assume that such
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Lender has made such amount available to the Agent on such date and the Agent
may make available to Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Lender on the date of
Borrowing, the Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest at the Federal Funds Rate. If
such Lender does not pay such corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify Borrower, and Borrower shall
immediately pay such corresponding amount to the Agent together with interest
at the rate specified for the Borrowing which includes such amount paid and any
amounts due under Section 3.12 hereof. Nothing in this subsection shall be
deemed to relieve any Lender from its obligation to fund its Commitments
hereunder or to prejudice any rights which Borrower may have against any Lender
as a result of any default by such Lender hereunder.
(c) All Borrowings under the Revolving Credit Commitments
shall be loaned by the Lenders on the basis of their Pro Rata Share of the
Revolving Credit Commitments. No Lender shall be responsible for any default
by any other Lender in its obligations hereunder, and each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fund its Commitment hereunder.
SECTION 3.03. INTEREST.
(a) Borrower agrees to pay interest in respect of all
unpaid principal amounts of the Revolving Loans from the respective dates such
principal amounts were advanced to maturity (whether by acceleration, notice of
prepayment or otherwise) at rates per annum equal to the applicable rates
indicated below:
(i) For Base Rate Advances--The Base Rate in effect from
time to time plus the Applicable Margin; and
(ii) For Eurodollar Advances--The relevant Adjusted LIBO
Rate plus the Applicable Margin.
(b) Overdue principal and, to the extent not prohibited
by applicable law, overdue interest, in respect of the Revolving Loans, and all
other overdue amounts owing hereunder, shall bear interest from each date that
such amounts are overdue:
(i) in the case of overdue principal and interest with
respect to all Loans outstanding as Eurodollar Advances, at the
greater of (A) the rate otherwise applicable for the then-current
Interest Period plus an additional two percent (2.0%) per annum or
(B) the rate
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in effect for Base Rate Advances plus an additional two percent (2.0%)
per annum; and
(ii) in the case of overdue principal and interest with
respect to all other Loans outstanding as Base Rate Advances, and all
other Obligations hereunder (other than Loans), at a rate equal to the
applicable Base Rate plus an additional two percent (2.0%) per annum.
(c) Interest on each Loan shall accrue from and including
the date of such Loan to but excluding the date of any repayment thereof;
provided that, if a Loan is repaid on the same day made, one day's interest
shall be paid on such Loan. Interest on all outstanding Base Rate Advances
shall be payable quarterly in arrears on the last day of each calendar quarter,
commencing on December 31, 1995. Interest on all outstanding Eurodollar
Advances shall be payable on the last day of each Interest Period applicable
thereto, and, in the case of Eurodollar Advances having an Interest Period in
excess of three months, on each three month anniversary of the initial date of
such Interest Period. Interest on all Loans shall be payable on any conversion
of any Advances comprising such Loans into Advances of another Type, prepayment
(on the amount prepaid), at maturity (whether by acceleration, notice of
prepayment or otherwise) and, after maturity, on demand.
(d) The Agent, upon determining the Adjusted LIBO Rate
for any Interest Period, shall promptly notify by telephone (confirmed in
writing) or in writing Borrower and the other Lenders. Any such determination
shall, absent manifest error, be final, conclusive and binding for all
purposes.
SECTION 3.04. INTEREST PERIODS.
(a) In connection with the making or continuation of, or
conversion into, each Borrowing of Eurodollar Advances, Borrower shall select
an Interest Period to be applicable to such Eurodollar Advances, which Interest
Period shall be either a 1, 2, 3 or 6 month period.
(b) Notwithstanding paragraph (a) of this Section 3.04:
(i) The initial Interest Period for any Borrowing of
Eurodollar Advances shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing consisting of
Base Rate Advances) and each Interest Period occurring thereafter in
respect of such Borrowing shall commence on the day on which the next
preceding Interest Period expires;
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(ii) If any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day, provided that if any Interest Period
in respect of Eurodollar Advances would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iii) Any Interest Period in respect of Eurodollar Advances
which begins on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period shall,
subject to part (iv) below, expire on the last Business Day of such
calendar month; and
(iv) No Interest Period with respect to the Loans shall
extend beyond the Maturity Date.
SECTION 3.05. FEES.
(a) Borrower shall pay to the Agent, for the ratable
benefit of each Lender based upon its respective Pro Rata Share, a commitment
fee (the "Commitment Fee") for the period commencing on the Closing Date and
ending on the Maturity Date, payable quarterly in arrears on the last day of
each calendar quarter, commencing on December 31, 1995, and on the Maturity
Date, equal to the Applicable Commitment Percentage multiplied by the average
daily unused portion of the Revolving Credit Commitments.
(b) The Borrower shall pay to the Agent, for the account
of itself and the Lenders, a letter of credit fee equal to the Applicable
Margin for Eurodollar Advances multiplied by the average daily Letter of Credit
Obligations (the "Letter of Credit Fee"). The Letter of Credit Fee shall be
payable by the Borrower quarterly, in arrears, commencing on December 31, 1995
and continuing thereafter on the last day of each succeeding calendar quarter
and on the Maturity Date.
(c) In addition to the Letter of Credit Fee, the Borrower
shall pay to the Agent on the date of the issuance of each Letter of Credit and
on each anniversary date thereafter during which such Letter of Credit remains
outstanding, in advance, an administrative fee with respect to such Letter of
Credit equal to one twentieth of one percent (0.05%) multiplied by the face
amount of such Letter of Credit.
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(d) Borrower shall pay to the Agent and its Affiliates
such structuring and syndication fees and annual administrative fees in the
respective amounts and on the dates set forth in the Fee Letter.
SECTION 3.06. VOLUNTARY PREPAYMENTS OF BORROWINGS.
(a) Borrower may, at its option, prepay Borrowings
consisting of Base Rate Advances at any time in whole, or from time to time in
part, in amounts aggregating $500,000 or any greater integral multiple of
$50,000, by paying the principal amount to be prepaid together with interest
accrued and unpaid thereon to the date of prepayment. Borrowings consisting of
Eurodollar Advances may be prepaid, at Borrower's option, in whole, or from
time to time in part, in amounts aggregating $1,500,000 or any greater integral
multiple of $250,000, by paying the principal amount to be prepaid, together
with interest accrued and unpaid thereon to the date of prepayment, and all
compensation payments pursuant to Section 3.12 if such prepayment is made on a
date other than the last day of an Interest Period applicable thereto. Each
such optional prepayment shall be applied in accordance with Section 3.06(c)
below.
(b) Borrower shall give written notice (or telephonic
notice confirmed in writing) to the Agent of any intended prepayment of the
Revolving Loans (i) by 11:00 A.M. (local time for the Agent) on the Business
Day of any prepayment of Base Rate Advances and (ii) not less than three
Business Days prior to any prepayment of Eurodollar Advances. Such notice,
once given, shall be irrevocable. Upon receipt of such notice of prepayment
pursuant to the first sentence of this paragraph (b), the Agent shall promptly
(and in any event by the same time on the next succeeding Business Day as such
notice is received) notify each Lender of the contents of such notice and of
such Lender's Pro Rata Share of such prepayment.
(c) Borrower, when providing notice of prepayment
pursuant to Section 3.06(b), may designate the Types of Advances and the
specific Borrowing or Borrowings which are to be prepaid, provided that (i) if
any prepayment of Eurodollar Advances made pursuant to a single Borrowing of
the Revolving Loans shall reduce the outstanding Advances made pursuant to such
Borrowing to an amount less than $1,500,000, such Borrowing shall immediately
be converted into Base Rate Advances; and (ii) each prepayment made pursuant to
a single Borrowing shall be applied pro rata among the Loans comprising such
Borrowing. In the absence of a designation by Borrower, the Agent shall,
subject to the foregoing, make such designation in its discretion but using
reasonable efforts to avoid funding losses to the Lenders pursuant to Section
3.12 subject to the last sentence of Section 3.15. All voluntary
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prepayments shall be applied to the payment of interest before application to
principal.
SECTION 3.07. PAYMENTS, ETC.
(a) Except as otherwise specifically provided herein, all
payments under this Agreement and the other Credit Documents, shall be made
without defense, set-off or counterclaim to the Agent not later than 12:00 noon
(local time for the Agent) on the date when due and shall be made in Dollars in
immediately available funds at its Payment Office.
(b) (i) All such payments shall be made free and clear of
and without deduction or withholding for any Taxes in respect of this
Agreement, the Notes or other Credit Documents, or any payments of principal,
interest, fees or other amounts payable hereunder or thereunder (but excluding,
except as provided in paragraph (iii) hereof, any Taxes (x) on the overall net
income of the Agent or the Lenders or (y) any Taxes in the form of franchise
taxes, in each case, imposed pursuant to the laws of the jurisdiction in which
the principal executive office or appropriate Lending Office of such Lender or
the Agent is located). If any Taxes are so levied or imposed, Borrower agrees
(A) to pay the full amount of such Taxes, and such additional amounts as may be
necessary so that every net payment of all amounts due hereunder and under the
Notes and other Credit Documents, after withholding or deduction for or on
account of any such Taxes (including additional sums payable under this Section
3.07), will not be less than the full amount provided for herein had no such
deduction or withholding been required, (B) to make such withholding or
deduction and (C) to pay the full amount deducted to the relevant authority in
accordance with applicable law. Borrower will furnish to the Agent and each
Lender, within 30 days after the date the payment of any Taxes is due pursuant
to applicable law, certified copies of tax receipts evidencing such payment by
Borrower. Borrower will indemnify and hold harmless the Agent and each Lender
and reimburse the Agent and each Lender upon written request for the amount of
any Taxes so levied or imposed and paid by the Agent or Lender and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or illegally
asserted; provided that, the Borrower shall not be required to indemnify any
Lender or the Agent for any Tax applicable to such Lender or the Agent on the
Closing Date. A certificate as to the amount of such payment by such Lender or
the Agent shall constitute prima facie evidence of the matters contained
therein.
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(ii) Each Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State thereof
(including the District of Columbia) agrees to furnish to Borrower and the
Agent, prior to the time it becomes a Lender hereunder, two copies of either
U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 or any successor forms thereto (wherein such Lender claims entitlement to
complete exemption from or reduced rate of U.S. Federal withholding tax on
interest paid by Borrower hereunder) and to provide to Borrower and the Agent a
new Form 4224 or Form 1001 or any successor forms thereto if any previously
delivered form is found to be incomplete or incorrect in any material respect
or upon the obsolescence of any previously delivered form; provided, however,
that no Lender shall be required to furnish a form under this paragraph (ii)
after the date that it becomes a Lender hereunder if it is not entitled to
claim an exemption from or a reduced rate of withholding under applicable law.
(iii) Borrower shall also reimburse the Agent and each
Lender, upon written request, for any Taxes imposed (including, without
limitation, Taxes imposed on the overall net income of the Agent or Lender or
its applicable Lending Office pursuant to the laws of the jurisdiction in which
the principal executive office or the applicable Lending Office of the Agent or
Lender is located) as the Agent or Lender shall determine are payable by the
Agent or Lender in respect of amounts paid by or on behalf of Borrower to or on
behalf of the Agent or Lender pursuant to paragraph (i) hereof.
(c) Subject to Section 3.04(ii), whenever any payment to
be made hereunder or under any Note shall be stated to be due on a day which is
not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the applicable rate during such extension.
(d) All computations of interest and fees shall be made
on the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable (to the extent computed on the basis of days
elapsed). Interest on Base Rate Advances shall be calculated based on the Base
Rate from and including the date of such Loan to but excluding the date of the
repayment or conversion thereof. Interest on Eurodollar Advances shall be
calculated as to each Interest Period from and including the first day thereof
to but excluding the last day thereof. Each determination by the Agent of an
interest rate or fee hereunder shall be made in good faith and shall constitute
prima facie evidence of the matters contained therein.
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(e) Payment by the Borrower to the Agent in accordance
with the terms of this Agreement shall, as to the Borrower, constitute payment
to the Lenders under this Agreement.
SECTION 3.08. INTEREST RATE NOT ASCERTAINABLE, ETC. In the
event that the Agent shall have determined (which determination shall be made
in good faith and, absent manifest error, shall be final, conclusive and
binding upon all parties) that on any date for determining the Adjusted LIBO
Rate for any Interest Period, by reason of any changes arising after the date
of this Agreement affecting the London interbank market, or the Agent's
position in such market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Adjusted LIBO Rate, then, and in any such event, the Agent shall forthwith give
notice (by telephone confirmed in writing) to Borrower and to the Lenders, of
such determination and a summary of the basis for such determination. Until
the Agent notifies Borrower that the circumstances giving rise to the
suspension described herein no longer exist (which notice Agent agrees to give
to the Borrower upon Agent obtaining knowledge that such circumstances have
ceased to exist), the obligations of the Lenders to make or permit portions of
the Revolving Loans to remain outstanding past the last day of the then current
Interest Periods as Eurodollar Advances shall be suspended, and such affected
Advances shall bear the same interest as Base Rate Advances.
SECTION 3.09. ILLEGALITY.
(a) In the event that any Lender shall have determined
(which determination shall be made in good faith and, absent manifest error,
shall be final, conclusive and binding upon all parties) at any time that the
making or continuance of any Eurodollar Advance has become unlawful by
compliance by such Lender in good faith with any applicable law, governmental
rule, regulation, guideline or order (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful), then, in any
such event, the Lender shall give prompt notice (by telephone confirmed in
writing) to Borrower and to the Agent of such determination and a summary of
the basis for such determination (which notice the Agent shall promptly
transmit to the other Lenders).
(b) Upon the giving of the notice to Borrower referred to
in subsection (a) above, (i) Borrower's right to request from such Lender, and
such Lender's obligation to make Eurodollar Advances shall be immediately
suspended, and such Lender shall make an Advance as part of the requested
Borrowing of Eurodollar Advances as a Base Rate Advance, which Base Rate
Advance shall, for all other purposes, be considered part of such Borrowing,
and
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(ii) if the affected Eurodollar Advance or Advances are then outstanding,
Borrower shall immediately, or if permitted by applicable law, no later than
the date permitted thereby, upon at least one Business Day's written notice to
the Agent and the affected Lender, convert each such Advance into a Base Rate
Advance or Advances, provided that if more than one Lender is affected at any
time, then all affected Lenders must be treated the same pursuant to this
Section 3.09(b).
SECTION 3.10. INCREASED COSTS.
(a) If, after the date hereof, by reason of (x) the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in or in the interpretation
of any law or regulation, or (y) the compliance with any guideline or request
from any central bank or other governmental authority or quasi-governmental
authority exercising control over banks or financial institutions generally
(whether or not having the force of law):
(i) any Lender (or its applicable Lending Office) shall
be subject to any tax, duty or other charge with respect to its
Eurodollar Advances, its participation in Letters of Credit or its
obligation to make Eurodollar Advances or participate in Letters of
Credit, or the basis of taxation of payments to any Lender of the
principal of or interest on its Eurodollar Advances or its
participation in Letters of Credit or its obligation to make
Eurodollar Advances or participate in Letters of Credit shall have
changed (except for changes in the tax on the overall net income of
such Lender or its applicable Lending Office, or franchise taxes
applicable thereto, in each case, as imposed by the jurisdiction in
which such Lender's principal executive office or applicable Lending
Office is located); or
(ii) any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve System),
special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Lender's
applicable Lending Office shall be imposed or deemed applicable or any
other condition affecting its Eurodollar Advances or its participation
in Letters of Credit or its obligation to make Eurodollar Advances or
participate in Letters of Credit shall be imposed on any Lender or its
applicable Lending Office or the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining
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Eurodollar Advances (except to the extent already included in the determination
of the applicable Adjusted LIBO Rate for Eurodollar Advances) or its
participation in Letters of Credit or its obligation to make Eurodollar
Advances or participate in Letters of Credit, or there shall be a reduction in
the amount received or receivable by such Lender or its applicable Lending
Office, then Borrower shall from time to time (subject, in the case of certain
Taxes, to the applicable provisions of Section 3.07(b)), upon written notice
from and demand by such Lender on Borrower (with a copy of such notice and
demand to the Agent), pay to the Agent for the account of such Lender within
five Business Days after the date of such notice and demand, additional amounts
sufficient to indemnify such Lender against such increased cost. A certificate
as to the amount of such increased cost, submitted to Borrower and the Agent by
such Lender in good faith and accompanied by a statement prepared by such
Lender describing in reasonable detail the basis for and calculation of such
increased cost, shall constitute prima facie evidence of the matters contained
therein.
(b) If any Lender shall advise the Agent that at any
time, because of the circumstances described in clauses (x) or (y) in Section
3.10(a) or any other circumstances beyond such Lender's reasonable control
arising after the date of this Agreement affecting such Lender or the London
interbank market or such Lender's position in such market, the Adjusted LIBO
Rate as determined by the Agent will not adequately and fairly reflect the cost
to such Lender of funding its Eurodollar Advances, then, and in any such event:
(i) the Agent shall forthwith give notice (by telephone
confirmed in writing) to Borrower and to the other Lenders of such
advice;
(ii) Borrower's right to request from such Lender and such
Lender's obligation to make or permit portions of the Loans to remain
outstanding past the last day of the then current Interest Periods as
Eurodollar Advances shall be immediately suspended; and
(iii) such Lender shall make a Loan as part of the
requested Borrowing of Eurodollar Advances as a Base Rate Advance,
which such Base Rate Advance shall, for all other purposes, be
considered part of such Borrowing.
SECTION 3.11. LENDING OFFICES.
(a) Each Lender agrees that, if requested by Borrower, it
will use reasonable efforts (subject to overall policy considerations of such
Lender) to designate an alternate Lending Office with respect to any of its
Eurodollar Advances affected by
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the matters or circumstances described in Sections 3.07(b), 3.08, 3.09 or 3.10
to reduce the liability of Borrower or avoid the results provided thereunder,
so long as such designation is not disadvantageous to such Lender as reasonably
determined by such Lender, which determination shall be conclusive and binding
on all parties hereto. Nothing in this Section 3.11 shall affect or postpone
any of the obligations of Borrower or any right of any Lender provided
hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State thereof
(including the District of Columbia) issues a public announcement with respect
to the closing of its lending offices in the United States such that any
withholdings or deductions and additional payments with respect to Taxes may be
required to be made by Borrower thereafter pursuant to Section 3.07(b), such
Lender shall use reasonable efforts to furnish Borrower notice thereof as soon
as practicable thereafter; provided, however, that no delay or failure to
furnish such notice shall in any event release or discharge Borrower from its
obligations to such Lender pursuant to Section 3.07(b) or otherwise result in
any liability of such Lender.
SECTION 3.12. FUNDING LOSSES. Borrower shall compensate each
Lender, upon its written request to Borrower (which request shall set forth the
basis for requesting such amounts in reasonable detail and which request shall
be made in good faith and shall constitute prima facie evidence of the matters
contained therein), for all losses, expenses and liabilities (including,
without limitation, any interest paid by such Lender to lenders of funds
borrowed by it to make or carry its Eurodollar Advances, in either case to the
extent not recovered by such Lender in connection with the re-employment of
such funds and including loss of anticipated profits), which the Lender may
sustain: (i) if for any reason (other than a default by such Lender) a
Borrowing of, or conversion to or continuation of, Eurodollar Advances to
Borrower does not occur on the date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation (whether or not withdrawn), (ii) if any
repayment (excluding any mandatory prepayments pursuant to Section 2.04 but
including any conversions pursuant to Section 3.09(b)) of any Eurodollar
Advances to Borrower occurs on a date which is not the last day of an Interest
Period applicable thereto, or (iii), if, for any reason, Borrower defaults in
its obligation to repay its Eurodollar Advances when required by the terms of
this Agreement.
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SECTION 3.13. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR
ADVANCES. Calculation of all amounts payable to a Lender under this Article
III shall be made as though that Lender had actually funded its relevant
Eurodollar Advances through the purchase of deposits in the relevant market
bearing interest at the rate applicable to such Eurodollar Advances in an
amount equal to the amount of the Eurodollar Advances and having a maturity
comparable to the relevant Interest Period and through the transfer of such
Eurodollar Advances from an offshore office of that Lender to a domestic office
of that Lender in the United States of America; provided, however, that each
Lender may fund each of its Eurodollar Advances in any manner it sees fit and
the foregoing assumption shall be used only for calculation of amounts payable
under this Article III.
SECTION 3.14. APPORTIONMENT OF PAYMENTS. Aggregate principal
and interest payments in respect of Loans and payments in respect of Letters of
Credit, letter of credit fees and commitment fees shall be apportioned among
all outstanding Commitments and Loans to which such payments relate,
proportionately to the Lenders' respective pro rata portions of such
Commitments and outstanding Loans. The Agent shall promptly distribute to each
Lender at its payment office specified by any Lender its share of all such
payments received by the Agent on the same Business Day as such payment is
deemed to be received by the Agent.
SECTION 3.15. SHARING OF PAYMENTS, ETC. If any Lender shall
obtain any payment or reduction (including, without limitation, any amounts
received as adequate protection of a deposit treated as cash collateral under
the Bankruptcy Code) of the Obligations (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) in excess of its
Pro Rata Share of payments or reductions on account of such obligations
obtained by all the Lenders, such Lender shall forthwith (i) notify each of the
other Lenders and Agent of such receipt, and (ii) purchase from the other
Lenders such participations in the affected obligations as shall be necessary
to cause such purchasing Lender to share the excess payment or reduction, net
of costs incurred in connection therewith, ratably with each of them, provided
that if all or any portion of such excess payment or reduction is thereafter
recovered from such purchasing Lender or additional costs are incurred, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery or such additional costs, but without interest unless the Lender
obligated to return such funds is required to pay interest on such funds.
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.15 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
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respect to such participation as fully as if such Lender were the direct
creditor of Borrower in the amount of such participation.
SECTION 3.16. CAPITAL ADEQUACY. Without limiting any other
provision of this Agreement, in the event that any Lender shall have determined
that any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy not currently in effect or fully
applicable as of the Closing Date, or any change therein or in the
interpretation or application thereof after the Closing Date, or compliance by
such Lender with any request or directive regarding capital adequacy not
currently in effect or fully applicable as of the Closing Date (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) from a central bank or governmental authority or body having
jurisdiction, does or shall have the effect of reducing the rate of return on
such Lender's capital as a consequence of its obligations hereunder to a level
below that which such Lender could have achieved but for such law, treaty,
rule, regulation, guideline or order, or such change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then within ten (10) Business Days
after written notice and demand by such Lender (with copies thereof to the
Agent), Borrower shall from time to time pay to such Lender additional amounts
sufficient to compensate such Lender for such reduction (but, in the case of
outstanding Base Rate Advances, without duplication of any amounts already
recovered by such Lender by reason of an adjustment in the applicable Base
Rate). Each certificate as to the amount payable under this Section 3.16
(which certificate shall set forth the basis for requesting such amounts in
reasonable detail), submitted to Borrower by any Lender in good faith, shall
constitute prima facie evidence of the matters contained therein.
SECTION 3.17. NOTICE OF CAPITAL ADEQUACY AND INCREASED COSTS
CLAIMS; LIMITATION ON PAYMENT OBLIGATIONS.
(a) Each Lender agrees to notify the Borrower as promptly as
practicable upon such Lender obtaining actual knowledge of any event occurring
after the Closing Date entitling such Lender to compensation pursuant to
Section 3.10 or Section 3.16 hereof; provided that, except as set forth in
subsection (b) below, the failure of any Lender to give such notice shall not
release the Borrower from any of its obligations pursuant to such Sections.
(b) In the event that any Lender fails to make written demand
for indemnification or compensation pursuant to Section 3.10 or Section 3.16
hereof within one year after the date that such Lender receives actual notice
or obtains actual knowledge of
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the promulgation of a law, rule, order or interpretation or occurrence of
another event giving rise to a claim pursuant to such Sections, the Borrower
shall not have any obligation to pay any amount with respect to claims accruing
prior to the date which is one year preceding such written demand.
ARTICLE IV.
CONDITIONS TO BORROWINGS AND LETTERS OF CREDIT
The obligations of each Lender to make Advances to Borrower
and the obligation of the Agent to issue Letters of Credit hereunder is subject
to the satisfaction of the following conditions:
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL LOANS AND
LETTERS OF CREDIT. At the time of the making of the initial Loans and issuance
of the initial Letters of Credit hereunder on the Closing Date, all obligations
of Borrower hereunder incurred prior to the initial Loans and Letters of Credit
(including, without limitation, Borrower's obligations to reimburse the
reasonable fees and expenses of counsel to the Agent and any fees and expenses
payable to the Agent or its Affiliates as previously agreed with Borrower,
including without limitation, the fees set forth in the Fee Letter), shall have
been paid in full, and the Agent shall have received the following, in form and
substance reasonably satisfactory in all respects to the Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Revolving Credit Notes evidencing
the Revolving Credit Commitments;
(c) a duly executed Note Assignment and original
Intercompany Loan Documents, duly endorsed to the Agent, with respect
to each Intercompany Loan existing on the Closing Date;
(d) certificates of the Secretary or Assistant Secretary
of each of the Credit Parties attaching and certifying copies of the
resolutions of the boards of directors of the Credit Parties,
authorizing as applicable the execution, delivery and performance of
the Credit Documents;
(e) certificates of the Secretary or an Assistant
Secretary of each of the Credit Parties certifying (i) the name, title
and true signature of each officer of such entities executing the
Credit Documents, and (ii) the bylaws of such entities;
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(f) certified copies of the certificate or articles of
incorporation of each Credit Party certified by the Secretary of State
and by the Secretary or Assistant Secretary of such Credit Party,
together with certificates of good standing or existence, as may be
available from the Secretary of State of the jurisdiction of
incorporation or organization of such Credit Party and each other
jurisdiction where such Credit Party's ownership of property or the
conduct of its business require it to be qualified, except where a
failure to be so qualified would not have a Materially Adverse Effect;
(g) certificate of Borrower in substantially the form of
Exhibit D attached hereto and appropriately completed;
(h) the favorable opinion of Alston & Bird, counsel to
the Credit Parties, in the form of Exhibit E, addressed to the Agent
and each of the Lenders;
(i) copies of all documents and instruments, including
all consents, authorizations and filings, required or advisable under
any Requirement of Law or by any material Contractual Obligation of
the Credit Parties, in connection with the execution, delivery,
performance, validity and enforceability of the Credit Documents and
the other documents to be executed and delivered hereunder, and such
consents, authorizations, filings and orders shall be in full force
and effect and all applicable waiting periods shall have expired;
(j) certificates, reports and other information as the
Agent may reasonably request from any Consolidated Company in order to
satisfy the Lenders as to the absence of any material liabilities or
obligations arising from matters relating to employees of the
Consolidated Companies, including employee relations, collective
bargaining agreements, Plans and other compensation and employee
benefit plans;
(k) certificates, reports, environmental audits and
investigations, and other information as the Agent may reasonably
request from any Consolidated Company in order to satisfy the Lenders
as to the absence of any material liabilities or obligations arising
from environmental and employee health and safety exposures to which
the Consolidated Companies may be subject, and the plans of the
Consolidated Companies with respect thereto;
(l) certificates, reports and other information as the
Agent may reasonably request from any Consolidated Company in order to
satisfy the Lenders as to the absence of any
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material liabilities or obligations arising from litigation (including
without limitation, products liability and patent infringement claims)
pending or threatened against the Consolidated Companies;
(m) evidence satisfactory to the Agent and the Lenders
that upon the funding of the initial Loans hereunder, the Existing
Indebtedness will be paid in full and terminated and that the holders
thereof will release all Liens securing the Existing Indebtedness;
(n) a summary, set forth in format and detail reasonably
acceptable to the Agent, of the types and amounts of insurance
(property and liability) maintained by the Consolidated Companies;
(o) evidence assuring the Agent and the Lenders that all
corporate proceedings and all other legal matters relating to the
Credit Parties in connection with the authorization, legality,
validity and enforceability of the Credit Documents are in form and
substance satisfactory to the Lenders;
(p) review of the subordination provisions in all
Subordinated Debt of the Borrower shall have been completed and such
provisions shall be in form and substance satisfactory to the Lenders;
and
(q) a certified copy of the Seller Note and the documents
governing the same and the documents governing the issuance of the
Buyer Note.
SECTION 4.02. CONDITIONS TO ALL LOANS AND LETTERS OF CREDIT.
At the time of the making of all Loans and the issuance of each Letter of
Credit, including the initial Loans and initial Letter of Credit hereunder,
(before as well as after giving effect to such Loans and Letters of Credit and
to the proposed use of the proceeds thereof), the following conditions shall
have been satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Borrower
contained herein shall be true and correct in all material respects
with the same effect as though such representations and warranties had
been made on and as of the date of such Loans or the issuance of such
Letter of Credit (except to the extent such representations and
warranties specifically relate to an earlier date);
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(c) since the date of the most recent financial
statements of the Consolidated Companies described in Section 5.14,
there shall have been no change which has had or could reasonably be
expected to have a Materially Adverse Effect (whether or not any
notice with respect to such change has been furnished to the Lenders
pursuant to Section 6.07);
(d) there shall be no action or proceeding instituted or
pending before any court or other governmental authority or, to the
knowledge of Borrower, threatened (i) which reasonably could be
expected to have a Materially Adverse Effect, or (ii) seeking to
prohibit or restrict one or more Credit Party's ownership or operation
of any portion of its business or assets, or to compel one or more
Credit Party to dispose of or hold separate all or any portion of its
businesses or assets, where such portion or portions of such
business(es) or assets, as the case may be, constitute a material
portion of the total businesses or assets of the Consolidated
Companies taken as a whole;
(e) the Loans to be made and the use of proceeds thereof
or the issuance of the requested Letter of Credit shall not
contravene, violate or conflict with, or involve the Agent or any
Lender in a violation of, any law, rule, injunction, or regulation, or
determination of any court of law or other governmental authority
applicable to Borrower; and
(f) the Agent shall have received such other documents or
legal opinions as the Agent or any Lender may reasonably request, all
in form and substance reasonably satisfactory to the Agent.
Each request for a Borrowing and the acceptance by Borrower of
the proceeds thereof and each request for the issuance of a Letter of Credit
shall constitute a representation and warranty by Borrower, as of the date of
the Loans comprising such Borrowing or the issuance of such Letter of Credit,
that the applicable conditions specified in Sections 4.01 and 4.02 have been
satisfied.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Borrower (as to itself and all other Consolidated Companies)
represents and warrants as follows:
SECTION 5.01. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each
of the Consolidated Companies is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation, and each of the Credit Parties has the corporate power and
authority and the legal right to own and operate its property and to conduct
its business. Each of the Consolidated Companies (i) has the corporate power
and authority and the legal right to own and operate its property and to
conduct its business, (ii) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership of
property or the conduct of its business requires such qualification, and (iii)
is in compliance with all Requirements of Law, where (a) the failure to have
such power, authority and legal right as set forth in clause (i), (b) the
failure to be so qualified or in good standing as set forth in clause (ii), or
(c) the failure to comply with Requirements of Law as set forth in clause
(iii), would reasonably be expected, in the aggregate, to have a Materially
Adverse Effect. The jurisdiction of incorporation or organization, and the
ownership of all issued and outstanding capital stock, for each Subsidiary as
of the date of this Agreement is accurately described on Schedule 5.01.
SECTION 5.02. CORPORATE POWER; AUTHORIZATION. Each of the
Credit Parties has the corporate power and authority to make, deliver and
perform the Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of such
Credit Documents. No consent or authorization of, or filing with, any Person
(including, without limitation, any governmental authority), is required in
connection with the execution, delivery or performance by any Credit Party, or
the validity or enforceability against any Credit Party, of the Credit
Documents, other than such consents, authorizations or filings which have been
made or obtained.
SECTION 5.03. ENFORCEABLE OBLIGATIONS. This Agreement has
been duly executed and delivered, and each other Credit Document will be duly
executed and delivered, by the respective Credit Parties, and this Agreement
constitutes, and each other Credit Document when executed and delivered will
constitute, legal, valid and binding obligations of the Credit Parties,
respectively, enforceable against the Credit Parties in accordance with their
respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or
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similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity.
SECTION 5.04. NO LEGAL BAR. The execution, delivery and
performance by the Credit Parties of the Credit Documents will not violate any
Requirement of Law or cause a breach or default under any of their respective
Contractual Obligations.
SECTION 5.05. NO MATERIAL LITIGATION. Except as set forth on
Schedule 5.05 or in any notice furnished to the Lenders pursuant to Section
6.07(e) at or prior to the respective times the representations and warranties
set forth in this Section 5.05 are made or deemed to be made hereunder, no
litigation, investigations or proceedings of or before any courts, tribunals,
arbitrators or governmental authorities are pending or, to the knowledge of
Borrower, threatened against any of the Consolidated Companies, or against any
of their respective properties or revenues, existing or future (a) with respect
to any Credit Document, or any of the transactions contemplated hereby or
thereby, or (b) which, if adversely determined, would reasonably be expected to
have a Materially Adverse Effect.
SECTION 5.06. INVESTMENT COMPANY ACT, ETC. None of the
Credit Parties is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended). None of the Credit Parties is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed, guarantee such
indebtedness, or pledge its assets to secure such indebtedness, all as
contemplated hereby or by any other Credit Document.
SECTION 5.07. MARGIN REGULATIONS. No part of the proceeds of
any of the Loans will be used for any purpose which violates, or which would be
inconsistent or not in compliance with, the provisions of the applicable Margin
Regulations.
SECTION 5.08. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) The Consolidated Companies have received no notices
of claims or potential liability under, and are in compliance with, all
applicable Environmental Laws, where such claims and liabilities under, and
failures to comply with, such statutes, regulations, rules, ordinances, laws or
licenses, would reasonably be expected to result in penalties, fines, claims or
other liabilities to the Consolidated Companies in amounts in excess of
$1,000,000, either individually or in the aggregate (including any such
penalties, fines, claims, or liabilities relating to the
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matters set forth on Schedule 5.08(a)), except as set forth on Schedule 5.08(a)
or in any notice furnished to the Lenders pursuant to Section 6.07(f) at or
prior to the respective times the representations and warranties set forth in
this Section 5.08(a) are made or deemed to be made hereunder.
(b) Except as set forth on Schedule 5.08(b) or in any
notice furnished to the Lenders pursuant to Section 6.07(f) at or prior to the
respective times the representations and warranties set forth in this Section
5.08(b) are made or deemed to be made hereunder, none of the Consolidated
Companies has received any notice of violation, or notice of any action, either
judicial or administrative, from any governmental authority (whether United
States or foreign) relating to the actual or alleged violation of any
Environmental Law, including, without limitation, any notice of any actual or
alleged spill, leak, or other release of any Hazardous Substance, waste or
hazardous waste by any Consolidated Company or its employees or agents, or as
to the existence of any contamination on any properties owned by any
Consolidated Company, where any such violation, spill, leak, release or
contamination would reasonably be expected to result in penalties, fines,
claims or other liabilities to the Consolidated Companies in amounts in excess
of $1,000,000, either individually or in the aggregate.
(c) Except as set forth on Schedule 5.08(c), the
Consolidated Companies have obtained all necessary governmental permits,
licenses and approvals which are material to the operations conducted on their
respective properties, including without limitation, all required material
permits, licenses and approvals for (i) the emission of air pollutants or
contaminants, (ii) the treatment or pretreatment and discharge of waste water
or storm water, (iii) the treatment, storage, disposal or generation of
hazardous wastes, (iv) the withdrawal and usage of ground water or surface
water, and (v) the disposal of solid wastes.
SECTION 5.09. INSURANCE. The Consolidated Companies
currently maintain insurance with respect to their respective properties and
businesses, with financially sound and reputable insurers, having coverages
against losses or damages of the kinds customarily insured against by reputable
companies in the same or similar businesses, such insurance being in amounts no
less than those amounts which are customary for such companies under similar
circumstances. The Consolidated Companies have paid all material amounts of
insurance premiums now due and owing with respect to such insurance policies
and coverages, and such policies and coverages are in full force and effect.
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SECTION 5.10. NO DEFAULT. None of the Consolidated Companies
is in default under or with respect to any Contractual Obligation in any
respect which has had or is reasonably expected to have a Materially Adverse
Effect.
SECTION 5.11. NO BURDENSOME RESTRICTIONS. Except as set
forth on Schedule 5.11 or in any notice furnished to the Lenders pursuant to
Section 6.07(k) at or prior to the respective times the representations and
warranties set forth in this Section 5.11 are made or deemed to be made
hereunder, none of the Consolidated Companies is a party to or bound by any
Contractual Obligation or Requirement of Law which has had or would reasonably
be expected to have a Materially Adverse Effect.
SECTION 5.12. TAXES. Except as set forth on Schedule 5.12,
each of the Consolidated Companies have filed or caused to be filed all
declarations, reports and tax returns which are required to have been filed,
and has paid all taxes, custom duties, levies, charges and similar
contributions ("taxes" in this Section 5.12) shown to be due and payable on
said returns or on any assessments made against it or its properties, and all
other taxes, fees or other charges imposed on it or any of its properties by
any governmental authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided in its
books); and no tax liens have been filed and, to the knowledge of Borrower, no
claims are being asserted with respect to any such taxes, fees or other
charges.
SECTION 5.13. SUBSIDIARIES. Except as disclosed on Schedule
5.01, on the date of this Agreement, Borrower has no Subsidiaries and neither
Borrower nor any Subsidiary is a joint venture partner or general partner in
any partnership. After the date of this Agreement, except as disclosed on
Schedule 5.01 or in any notice furnished pursuant to Section 6.07(l) at or
prior to the respective times the representations and warranties set forth in
this Section 5.13 are made or deemed to be made hereunder, Borrower has no
Subsidiaries.
SECTION 5.14. FINANCIAL STATEMENTS. Borrower has furnished
to the Agent and the Lenders (i) the audited consolidated and unaudited
consolidating balance sheets as of December 31, 1994, 1993 and 1992 of Borrower
and the related consolidated and consolidating statements of income and
shareholders' equity and consolidated statements of cash flows for the fiscal
years then ended, including in each case the related schedules and notes, (ii)
the unaudited balance sheet of Borrower
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presented on a consolidated basis as at the end of the second fiscal quarter of
1995, and the related unaudited consolidated statements of income and cash
flows presented on a consolidated basis for the year-to-date period then ended,
setting forth in each case in comparative form the figures for the
corresponding quarter of Borrower's previous fiscal year. The foregoing
financial statements fairly present in all material respects the consolidated
financial condition of Borrower as at the dates thereof and results of
operations for such periods in conformity with GAAP consistently applied
(subject, in the case of the quarterly financial statements, to normal year-end
audit adjustments and the absence of certain footnotes). The Consolidated
Companies taken as a whole do not have any material contingent obligations,
contingent liabilities, or material liabilities for known taxes, long-term
leases or unusual forward or long-term commitments not reflected in the
foregoing financial statements or the notes thereto. Since December 31, 1994,
there have been no changes with respect to the Consolidated Companies which has
had or would reasonably be expected to have a Materially Adverse Effect.
SECTION 5.15. ERISA. Except as disclosed on Schedule 5.15:
(1) Identification of Plans. None of the Consolidated
Companies nor any of their respective ERISA Affiliates maintains or contributes
to, or has during the past six years maintained or contributed to, any Plan
that is subject to Title IV of ERISA;
(2) Compliance. Each Plan maintained by the Consolidated
Companies has at all times been maintained, by its terms and in operation, in
compliance with all applicable laws, and the Consolidated Companies are subject
to no tax or penalty with respect to any Plan of such Consolidated Company or
any ERISA Affiliate thereof, including without limitation, any tax or penalty
under Title I or Title IV of ERISA or under Chapter 43 of the Tax Code, or any
tax or penalty resulting from a loss of deduction under Sections 162, 404, or
419 of the Tax Code, where the failure to comply with such laws, and such taxes
and penalties, together with all other liabilities referred to in this Section
5.15 (taken as a whole), would in the aggregate have a Materially Adverse
Effect;
(3) Liabilities. The Consolidated Companies are subject
to no liabilities (including withdrawal liabilities) with respect to any Plans
of such Consolidated Companies or any of their ERISA Affiliates, including
without limitation, any liabilities arising from Titles I or IV of ERISA, other
than obligations to fund benefits under an ongoing Plan and to pay current
contributions, expenses and premiums with respect to such
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Plans, where such liabilities, together with all other liabilities referred to
in this Section 5.15 (taken as a whole), would in the aggregate have a
Materially Adverse Effect;
(4) Funding. The Consolidated Companies and, with
respect to any Plan which is subject to Title IV of ERISA, each of their
respective ERISA Affiliates, have made full and timely payment of all amounts
(A) required to be contributed under the terms of each Plan and applicable law,
and (B) required to be paid as expenses (including PBGC or other premiums) of
each Plan, where the failure to pay such amounts (when taken as a whole,
including any penalties attributable to such amounts) would have a Materially
Adverse Effect. No Plan subject to Title IV of ERISA has an "amount of
unfunded benefit liabilities" (as defined in Section 4001(a)(18) of ERISA),
determined as if such Plan terminated on any date on which this representation
and warranty is deemed made, in any amount which, together with all other
liabilities referred to in this Section 5.15 (taken as a whole), would have a
Materially Adverse Effect if such amount were then due and payable. The
Consolidated Companies are subject to no liabilities with respect to post-
retirement medical benefits in any amounts which, together with all other
liabilities referred to in this Section 5.15 (taken as a whole), would have a
Materially Adverse Effect if such amounts were then due and payable.
SECTION 5.16. PATENTS, TRADEMARKS, LICENSES, ETC. Except as
set forth on Schedule 5.16, (i) the Consolidated Companies have obtained and
hold in full force and effect all material patents, trademarks, service marks,
trade names, copyrights, licenses and other such rights, free from burdensome
restrictions, which are necessary for the operation of their respective
businesses as presently conducted, and (ii) to the best of Borrower's
knowledge, no product, process, method, service or other item presently sold by
or employed by any Consolidated Company in connection with such business
infringes any patents, trademark, service mark, trade name, copyright, license
or other right owned by any other person and there is not presently pending, or
to the knowledge of Borrower, threatened, any claim or litigation against or
affecting any Consolidated Company contesting such Person's right to sell or
use any such product, process, method, substance or other item where the result
of such failure to obtain and hold such benefits or such infringement would
have a Materially Adverse Effect.
SECTION 5.17. OWNERSHIP OF PROPERTY. Except as set forth on
Schedule 5.17, (i) each Consolidated Company has good and marketable fee simple
title to or a valid leasehold interest in all of its real property and good
title to, or a valid leasehold interest in, all of its other property, as such
properties are reflected in the consolidated balance sheet of the Consolidated
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Companies as of December 31, 1994 referred to in Section 5.14, other than
properties disposed of in the ordinary course of business since such date or as
otherwise permitted by the terms of this Agreement, subject to no Lien or title
defect of any kind, except Permitted Liens. The Consolidated Companies enjoy
peaceful and undisturbed possession under all of their respective leases.
SECTION 5.18. INDEBTEDNESS. Except for the Existing
Indebtedness to be repaid and terminated on the Closing Date set forth on
Schedule 5.18 and for the Indebtedness set forth on Schedule 7.01, none of the
Consolidated Companies is an obligor in respect of any Indebtedness for
borrowed money, or any commitment to create or incur any Indebtedness for
borrowed money, in an amount not less than $100,000 in any single case, and
such Indebtedness and commitments for amounts less than $100,000 do not exceed
$1,000,000 in the aggregate for all such Indebtedness and commitments of the
Consolidated Companies.
SECTION 5.19. FINANCIAL CONDITION. On the Closing Date and
after giving effect to the transactions contemplated by this Agreement and the
other Credit Documents, including without limitation, the use of the proceeds
of the Revolving Loans as provided in Section 2.01 (i) the assets of each
Credit Party at fair valuation and based on their present fair saleable value
(including, without limitation, the fair and realistic value of any rights in
respect of any Intercompany Loans held by such Credit Party) will exceed such
Credit Party's debts, including contingent liabilities, (ii) the remaining
capital of such Credit Party will not be unreasonably small to conduct the
Credit Party's business, and (iii) such Credit Party will not have incurred
debts, or have intended to incur debts, beyond the Credit Party's ability to
pay such debts as they mature. For purposes of this Section 5.19, "debt" means
any liability on a claim, and "claim" means (a) the right to payment, whether
or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, or (b) the right to an equitable remedy for breach of performance
if such breach gives rise to a right to payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
SECTION 5.20. LABOR MATTERS. Except as set forth in Schedule
5.20 or in any notice furnished to the Lenders pursuant to Section 6.07(k) at
or prior to the respective times the representations and warranties set forth
in this Section 5.20 are made or deemed to be made hereunder, the Consolidated
Companies have experienced no strikes, labor disputes, slow downs or work
stoppages due to labor disagreements which have had, or would reasonably be
expected to have, a Materially Adverse Effect, and,
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to the best knowledge of Borrower, there are no such strikes, disputes, slow
downs or work stoppages threatened against any Consolidated Company. The hours
worked and payment made to employees of the Consolidated Companies have not
been in violation in any material respect of the Fair Labor Standards Act or
any other applicable law dealing with such matters. All payments due from the
Consolidated Companies, or for which any claim may be made against the
Consolidated Companies, on account of wages and employee health and welfare
insurance and other benefits have been paid or accrued as liabilities on the
books of the Consolidated Companies where the failure to pay or accrue such
liabilities would reasonably be expected to have a Materially Adverse Effect.
SECTION 5.21. PAYMENT OR DIVIDEND RESTRICTIONS. Except as
set forth in Section 7.04 or described on Schedule 5.21, none of the
Consolidated Companies is party to or subject to any agreement or understanding
restricting or limiting the payment of any dividends or other distributions by
any such Consolidated Company.
SECTION 5.22. INTERCOMPANY LOANS. The Intercompany Loans and
the Intercompany Loan Documents have been duly authorized and approved by all
necessary corporate and shareholder action on the part of the parties thereto,
and constitute the legal, valid and binding obligations of the parties thereto,
enforceable against each of them in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally, and by
general principles of equity.
SECTION 5.23. DISCLOSURE. No representation or warranty
contained in this Agreement (including the Schedules attached hereto) or in any
other document furnished from time to time pursuant to the terms of this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein not misleading in any material respect as of the date made or
deemed to be made. Except as may be set forth herein (including the Schedules
attached hereto), there is no fact known to Borrower which has had, or is
reasonably expected to have, a Materially Adverse Effect.
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ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any
Note shall remain unpaid, Borrower will:
SECTION 6.01. CORPORATE EXISTENCE, ETC. Except as otherwise
permitted pursuant to Section 7.03, preserve and maintain, and cause each of
its Subsidiaries to preserve and maintain, its corporate existence, its
material rights, franchises, and licenses, and its material patents and
copyrights (for the scheduled duration thereof), trademarks, trade names, and
service marks, necessary or desirable in the normal conduct of its business,
and its qualification to do business as a foreign corporation in all
jurisdictions where it conducts business or other activities making such
qualification necessary, where the failure to be so qualified would reasonably
be expected to have a Materially Adverse Effect.
SECTION 6.02. COMPLIANCE WITH LAWS, ETC. Comply, and cause
each of its Subsidiaries to comply with all Requirements of Law (including,
without limitation, the Environmental Laws subject to the exception set forth
in Section 5.08 where the penalties, claims, fines, and other liabilities
resulting from noncompliance with such Environmental Laws do not involve
amounts in excess of $2,000,000 in the aggregate) and Contractual Obligations
applicable to or binding on any of them where the failure to comply with such
Requirements of Law and Contractual Obligations would reasonably be expected to
have a Materially Adverse Effect.
SECTION 6.03. PAYMENT OF TAXES AND CLAIMS, ETC. Pay, and
cause each of its Subsidiaries to pay, (i) all taxes, assessments and
governmental charges imposed upon it or upon its property, and (ii) all claims
(including, without limitation, claims for labor, materials, supplies or
services) which might, if unpaid, become a Lien upon its property, unless, in
each case, the validity or amount thereof is being contested in good faith by
appropriate proceedings and adequate reserves are maintained with respect
thereto.
SECTION 6.04. KEEPING OF BOOKS. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, containing complete
and accurate entries of all their respective financial and business
transactions.
SECTION 6.05. VISITATION, INSPECTION, ETC. Permit, and cause
each of its Subsidiaries to permit, any representative of the Agent or any
Lender, at the Agent's or such Lender's expense, to visit and inspect any of
its property, to examine its books and
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records and to make copies and take extracts therefrom, and to discuss its
affairs, finances and accounts with its officers, all at such reasonable times,
upon reasonable prior notice, and as often as the Agent or such Lender may
reasonably request; provided that, no notice shall be required in the event
that an Event of Default has occurred and is continuing.
SECTION 6.06. INSURANCE; MAINTENANCE OF PROPERTIES.
(a) Maintain or cause to be maintained with financially
sound and reputable insurers, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against loss or
damage of the kinds customarily insured against by reputable companies in the
same or similar businesses, such insurance to be of such types and in such
amounts as is customary for such companies under similar circumstances.
(b) Cause, and cause each of the Consolidated Companies
to cause, all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order (ordinary wear
and tear excepted) and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements, settlements and
improvements thereof, all as in the judgment of Borrower may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent Borrower from discontinuing the operation or maintenance
of any such properties if such discontinuance is, in the judgment of Borrower,
desirable in the conduct of its business or the business of any Consolidated
Company.
SECTION 6.07. REPORTING COVENANTS. Furnish to each Lender:
(a) Annual Financial Statements. As soon as available
and in any event within 90 days after the end of each fiscal year of
Borrower, a balance sheet of the Consolidated Companies as at the end
of such year, presented on a consolidated and consolidating basis, and
the related statements of income, shareholders' equity, and cash flows
of the Consolidated Companies for such fiscal year, presented on a
consolidated and consolidating basis (other than statements of cash
flow), setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and accompanied, as
to the consolidated statements, by a report thereon of Ernst & Young,
L.L.P. or other independent public accountants of comparable
recognized national standing, which such report shall be unqualified
as to going concern and scope of audit and otherwise
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satisfactory to the Lenders and shall state that such financial
statements present fairly in all material respects the financial
condition as at the end of such fiscal year on a consolidated basis,
and the results of operations and statements of cash flows of the
Consolidated Companies for such fiscal year in accordance with GAAP
and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(b) Quarterly Financial Statements. As soon as available
and in any event within 45 days after the end of each fiscal quarter
of Borrower (other than the fourth fiscal quarter), a balance sheet of
the Consolidated Companies as at the end of such quarter presented on
a consolidated basis and the related statements of income,
shareholders' equity (but only if such statement of shareholders'
equity is required to be prepared for such fiscal quarter under GAAP
or the accounting requirements of the Securities and Exchange
Commission, including, without limitation, Regulation S-X), and cash
flows of the Consolidated Companies for such fiscal quarter and for
the portion of Borrower's fiscal year ended at the end of such
quarter, presented on a consolidated basis setting forth in each case
in comparative form the figures for the corresponding quarter and the
corresponding portion of Borrower's previous fiscal year, all in
reasonable detail and certified by the chief financial officer or
principal accounting officer of Borrower that such financial
statements fairly present in all material respects the financial
condition of the Consolidated Companies as at the end of such fiscal
quarter on a consolidated basis, and the results of operations and
statements of cash flows of the Consolidated Companies for such fiscal
quarter and such portion of Borrower's fiscal year, in accordance with
GAAP consistently applied (subject to normal year-end audit
adjustments and the absence of certain footnotes);
(c) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsections (a) and (b)
above, a certificate of the treasurer or chief financial officer of
Borrower substantially in the form of Exhibit F attached hereto: (i)
to the effect that, based upon a review of the activities of the
Consolidated Companies and such financial statements during the
period covered thereby, there exists no Event of Default and no
Default under this Agreement, or if there exists an Event of Default
or a Default hereunder, specifying the nature thereof and the proposed
response thereto, (ii) demonstrating in reasonable detail compliance
as at the end of such fiscal year or such fiscal quarter with Section
6.08 and Sections 7.01 through
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7.05, (iii) certifying, with respect to the consolidating financial
statements required pursuant to subsection (a) above, that such
financial statements fairly present in all material respects the
financial condition of the relevant Consolidated Company as at the end
of such fiscal quarter on a consolidating basis, and the results of
operations of such Consolidated Company for such fiscal year, in
accordance with GAAP consistently applied, and (iv) indicating the
number of shares of Voting Stock of the Borrower owned by the Persons
comprising the Fuqua Family;
(d) Notice of Default. Promptly after any Executive
Officer of Borrower has notice or knowledge of the occurrence of an
Event of Default or a Default, a certificate of the chief executive
officer, chief financial officer or principal accounting officer of
Borrower specifying the nature thereof and the proposed response
thereto;
(e) Litigation. Promptly after (i) the occurrence
thereof, notice of the institution of or any material adverse
development in any material action, suit or proceeding or any
governmental investigation or any arbitration, before any court or
arbitrator or any governmental or administrative body, agency or
official, against any Consolidated Company, or any material property
of any thereof, or (ii) an Executive Officer obtains actual knowledge
thereof, notice of the threat of any such action, suit, proceeding,
investigation or arbitration;
(f) Environmental Notices. Promptly after receipt
thereof, notice of any actual or alleged violation, or notice of any
action, claim or request for information, either judicial or
administrative, from any governmental authority relating to any actual
or alleged claim, notice of potential responsibility under or
violation of any Environmental Law, or any actual or alleged spill,
leak, disposal or other release of any waste, petroleum product, or
hazardous waste or Hazardous Substance by any Consolidated Company
which could reasonably be expected to result in penalties, fines,
claims or other liabilities to any Consolidated Company in amounts in
excess of $1,000,000;
(g) ERISA. (i) Promptly after the occurrence thereof
with respect to any Plan of any Consolidated Company or any ERISA
Affiliate thereof, or any trust established thereunder, notice of (A)
a "reportable event" described in Section 4043 of ERISA and the
regulations issued from time to time thereunder (other than a
"reportable event" not subject to the provisions for 30-day notice to
the PBGC under such regulations or for which penalties have been
waived under
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PBGC Technical Update 95-3), or (B) any other event which could
subject any Consolidated Company to any tax, penalty or liability
under Title I or Title IV of ERISA or Chapter 43 of the Tax Code, or
any tax or penalty resulting from a loss of deduction under Sections
162, 404 or 419 of the Tax Code, where any such taxes, penalties or
liabilities exceed or could exceed $250,000 in the aggregate;
(ii) Promptly after such notice must be provided
to the PBGC, or to a Plan participant, beneficiary or alternative
payee, any notice required under Section 101(d), 302(f)(4), 303, 307,
4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or under Section 401(a)(29) or
412 of the Tax Code with respect to any Plan of any Consolidated
Company or any ERISA Affiliate thereof;
(iii) Promptly after receipt, any notice received
by any Consolidated Company or any ERISA Affiliate thereof concerning
the intent of the PBGC or any other governmental authority to
terminate a Plan of such Company or ERISA Affiliate thereof which is
subject to Title IV of ERISA, to impose any liability on such Company
or ERISA Affiliate under Title IV of ERISA or Chapter 43 of the Tax
Code;
(iv) Upon the request of the Agent, promptly upon
the filing thereof with the Internal Revenue Service ("IRS") or the
Department of Labor ("DOL"), a copy of IRS Form 5500 or annual report
for each Plan of any Consolidated Company or ERISA Affiliate thereof
which is subject to Title IV of ERISA;
(v) Upon the request of the Agent, (A) true and
complete copies of any and all documents, government reports and IRS
determination or opinion letters or rulings for any Plan of any
Consolidated Company from the IRS, PBGC or DOL, (B) any reports filed
with the IRS, PBGC or DOL with respect to a Plan of the Consolidated
Companies or any ERISA Affiliate thereof, or (C) a current statement
of withdrawal liability for each Multiemployer Plan of any
Consolidated Company or any ERISA Affiliate thereof;
(h) Liens. Promptly upon any Consolidated Company
becoming aware thereof, notice of the filing of any federal statutory
Lien, tax or other state or local government Lien or any other Lien
affecting their respective properties, other than Permitted Liens;
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(i) Public Filings, Etc. Promptly upon the filing
thereof or otherwise becoming available, copies of all financial
statements, annual, quarterly and special reports, proxy statements
and notices sent or made available generally by Borrower to its public
security holders, of all regular and periodic reports and all
registration statements (other than any registration statement on Form
S-8 (or its equivalent) filed under the Securities Act of 1933, as
amended) and prospectuses, if any, filed by any of them with any
securities exchange, and of all press releases and other statements
made available generally to the public containing material
developments in the business or financial condition of Borrower and
the other Consolidated Companies;
(j) Accountants' Reports. Promptly upon receipt thereof,
copies of all financial statements of, and all reports submitted by,
independent public accountants to Borrower in connection with each
annual, interim, or special audit of Borrower's financial statements,
including without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
(k) Burdensome Restrictions, Etc. Promptly upon the
existence or occurrence thereof, notice of the existence or occurrence
of (i) any Contractual Obligation or Requirement of Law described in
Section 5.11, (ii) failure of any Consolidated Company to hold in full
force and effect those material trademarks, service marks, patents,
trade names, copyrights, licenses and similar rights necessary in the
normal conduct of its business, and (iii) any strike, labor dispute,
slow down or work stoppage as described in Section 5.20;
(l) Subsidiaries. Promptly upon the creation or
Acquisition of any new Subsidiary, notice of such event together with
a description of such Subsidiary and such transaction, relating
thereto;
(m) Asset Sale. Promptly upon the consummation of any
Asset Sale, notice of such event including the amount of Net Proceeds
received in connection therewith;
(n) Intercompany Loans. Together with the certificate
delivered pursuant to subsection (c) above, a list of the outstanding
Intercompany Loans as of the last day of the fiscal quarter for which
such certificate is delivered, indicating the outstanding balance on
each of the Intercompany Notes; and
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(o) Other Information. With reasonable promptness, such
other information about the Consolidated Companies as the Agent or any
Lender may reasonably request from time to time.
SECTION 6.08. FINANCIAL COVENANTS.
(a) Debt to Capital Ratio. Maintain a ratio of
Consolidated Funded Debt to Total Capitalization equal to or less than .6:1.0,
measured as of the last day of each fiscal quarter.
(b) Interest Coverage. Maintain an Interest Coverage
Ratio equal to or greater than 2.0:1.0, measured as of the last day of each
fiscal quarter for the immediately preceding four fiscal quarters ending on
such date.
(c) Consolidated Funded Debt to Cash Flow. Maintain a
ratio of (i) Consolidated Funded Debt to (ii) Consolidated EBITDA equal to or
less than 3.5:1.0, measured as of the last day of each fiscal quarter, and in
the case of Consolidated EBITDA, calculated for the immediately preceding four
fiscal quarters ending on such date.
(d) Second Fiscal Quarter 1995 Calculations. Schedule
6.08 sets forth the calculation of the financial covenant amounts, ratios, and
percentages required by paragraphs (a) through (c) of this Section 6.08
calculated as of June 30, 1995.
SECTION 6.09. NOTICES UNDER CERTAIN OTHER INDEBTEDNESS.
Immediately upon its receipt thereof, Borrower shall furnish the Agent a copy
of any notice received by it or any other Consolidated Company from the
holder(s) of Indebtedness referred to in Section 7.01(b), (c), (d), (f), (g),
(i), (j) or (l) (or from any trustee, agent, attorney, or other party acting on
behalf of such holder(s)) in an amount which, in the aggregate, exceeds
$2,000,000, where such notice states or claims (i) the existence or occurrence
of any default or event of default with respect to such Indebtedness under the
terms of any indenture, loan or credit agreement, debenture, note, or other
document evidencing or governing such Indebtedness, or (ii) the existence or
occurrence of any event or condition which requires or permits holder(s) of any
Indebtedness to exercise rights under any Change in Control Provision.
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ARTICLE VII.
NEGATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any
Note shall remain unpaid, Borrower will not and will not permit any Subsidiary
to:
SECTION 7.01. INDEBTEDNESS. Create, incur, assume,
guarantee, suffer to exist or otherwise become liable on or with respect to,
directly or indirectly, any Indebtedness, other than:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness outstanding on the Closing Date (other
than the Existing Indebtedness to be repaid on the Closing Date) and
described on Schedule 7.01, including the line of credit extended by
SunTrust in aggregate principal amount not to exceed $5,000,000 and
the letter of credit facility for trade letters of credit extended by
SunTrust in an aggregate face amount not to exceed $1,000,000;
(c) The Seller Note and any stand-by letter of credit
facility established by the Borrower solely for support thereof (which
letter of credit and accompanying documentation has been approved in
writing by the Required Lenders);
(d) Indebtedness not otherwise permitted by this Section
7.01; provided however, that the aggregate principal amount of the
Indebtedness permitted by this paragraph (d) at any one time
outstanding may not exceed $5,000,000;
(e) unsecured current liabilities (other than liabilities
for borrowed money or liabilities evidenced by promissory notes, bonds
or similar instruments) incurred in the ordinary course of business
and not more than 30 days past due;
(f) Subordinated Debt of the Borrower which is unsecured
and approved as to terms and conditions by the Required Lenders;
(g) Guarantees approved in writing by the Required
Lenders;
(h) Endorsements of instruments for deposit or collection
in the ordinary course of business;
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(i) Indebtedness of a Person which is acquired by or
consolidated with a Consolidated Company as long as such Indebtedness
is not obtained in contemplation of such acquisition; provided that,
such Indebtedness relates either to a tax exempt financing arrangement
of such Person or Capital Lease Obligations (excluding Capital Lease
Obligations under tax exempt financing arrangements already included
as Indebtedness for purposes of determining compliance with this
subsection (i)) which do not violate subsection (d) above and provided
further, that such Indebtedness does not exceed $10,000,000 in
aggregate amount with respect to any single Acquisition or related
series of Acquisitions and does not exceed $20,000,000 in aggregate
amount during the term of this Agreement;
(j) Indebtedness arising from the Acquisition of Basic
American Corporation, whether in connection with new credit facilities
provided by SunTrust or any other Person, existing Indebtedness of
Basic American Corporation outstanding on the date of the Acquisition
after giving effect thereto, or Indebtedness in the form of notes or
other obligations created by a Consolidated Company in favor of the
seller of Basic American Corporation in connection with the
Acquistion; provided, however, that the aggregate principal amount of
such Indebtedness at any time outstanding shall not exceed $5,000,000;
(k) Intercompany Loans among the Borrower and its
Subsidiaries; provided that, the obligations of each obligor of such
Indebtedness shall (i) be evidenced by an Intercompany Note which is
pledged to the Agent for the benefit of the Lenders pursuant to a Note
Assignment; (ii) be subordinated in right of payment to the
Obligations on terms and conditions satisfactory to the Required
Lenders, in the case of Intercompany Loans made to the Borrower, and
(iii) be payable on demand, in the case of Intercompany Loans made by
the Borrower; and
(l) Indebtedness incurred in connection with the refinancing,
extension or renewal of Indebtedness described in subparagraphs (b),
(d) and (i) above so long as such Indebtedness is extended on terms at
least as favorable, and in a principal amount no greater than, the
Indebtedness refinanced or renewed or extended.
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SECTION 7.02. LIENS. Create, incur, assume or suffer to
exist any Lien on any of its property now owned or hereafter acquired to secure
any Indebtedness other than:
(a) Liens existing on the Closing Date and disclosed on
Schedule 7.02 and Liens granted on or after the Closing Date to the
Agent for the benefit of the Lenders;
(b) any Lien securing Indebtedness permitted by Section
7.01(d);
(c) Liens for taxes not yet due, and Liens for taxes or
Liens imposed by ERISA which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
are being maintained in accordance with GAAP;
(d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
and created in the ordinary course of business for amounts not yet due
or which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves are being maintained in
accordance with GAAP;
(e) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(f) zoning, easements and restrictions on the use of real
property which do not materially impair the use of such property;
(g) rights in property reserved or vested in any
governmental authority which do not materially impair the use of such
property; and
(h) Liens securing tax exempt financings permitted by
Section 7.01(i) and the Indebtedness permitted by Section 7.01(j).
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SECTION 7.03. MERGERS, ASSET SALES, ETC.
(a) Merge or consolidate with any other Person, except that this Section 7.03
shall not apply to (i) any merger or consolidation of Borrower with any other
Person provided that the Borrower is the surviving corporation after such
merger or consolidation, (ii) any merger or consolidation of any of the
Borrower's Subsidiaries with any other Person provided that the surviving
corporation of such merger or consolidation, after giving effect thereto, shall
be a wholly-owned Subsidiary of the Borrower or (iii) any merger of a
Subsidiary of the Borrower into the Borrower or another wholly-owned Subsidiary
of the Borrower;
(b) Enter into any Asset Sale or lease of any of its accounts,
property or other assets (including capital stock of any Subsidiary of
Borrower), except that this Section 7.03 shall not apply to (i) any Asset Sale
or lease of assets of any Subsidiary of the Borrower to the Borrower or any of
its other Subsidiaries, (ii) other Asset Sales as long as the Net Proceeds
thereof are applied as set forth in Section 2.04 hereof, and (iii) the sale of
American Southern Insurance Company; provided, however, that no transaction
pursuant to subsection 7.03(a) or subsections 7.03(b)(i) and (ii) above shall
be permitted if any Default or Event of Default exists at the time of such
transaction or would exist as a result of such transaction.
SECTION 7.04. DIVIDENDS, ETC. Borrower shall not declare or
pay any dividend on its capital stock, and neither Borrower nor any of its
Subsidiaries shall make any payment to purchase, redeem, retire or acquire any
of its Subordinated Debt or capital stock or any option, warrant, or other
right to acquire such Subordinated Debt or capital stock, other than:
(i) dividends payable solely in shares of capital stock;
(ii) dividends payable to the Borrower by its Subsidiaries;
(iii) mandatory sinking fund payments, other required
prepayment or mandatory installment or final payment at maturity
required by the terms of any Subordinated Debt; and
(iv) purchases by Borrower of its capital stock for total
consideration not to exceed $1,000,000 in any fiscal year of the
Borrower;
provided, however, no such dividend or other payment may be declared or paid
pursuant to this Section 7.04 unless no Default or Event of Default exists at
the time of such declaration or
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payment, or would exist as a result of such declaration or payment.
SECTION 7.05. INVESTMENTS, LOANS, ACQUISITIONS ETC. (i) Make
or enter into any Acquisition, (ii) make, permit or hold any Investments, or
(iii) otherwise acquire or hold any Subsidiaries, other than:
(a) Investments in Subsidiaries of Borrower existing as
of the Closing Date;
(b) Investments in Cash Equivalents;
(c) Investments in other instruments which have received
and continue to be rated as Investment Grade;
(d) Investments received in settlement of Indebtedness
created in the ordinary course of business or Investments in the form
of loans to employees in the ordinary course of business;
(e) Intercompany Loans to the extent permitted by Section
7.01;
(f) Acquisitions, provided that:
(x) before and after giving effect to such
Acquisition, no Default or Event of Default shall exist
hereunder, as certified by Borrower to the Lenders in writing,
together with evidence of the calculation of the financial
covenants hereunder, as of the closing date of such
Acquisition;
(y) such Acquisition shall have been approved in
advance by a majority of the board of directors of the seller;
and
(z) in the case of any Acquisition where the total
consideration to be paid by the Borrower exceeds $5,000,000,
the Lenders shall have been given reasonable notice of the
proposed Acquisition, access to the due diligence information
collected or prepared by the Borrower in connection with the
Acquisition, and a reasonable opportunity to review such
information and question the management of the Borrower
regarding such information;
(g) Investments of American Southern Insurance Company
permitted by applicable law;
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(h) the Buyer Note; and
(i) Other Investments not permitted by the preceding
paragraphs to the extent reflected on the balance sheet of the
Consolidated Companies as of the Closing Date and set forth on
Schedule 7.05 attached hereto.
SECTION 7.06 SALE AND LEASEBACK TRANSACTIONS. Sell or
transfer any property, real or personal, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which
any Consolidated Company intends to use for substantially the same purpose or
purposes as the property being sold or transferred.
SECTION 7.07. TRANSACTIONS WITH AFFILIATES. Enter into any
transaction or series of related transactions which in the aggregate would be
material, whether or not in the ordinary course of business, with any Affiliate
of any Consolidated Company (but excluding any Affiliate which is also a
wholly-owned Subsidiary of Borrower and any compensation arrangement with an
officer or director of the Borrower or any other Consolidated Company entered
into in the ordinary course of business), other than on terms and conditions
substantially as favorable to such Consolidated Company as would be obtained by
such Consolidated Company at the time in a comparable arm's-length transaction
with a Person other than an Affiliate.
SECTION 7.08. ISSUANCE OF CAPITAL STOCK. Allow any
Subsidiary of Borrower to issue any shares, interests, warrants, participations
or other equivalent instruments to any Person other than the Borrower.
SECTION 7.09. ERISA. Without first obtaining the written
approval of the Required Lenders, take or fail to take any action which might
reasonably be expected to have a Materially Adverse Effect with respect to any
Plan of any Consolidated Company or, with respect to its ERISA Affiliates, any
Plans which are subject to Title IV of ERISA or to continuation health care
requirements for group health plans under the Tax Code, including without
limitation (i) establishing any such Plan, (ii) amending any such Plan (except
where required to comply with applicable law), (iii) terminating or withdrawing
from any such Plan, or (iv) incurring an amount of unfunded benefit
liabilities, as defined in Section 4001(a)(18) of ERISA, or any withdrawal
liability under Title IV of ERISA with respect to any such Plan.
SECTION 7.10. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING
CONSOLIDATED COMPANIES. Create or otherwise cause or suffer to exist or become
effective, any consensual encumbrance or restriction on the ability of any
Consolidated Company to (i) pay
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dividends or make any other distributions on any stock of a Subsidiary of the
Borrower, or (ii) pay any Indebtedness owed to Borrower or any other
Consolidated Company, or (iii) transfer any of its property or assets to
Borrower or any other Consolidated Company, except any consensual encumbrance
or restriction existing as of the Closing Date.
SECTION 7.11. ACTIONS UNDER CERTAIN DOCUMENTS. Without the
prior written consent of the Required Lenders (i) modify, amend, cancel or
rescind the provisions of any agreements or documents evidencing or governing
(x) Subordinated Debt, or (y) the maturity date, principal amount, interest
rate, amortization schedule or offset rights with respect to either the Seller
Note or the Buyer Note or (ii) make any payment with respect to Subordinated
Debt except payments expressly permitted by the terms of such Subordinated
Debt.
SECTION 7.12. CHANGES IN FISCAL YEAR. Change its fiscal year
from that in effect as of the Closing Date.
ARTICLE VIII.
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the
following specified events (each an "Event of Default"):
SECTION 8.01. PAYMENTS. Borrower shall fail to make promptly
when due (including, without limitation, by mandatory prepayment) any principal
payment with respect to the Loans, or Borrower shall fail to make any payment
of interest, fee or other amount payable hereunder within five (5) days of the
due date thereof;
SECTION 8.02. COVENANTS WITHOUT NOTICE. Borrower shall fail
to observe or perform any covenant or agreement contained in (i) Sections 6.01,
6.05, 6.07 or 6.09 and such failure shall remain unremedied for five (5) days
after the earlier of (x) any Executive Officer of the Borrower obtaining
knowledge thereof or (y) written notice thereof shall have been given to
Borrower by Agent or any Lender or (ii) Section 6.08 or Article VII;
SECTION 8.03. OTHER COVENANTS. Borrower shall fail to
observe or perform any covenant or agreement contained in this Agreement, other
than those referred to in Sections 8.01 and 8.02, and, if capable of being
remedied, such failure shall remain unremedied for 30 days after the earlier of
(i) any Executive Officer of the Borrower obtaining knowledge thereof, or (ii)
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written notice thereof shall have been given to Borrower by Agent or any
Lender;
SECTION 8.04. REPRESENTATIONS. Any representation or
warranty made or deemed to be made by Borrower or any other Credit Party or by
any of its officers under this Agreement or any other Credit Document
(including the Schedules attached thereto), or any certificate or other
document submitted to the Agent or the Lenders by any such Person pursuant to
the terms of this Agreement or any other Credit Document, shall be incorrect in
any material respect when made or deemed to be made or submitted;
SECTION 8.05. NON-PAYMENTS OF OTHER INDEBTEDNESS. Any
Consolidated Company shall fail to make when due (whether at stated maturity,
by acceleration, on demand or otherwise, and after giving effect to any
applicable grace period) any payment of principal of or interest on any
Indebtedness (other than the Obligations) exceeding $2,000,002 individually or
in the aggregate;
SECTION 8.06. DEFAULTS UNDER OTHER AGREEMENTS; CHANGE IN
CONTROL PROVISIONS. Any Consolidated Company shall fail to observe or perform
any covenants or agreements contained in any agreements or instruments relating
to any of its Indebtedness exceeding $2,000,002 individually or in the
aggregate, or any other event shall occur if the effect of such failure or
other event is to accelerate, or to permit the holder of such Indebtedness or
any other Person to accelerate, the maturity of such Indebtedness; or any such
Indebtedness shall be required to be prepaid (other than by a regularly
scheduled required prepayment) in whole or in part prior to its stated
maturity; or any event or condition shall occur or exist which, pursuant to the
terms of any Change in Control Provision, requires or permits the holder(s) of
the Indebtedness subject to such Change in Control Provision to require that
such Indebtedness exceeding $2,000,002 individually or in the aggregate, be
redeemed, repurchased, defeased, prepaid or repaid, in whole or in part, or the
maturity of such Indebtedness to be accelerated, unless such failure or the
effect of such Change in Control Provision is waived in writing by the holders
of such Indebtedness;
SECTION 8.07. BANKRUPTCY. Borrower or any other Consolidated
Company shall commence a voluntary case concerning itself under the Bankruptcy
Code or applicable foreign bankruptcy laws; or an involuntary case for
bankruptcy is commenced against any Consolidated Company and the petition is
not controverted within 20 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) or
similar official under applicable foreign bankruptcy laws is appointed for, or
takes charge of, all or any
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substantial part of the property of any Consolidated Company; or any
Consolidated Company commences proceedings of its own bankruptcy or to be
granted a suspension of payments or any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction,
whether now or hereafter in effect, relating to any Consolidated Company or
there is commenced against any Consolidated Company any such proceeding which
remains undismissed for a period of 60 days; or any Consolidated Company is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or any Consolidated Company
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or any Consolidated Company makes a general assignment for the benefit of
creditors; or any Consolidated Company shall fail to pay, or shall state in
writing that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or any Consolidated Company shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts; or any Consolidated Company shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate action is taken by any Consolidated Company for the purpose of
effecting any of the foregoing;
SECTION 8.08. ERISA. A Plan of a Consolidated Company or a
Plan subject to Title IV of ERISA of any of its ERISA Affiliates
(i) shall fail to be funded in accordance with the
minimum funding standard required by applicable law,
the terms of such Plan, Section 412 of the Tax Code
or Section 302 of ERISA for any plan year or a waiver
of such standard is sought or granted with respect to
such Plan under applicable law, the terms of such
Plan or Section 412 of the Tax Code or Section 303 of
ERISA; or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable law or the
terms of such Plan; or
(iii) shall require a Consolidated Company to provide
security under applicable law, the terms of such
Plan, Section 401 or 412 of the Tax Code or Section
306 or 307 of ERISA; or
(iv) results in a liability to a Consolidated Company
under applicable law, the terms of such Plan, or
Title IV of ERISA;
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and there shall result from any such failure, waiver, termination or other
event a liability to the PBGC or a Plan that would have a Materially Adverse
Effect;
SECTION 8.09. MONEY JUDGMENT. Judgments or orders for the
payment of money in excess of $2,000,000 individually or in the aggregate
(unless the Borrower's insurers have affirmatively agreed in writing that such
amounts are covered by insurance) or otherwise having a Materially Adverse
Effect shall be rendered against Borrower or any other Consolidated Company and
such judgment or order shall continue unsatisfied (in the case of a money
judgment) and in effect for a period of 60 days during which execution shall
not be effectively stayed or deferred (whether by action of a court, by
agreement or otherwise);
SECTION 8.10. OWNERSHIP OF SUBSIDIARIES. If Borrower shall
at any time fail to own and control the shares of Voting Stock of any
Subsidiary which it owned or controlled as of the Closing Date or such later
date when such Subsidiary was created or acquired, except in connection with an
Asset Sale or a merger or consolidation permitted hereunder;
SECTION 8.11. CHANGE IN CONTROL OF BORROWER. If any of the
following shall occur:
(a) any individual, entity, or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended), other than the Fuqua Family, shall acquire the stock of the Borrower
resulting in beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the such Act) of more than 30% of the combined voting power of the then
outstanding Voting Stock of the Borrower entitled to vote for the election of a
majority of the members of the board of directors of the Borrower; or
(b) the Persons comprising the Fuqua Family shall cease to
own, in the aggregate, at least 720,000 shares of the outstanding Voting Stock
of the Borrower (without regard to any dilution thereof); or
(c) a change in the board of directors of the Borrower shall
occur such that, as of any date, a majority of the Board of Directors of the
Borrower consists of individuals who were not either (i) directors of the
Borrower as of the corresponding date of the previous year, (ii) selected or
nominated to be selected to become directors by the Board of Directors of the
Borrower of which a majority consisted of individuals described in clause (i),
or (iii) selected or nominated to be selected to become directors by the Board
of Directors of the Borrower of which a majority
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consisted of individuals described in clause (i) and individuals described in
clause (ii);
SECTION 8.12. DEFAULT UNDER OTHER CREDIT DOCUMENTS. There
shall exist or occur any "Event of Default" as provided under the terms of any
other Credit Document, or any Credit Document ceases to be in full force and
effect or the validity or enforceability thereof is disaffirmed by or on behalf
of Borrower or any other Credit Party, or at any time it is or becomes unlawful
for Borrower or any other Credit Party to perform or comply with its
obligations under any Credit Document, or the obligations of Borrower or any
other Credit Party under any Credit Document are not or cease to be legal,
valid and binding on Borrower or any such Credit Party;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Agent may, and upon the written or telex request
of the Required Lenders, shall, by written notice to Borrower, take any or all
of the following actions, without prejudice to the rights of the Agent, any
Lender or the holder of any Note to enforce its claims against Borrower or any
other Credit Party: (i) declare all Commitments terminated, whereupon the
Commitments of each Lender shall terminate immediately and any commitment fee
shall forthwith become due and payable without any other notice of any kind;
(ii) declare the principal of and any accrued interest on the Loans, and all
other Obligations owing hereunder, including, without limitation, an amount
equal to the maximum amount available to be drawn under all outstanding Letters
of Credit (whether or not the beneficiary thereunder shall have presented, or
shall be entitled at such time to present, the drafts or other documents
required to draw under such Letters of Credit) to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; provided,
that, if an Event of Default specified in Section 8.07 shall occur, the result
which would occur upon the giving of written notice by the Agent to any Credit
Party, as specified in clauses (i) and (ii) above, shall occur automatically
without the giving of any such notice, and (iii) may exercise any other rights
or remedies available under the Credit Documents, at law or in equity. As long
as any Letters of Credit remain outstanding, any amounts described in clause
(ii) above with respect to Letters of Credit, when received by the Agent, shall
be deposited in a cash collateral account as cash collateral for the obligation
of the Borrower under Article II of this Agreement in the event of any drawing
under a Letter of Credit, and upon drawing under any outstanding Letter of
Credit in respect of which the Agent has deposited in the cash collateral
account any amounts described in clause (ii) above, the Agent
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shall pay such amounts to itself to reimburse itself for the amount of such
drawing as provided in Section 2.07 hereof.
ARTICLE IX.
THE AGENT
SECTION 9.01. APPOINTMENT OF AGENT. Each Lender hereby
designates SunTrust as Agent to administer all matters concerning the Loans and
to act as herein specified. Each Lender hereby irrevocably authorizes, and
each holder of any Note by the acceptance of a Note shall be deemed irrevocably
to authorize, the Agent to take such actions on its behalf under the provisions
of this Agreement, the other Credit Documents, and all other instruments and
agreements referred to herein or therein, and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof and such other powers
as are reasonably incidental thereto. The Agent may perform any of its duties
hereunder by or through their agents or employees.
SECTION 9.02. AUTHORIZATION OF AGENT WITH RESPECT TO THE
SECURITY DOCUMENTS. (a) Each Lender hereby authorizes the Agent to enter into
each of the Security Documents substantially in the form attached hereto, and
to take all action contemplated thereby. All rights and remedies under the
Security Documents may be exercised by the Agent for the benefit of the Agent
and the Lenders and the other beneficiaries thereof upon the terms thereof.
The Lenders further agree that the Agent may assign its rights and obligations
under any of the Security Documents to any affiliate of the Agent or to any
trustee, if necessary or appropriate under applicable law, which assignee in
each such case shall (subject to compliance with any requirements of applicable
law governing the assignment of such Security Documents) be entitled to all the
rights of the Agent under and with respect to the applicable Security Document.
(b) In each circumstance where, under any provision of
any Security Document, the Agent shall have the right to grant or withhold any
consent, exercise any remedy, make any determination or direct any action by
the Agent under such Security Document, the Agent shall act in respect of such
consent, exercise of remedies, determination or action, as the case may be,
with the consent of and at the direction of the Required Lenders; provided,
however, that no such consent of the Required Lenders shall be required with
respect to any consent, determination or other matter that is, in the Agent's
judgment, ministerial or administrative in nature. In each circumstance where
any consent of or direction from the Required Lenders is required, the Agent
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shall send to the Lenders a notice setting forth a description in reasonable
detail of the matter as to which consent or direction is requested and the
Agent's proposed course of action with respect thereto.
SECTION 9.03. NATURE OF DUTIES OF AGENT. The Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Credit Documents. None of the Agent nor any of its
respective officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The
duties of the Agent shall be ministerial and administrative in nature; the
Agent shall not have by reason of this Agreement a fiduciary relationship in
respect of any Lender; and nothing in this Agreement, express or implied, is
intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or the other Credit Documents except
as expressly set forth herein. In carrying out its duties as expressly set
forth in this Agreement and the other Credit Documents, the Agent shall act in
a manner customary to its administration of credit facilities of a similar size
and nature provided to borrowers of similar standing for its own account.
SECTION 9.04. LACK OF RELIANCE ON THE AGENT.
(a) Independently and without reliance upon the Agent,
each Lender, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of the Credit Parties in connection with the taking or not taking of
any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of the Credit Parties, and, except as expressly provided in
this Agreement, the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for
any recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection herewith
or for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes, the Note
Assignment or any other documents contemplated hereby or thereby, or the
financial condition of the Credit Parties, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Notes, the Note Assignment or the
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other documents contemplated hereby or thereby, or the financial condition of
the Credit Parties, or the existence or possible existence of any Default or
Event of Default.
SECTION 9.05. CERTAIN RIGHTS OF THE AGENT. If the Agent
shall request instructions from the Required Lenders with respect to any action
or actions (including the failure to act) in connection with this Agreement,
the Agent shall be entitled to refrain from such act or taking such act, unless
and until the Agent shall have received instructions from the Required Lenders;
and the Agent shall not incur liability in any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders.
SECTION 9.06. RELIANCE BY AGENT. The Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cable gram, radiogram, order or other documentary, teletransmission or
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person. The Agent may consult with legal
counsel (including counsel for any Credit Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 9.07. INDEMNIFICATION OF AGENT. To the extent the
Agent is not reimbursed and indemnified by the Credit Parties, each Lender will
reimburse and indemnify the Agent, ratably according to the respective amounts
of the Loans outstanding under all Facilities (or if no amounts are
outstanding, ratably in accordance with the Total Commitments), in either case,
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including counsel fees
and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against the Agent in performing its
duties hereunder, in any way relating to or arising out of this Agreement or
the other Credit Documents; provided that no Lender shall be liable to the
Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct.
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SECTION 9.08. THE AGENT IN ITS INDIVIDUAL CAPACITY. With
respect to its obligation to lend under this Agreement, the Loans made by it
and the Notes issued to it, the Agent shall have the same rights and powers
hereunder as any other Lender or holder of a Note and may exercise the same as
though it were not performing the duties specified herein; and the terms
"Lenders", "Required Lenders", "holders of Notes", or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of banking, trust, financial advisory or other
business with the Consolidated Companies or any affiliate of the Consolidated
Companies as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Consolidated Companies for
services in connection with this Agreement and otherwise without having to
account for the same to the Lenders.
SECTION 9.09. HOLDERS OF NOTES. The Agent may deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any Person who, at
the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in exchange
therefor.
SECTION 9.10. SUCCESSOR AGENT.
(a) The Agent may resign at any time by giving written
notice thereof to the Lenders and Borrower and may be removed at any time with
or without cause by the Required Lenders; provided, however, the Agent may not
resign or be removed until a successor Agent has been appointed and shall have
accepted such appointment. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Agent subject to Borrower's
prior written approval. If no successor Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent subject to Borrower's prior written
approval, which shall be a bank which maintains an office in the United States,
or a commercial bank organized under the laws of the United States of America
or any State thereof, or any Affiliate of such bank, having a combined capital
and surplus of at least $100,000,000. In the event that the Agent is no longer
a Lender hereunder, the Agent shall promptly resign as Agent.
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(b) Upon the acceptance of any appointment as the Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article X shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement.
ARTICLE X.
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, telecopy or similar teletransmission or writing) and shall be given to
such party at its address or applicable teletransmission number set forth on
the signature pages hereof, or such other address or applicable
teletransmission number as such party may hereafter specify by notice to the
Agent and Borrower. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section and the appropriate answerback is received,
(ii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid, (iii) if given
by telecopy, when such telecopy is transmitted to the telecopy number specified
in this Section and the appropriate confirmation is received, or (iv) if given
by any other means (including, without limitation, by air courier), when
delivered or received at the address specified in this Section; provided that
notices to the Agent shall not be effective until received.
SECTION 10.02. AMENDMENTS, ETC. No amendment or waiver of
any provision of this Agreement or the other Credit Documents, nor consent to
any departure by any Credit Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no amendment,
waiver or consent shall, unless in writing and signed by all the Lenders do any
of the following: (i) waive any of the conditions specified in Section 4.01 or
4.02, (ii) increase the Commitments or other contractual obligations to
Borrower under this Agreement, (iii) reduce the principal of, or interest on,
the Notes or any fees hereunder, (iv) postpone any date fixed for the payment
in respect of principal of, or interest on, the Notes or any fees hereunder,
(v) change the percentage of the Commitments or of the
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aggregate unpaid principal amount of the Notes, or the number or identity of
Lenders which shall be required for the Lenders or any of them to take any
action hereunder, (vi) agree to release any Credit Party from its obligations
under any Intercompany Note, (vii) modify the definition of "Required
Lenders," or (viii) modify this Section 10.02. Notwithstanding the foregoing,
no amendment, waiver or consent shall, unless in writing and signed by the
Agent in addition to the Lenders required hereinabove to take such action,
affect the rights or duties of the Agent under this Agreement or under any
other Credit Document.
SECTION 10.03. NO WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of the Agent, any Lender or any holder of a Note in
exercising any right or remedy hereunder or under any other Credit Document,
and no course of dealing between any Credit Party and the Agent, any Lender or
the holder of any Note shall operate as a waiver thereof, nor shall any single
or partial exercise of any right or remedy hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right or remedy hereunder or thereunder. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which the Agent, any Lender or the holder of any Note would otherwise have. No
notice to or demand on any Credit Party not required hereunder or under any
other Credit Document in any case shall entitle any Credit Party to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent, the Lenders or the holder of any Note to any
other or further action in any circumstances without notice or demand.
SECTION 10.04. PAYMENT OF EXPENSES, ETC. Borrower shall:
(i) whether or not the transactions hereby contemplated
are consummated, pay all reasonable, out-of-pocket costs and expenses
of the Agent in the administration (both before and after the
execution hereof and including reasonable expenses actually incurred
relating to advice of counsel as to the rights and duties of the Agent
and the Lenders with respect thereto) of, and in connection with the
preparation, execution and delivery of, preservation of rights under,
enforcement of, and, after a Default or Event of Default, refinancing,
renegotiation or restructuring of, this Agreement and the other Credit
Documents and the documents and instruments referred to therein, and
any amendment, waiver or consent relating thereto (including, without
limitation, the reasonable fees actually incurred and disbursements of
counsel for the Agent), and in the case of enforcement of this
Agreement or any Credit Document after an Event of Default, all such
reasonable, out-of-pocket costs
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and expenses (including, without limitation, the reasonable fees
actually incurred and reasonable disbursements and charges of
counsel), for any of the Lenders;
(ii) subject, in the case of certain Taxes, to the
applicable provisions of Section 3.07(b), pay and hold each of the
Lenders harmless from and against any and all present and future
stamp, documentary, and other similar Taxes with respect to this
Agreement, the Notes and any other Credit Documents, any collateral
described therein, or any payments due thereunder, and save each
Lender harmless from and against any and all liabilities with respect
to or resulting from any delay or omission to pay such Taxes; and
(iii) indemnify the Agent and each Lender, and their
respective officers, directors, employees, representatives and agents
from, and hold each of them harmless against, any and all costs,
losses, liabilities, claims, damages or expenses incurred by any of
them (whether or not any of them is designated a party thereto) (an
"Indemnitee") arising out of or by reason of any investigation,
litigation or other proceeding related to any actual or proposed use
of the proceeds of any of the Loans or any Credit Party's entering
into and performing of the Agreement, the Notes, or the other Credit
Documents, including, without limitation, the reasonable fees actually
incurred and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding; provided, however,
Borrower shall not be obligated to indemnify any Indemnitee for any of
the foregoing arising out of such Indemnitee's gross negligence or
willful misconduct;
(iv) without limiting the indemnities set forth in
subsection (iii) above, indemnify each Indemnitee for any and all
reasonable expenses and costs (including without limitation, remedial,
removal, response, abatement, cleanup, investigative, closure and
monitoring costs), losses, claims (including claims for contribution
or indemnity and including the cost of investigating or defending any
claim and whether or not such claim is ultimately defeated, and
whether such claim arose before, during or after any Credit Party's
ownership, operation, possession or control of its business, property
or facilities or before, on or after the date hereof, and including
also any amounts paid incidental to any compromise or settlement by
the Indemnitee or Indemnitees to the holders of any such claim),
lawsuits, liabilities, obligations, actions, judgments, suits,
disbursements, encumbrances, liens, damages (including without
limitation damages for contamination or destruction of natural
resources), penalties and fines of any kind or nature
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whatsoever (including without limitation in all cases the reasonable
fees actually incurred, other charges and disbursements of counsel in
connection therewith) incurred, suffered or sustained by that
Indemnitee based upon, arising under or relating to Environmental Laws
based on, arising out of or relating to in whole or in part, the
existence or exercise of any rights or remedies by any Indemnitee
under this Agreement, any other Credit Document or any related
documents.
If and to the extent that the obligations of Borrower under this Section 10.04
are unenforceable for any reason, Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
SECTION 10.05. RIGHT OF SETOFF. In addition to and not in
limitation of all rights of offset that any Lender or other holder of a Note
may have under applicable law, each Lender or other holder of a Note shall,
upon the occurrence of any Event of Default and whether or not such Lender or
such holder has made any demand or any Credit Party's obligations have matured,
have the right to appropriate and apply to the payment of any Credit Party's
obligations hereunder and under the other Credit Documents, all deposits of any
Credit Party (general or special, time or demand, provisional or final) then or
thereafter held by and other indebtedness or property then or thereafter owing
by such Lender or other holder to any Credit Party, whether or not related to
this Agreement or any transaction hereunder. Each Lender agrees to give the
Borrower prompt notice after the exercise by such Lender of the rights
described in this Section 10.05, but the failure of such Lender to give such
notice shall not affect the validity of the exercise of any such right. Any
amounts received by the Lenders with respect to the exercise of any such right
of offset shall be applied as set forth in Section 3.15 unless such offset was
against funds held in a special account expressly pledged to secure other
obligations of the Borrower to such Lender.
SECTION 10.06. BENEFIT OF AGREEMENT; ASSIGNMENTS AND
PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto, provided that Borrower may not assign or transfer any of its
interest hereunder without the prior written consent of the Lenders.
-79-
<PAGE> 86
(b) Any Lender may make, carry or transfer Loans at, to
or for the account of, any of its branch offices or the office of an Affiliate
of such Lender.
(c) Each Lender may assign all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of any of its Commitments and the Loans and Letter of Credit
Obligations at the time owing to it and the Notes held by it) to any financial
institution; provided, however, that (i) the Agent and Borrower must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed) unless such assignment is to an Affiliate of
the assigning Lender, (ii) the amount of the Commitments of the assigning
Lender subject to each assignment (determined as of the date the assignment and
acceptance with respect to such assignment is delivered to the Agent) shall not
be less than an amount equal to $10,000,000 or greater integral multiplies
thereof, and (iii) the parties to each such assignment shall execute and
deliver to the Agent an Assignment and Acceptance, together with the Note or
Notes subject to such assignment and, unless such assignment is to an Affiliate
of such Lender, a processing and recordation fee of $3,000. Borrower shall not
be responsible for such processing and recordation fee or any costs or expenses
incurred by any Lender or the Agent in connection with such assignment. From
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, the assignee thereunder shall be a party hereto and to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement. Notwithstanding the foregoing,
the assigning Lender must retain after the consummation of such Assignment and
Acceptance, a minimum aggregate amount of Commitments of $5,000,000 or such
lesser amount shown on the signature page of such Lender; provided, however, no
such minimum amount shall be required with respect to any such assignment made
at any time there exists an Event of Default hereunder. Within five (5)
Business Days after receipt of the notice and the Assignment and Acceptance,
Borrower, at its own expense, shall execute and deliver to the Agent, in
exchange for the surrendered Note or Notes, a new Note or Notes to the order of
such assignee in a principal amount equal to the applicable Commitments assumed
by it pursuant to such Assignment and Acceptance and new Note or Notes to the
assigning Lender in the amount of its retained Commitment or Commitments. Such
new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated
the date of the surrendered Note or Notes which they replace, and shall
otherwise be in substantially the form attached hereto.
-80-
<PAGE> 87
(d) Each Lender may, without the consent of Borrower or
the Agent, sell participations to one or more banks or other entities in all or
a portion of its rights and obligations under this Agreement (including all or
a portion of its Revolving Credit Commitments and the Loans owing to it and the
Notes held by it), provided, however, that (i) no Lender may sell a
participation in its aggregate Commitments (after giving effect to any
permitted assignment hereof) in an amount in excess of fifty percent (50%) of
such aggregate Commitments, provided, however, sales of participations to an
Affiliate of such Lender shall not be included in such calculation; provided,
however, no such maximum amount shall be applicable to any such participation
sold at any time there exists an Event of Default hereunder, (ii) such Lender's
obligations under this Agreement shall remain unchanged, (iii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, and (iv) the participating bank or other entity shall not
be entitled to the benefit (except through its selling Lender) of the cost
protection provisions contained in Article IV of this Agreement, and (v)
Borrower and the Agent and other Lenders shall continue to deal solely and
directly with each Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents, and such
Lender shall retain the sole right to enforce the obligations of Borrower
relating to the Loans and to approve any amendment, modification or waiver of
any provisions of this Agreement.
(e) Any Lender or participant may, in connection with the
assignment or participation or proposed assignment or participation, pursuant
to this Section, disclose to the assignee or participant or proposed assignee
or participant any information relating to Borrower or the other Consolidated
Companies furnished to such Lender by or on behalf of Borrower or any other
Consolidated Company. With respect to any disclosure of confidential,
non-public, proprietary information, such proposed assignee or participant
shall agree to use the information only for the purpose of making any necessary
credit judgments with respect to this credit facility and not to use the
information in any manner prohibited by any law, including without limitation,
the securities laws of the United States. The proposed participant or assignee
shall agree not to disclose any of such information except (i) to directors,
employees, auditors or counsel to whom it is necessary to show such
information, each of whom shall be informed of the confidential nature of the
information, (ii) in any statement or testimony pursuant to a subpoena or order
by any court, governmental body or other agency asserting jurisdiction over
such entity, or as otherwise required by law (provided prior notice is given to
Borrower and the Agent unless otherwise prohibited by the subpoena, order or
law), and (iii) upon the request or demand of any regulatory agency or
-81-
<PAGE> 88
authority with proper jurisdiction. The proposed participant or assignee shall
further agree to return all documents or other written material and copies
thereof received from any Lender, the Agent or Borrower relating to such
confidential information unless otherwise properly disposed of by such entity.
(f) Any Lender may at any time assign all or any portion
of its rights in this Agreement and the Notes issued to it to a Federal Reserve
Bank; provided that no such assignment shall release the Lender from any of its
obligations hereunder.
(g) If any Lender requests compensation pursuant to
Section 3.07(b), Section 3.10(a) or Section 3.16, or the obligations of any
Lender to make Eurodollar Advances, or to continue or to convert Base Rate
Advances into, Eurodollar Advances, shall be suspended pursuant to Section
3.09(b) or Section 3.10(b), then and in such event, upon request from the
Borrower delivered to such Lender and the Agent, such Lender shall assign, in
accordance with the provisions of Section 10.06(c), all of its rights and
obligations under this Agreement and the other Credit Documents to another
Lender or other financial institution selected by the Borrower and consented to
by the Agent in consideration for the payment by such assignee to the Lender of
the principal of and interest on the outstanding Loans accrued to the date of
such assignment, together with any and all other amounts owing to such Lender
under any provisions of this Agreement or the other Credit Documents accrued to
the date of such assignment, and the assumption of such Lender's Revolving
Credit Commitment and Letter of Credit Exposure hereunder.
SECTION 10.07. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF) OF THE STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE
SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE STATE OF
GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF
GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE
TRIAL BY JURY, AND BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE
-82-
<PAGE> 89
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(c) Nothing herein shall affect the right of the Agent,
any Lender, any holder of a Note or any Credit Party to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against Borrower in any other jurisdiction.
SECTION 10.08. INDEPENDENT NATURE OF LENDERS' RIGHTS. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights pursuant to this Agreement and its Notes, and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
SECTION 10.10. EFFECTIVENESS; SURVIVAL.
(a) This Agreement shall become effective on the date
(the "Effective Date") on which all of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Agent pursuant to Section 10.01 or, in the case of the Lenders,
shall have given to the Agent written or telex notice (actually received) that
the same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 3.07(b),
3.10, 3.12, 3.13, 3.16 and 10.04 hereof shall survive the payment in full of
the Notes after the Maturity Date. All representations and warranties made
herein, in the certificates, reports, notices, and other documents delivered
pursuant to this Agreement shall survive the execution and delivery of this
Agreement, the other Credit Documents, and such other agreements and documents,
the making of the Loans hereunder, and the execution and delivery of the Notes.
SECTION 10.11. SEVERABILITY. In case any provision in or
obligation under this Agreement or the other Credit Documents shall be invalid,
illegal or unenforceable, in whole or in part, in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or
-83-
<PAGE> 90
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
SECTION 10.12. INDEPENDENCE OF COVENANTS. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation of, another
covenant, shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.
SECTION 10.13. CHANGE IN ACCOUNTING PRINCIPLES, FISCAL YEAR
OR TAX LAWS. If (i) any preparation of the financial statements referred to in
Section 6.07 hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting
Standards Board or the American Institute of Certified Public Accounts (or
successors thereto or agencies with similar functions) result in a material
change in the method of calculation of financial covenants, standards or terms
found in this Agreement, (ii) there is any change in Borrower's fiscal quarter
or fiscal year which is consented to by the Required Lenders, or (iii) there is
a material change in federal tax laws which materially affects any of the
Consolidated Companies' ability to comply with the financial covenants,
standards or terms found in this Agreement, Borrower and the Required Lenders
agree to enter into negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that the criteria for
evaluating any of the Consolidated Companies' financial condition shall be the
same after such changes as if such changes had not been made. Unless and until
such provisions have been so amended, the provisions of this Agreement shall
govern.
SECTION 10.14. HEADINGS DESCRIPTIVE; ENTIRE AGREEMENT. The
headings of the several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement. This Agreement, the other
Credit Documents, and the agreements and documents required to be delivered
pursuant to the terms of this Agreement constitute the entire agreement among
the parties hereto and thereto regarding the subject matters hereof and thereof
and supersede all prior agreements, representations and understandings related
to such subject matters.
-84-
<PAGE> 91
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in Atlanta, Georgia, by their duly
authorized officers as of the day and year first above written.
<TABLE>
<S> <C>
Address for Notices: FUQUA ENTERPRISES, INC.
- -------------------
One Atlantic Center, Suite 5000
1201 West Peachtree Street, N.W.
Atlanta, Georgia 30309 By: /s/ Lawrence P. Klamon
Attn: Chief Financial Officer ---------------------------------------
Telecopy No.: (404) 815-4529 Lawrence P. Klamon
President and Chief
Executive Officer
Attest: /s/ Mildred H. Hutcheson
-----------------------------------
Mildred H. Hutcheson
Secretary
[CORPORATE SEAL]
</TABLE>
-85-
<PAGE> 92
<TABLE>
<S> <C>
Address for Notices: SUNTRUST BANK, ATLANTA
- ------------------- AS AGENT
25 Park Place, N.E.
23rd Floor
Atlanta, Georgia 30303 By: /s/ Willem-Jan O. Hattink
Attention: Sheila Corcoran ---------------------------------
Title: First Vice President
Telecopy No.: 404/588-8833
By: /s/ Sheila Corcoran
---------------------------------
Title: Corporate Banking Officer
Payment Office:
- --------------
25 Park Place, N.E.
23rd Floor
Atlanta, Georgia 30303
</TABLE>
-86-
<PAGE> 93
<TABLE>
<S> <C>
Address for Notices: SUNTRUST BANK, ATLANTA
- -------------------
25 Park Place, N.E.
23rd Floor
Atlanta, Georgia 30303 By: /s/ Willem-Jan O. Hattink
Attention: Sheila Corcoran ---------------------------------
Title: First Vice President
By: /s/ Sheila Corcoran
---------------------------------
Title: Corporate Banking Officer
Telecopy No.: (404) 588-8833
REVOLVING CREDIT COMMITMENT: $25,000,000.00
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 41.667%
</TABLE>
-87-
<PAGE> 94
<TABLE>
<S> <C>
Address for Notices: WACHOVIA BANK OF GEORGIA, N.A.
- -------------------
191 Peachtree Street
29th Floor
Mail Code 3940 By: /s/ Karen H. McClain
Atlanta, Georgia 30303 ---------------------------------
Attention: Karen H. McClain Title: Vice President
Telecopy No.: (404) 332-5016
REVOLVING CREDIT COMMITMENT: $20,000,000.00
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 33.333%
</TABLE>
-88-
<PAGE> 95
<TABLE>
<S> <C>
Address for Notices: FLEET BANK OF MAINE
- -------------------
511 Congress Street
Portland, ME 04104 By: /s/ Raymond T. Kelley, Jr.
Attention: Chip Kelley ---------------------------------------
Title: Vice President
Telecopy No.: (207) 791-2323
REVOLVING CREDIT COMMITMENT: $15,000,000.00
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 25.00%
</TABLE>
-89-
<PAGE> 96
SCHEDULE 1.01
INTERCOMPANY LOANS
Borrower advances funds to its leather operations (Irving Tanning
Company ("Irving"), Kroy Tanning Company, Incorporated and Seagrave Leather
Corporation) to support their working capital needs. Such advances at
September 30, 1995 were $9,000,000. Interest is charged to the leather
operations at LIBOR + 125 b.p. Pursuant to an Intercompany Note to be executed
by Irving in favor of Borrower, Borrower intends to advance the proceeds of the
initial borrowing under the Credit Agreement to Irving who will in turn use the
proceeds to pay in full the Indebtedness described on Schedule 5.18. Such
advances have not previously been evidenced by formal note agreement and,
except as noted, are not expected to be affected by the Closing.
<PAGE> 97
SCHEDULE 5.01
ORGANIZATION AND OWNERSHIP OF SUBSIDIARIES
The jurisdiction of incorporation and the ownership of all issued and
outstanding capital stock for each Subsidiary of Borrower are as follows:
<TABLE>
<CAPTION>
Jurisdiction of Date of Percentage of
Name of Subsidiary Incorporation Incorporation Ownership
---------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
American Southern Insurance Company Georgia 12-14-36 100%
American Safety Insurance Company Georgia 1-14-88 100%
Automated Systems of Georgia, Inc. Georgia 9-12-89 100%
Automobile Safety Management, Inc. Delaware 9-17-79 100%
Premier Adjusting & Claims Service, Inc. Georgia 2-3-95 100%
Hancock-Ellsworth Tanners, Inc. Delaware 2-3-70 100%
Irving Tanning Company Delaware 3-30-62 100%
Irving Leather Company Maine 3-16-78 100%
Vista Leather International Corp. Barbados 7-18-94 100%
Kroy Tanning Company, Incorporated Delaware 2-2-65 100%
Collagen International Products Corporation New York 6-30-70 100%
Seagrave Leather Corporation Maine 10-1-79 100%
Wilton Tanning Company Maine 6-29-59 100%
</TABLE>
<PAGE> 98
SCHEDULE 5.05
CERTAIN PENDING AND THREATENED LITIGATION
Hall v. Vista Resources, Inc., Civil Action No. DKC 91-3007, U.S.
District Court, Baltimore, Maryland. In September 1991, an action was
instituted against Borrower and an unrelated third party, alleging product
liability, negligence and breach of warranty. The plaintiff seeks damages for
each of the allegations of up to $10,000,000. The plaintiff claims, among
other things, that Maxim Motors, a former division of Borrower which was sold
in 1975, had failed to design certain safety features in a fire truck
manufactured and sold by Maxim Motors in 1972. Subsequently, the plaintiff
dropped the action against the unrelated third party. Borrower, which is
insured for up to $8,000,000 and is being defended by its insurance carrier,
denies the allegations in this action.
<PAGE> 99
SCHEDULE 5.08(a)
ENVIRONMENTAL COMPLIANCE
None.
<PAGE> 100
SCHEDULE 5.08(b)
ENVIRONMENTAL NOTICES
None.
<PAGE> 101
SCHEDULE 5.08(c)
ENVIRONMENTAL PERMITS
None.
<PAGE> 102
SCHEDULE 5.11
BURDENSOME RESTRICTIONS
None.
<PAGE> 103
SCHEDULE 5.12
TAX FILINGS AND PAYMENTS
Since 1994, American Southern Insurance Company, a subsidiary of
Borrower ("American Southern"), has paid premium taxes in Florida in accordance
with the methodology advocated by the Florida Department of Revenue (the
"Department") in the Florida Premium Tax Litigation described below (the
"Florida Methodology"). For the period from the acquisition of American
Southern through 1993, American Southern did not pay premium taxes in Florida
in accordance with the Florida Methodology. Consequently, to the extent that
the Department prevails in the Florida Premium Tax Litigation and American
Southern is subsequently audited, American Southern estimates that its possible
premium tax exposure in the 1991 through 1993 period is approximately $228,000
plus interest and penalties of approximately $70,000. The full amount of
approximately $298,000 is fully reserved for in American Southern's GAAP
financial statements. With respect to the portion of the 1991 tax year during
which InterRedec Southern Company, Inc. ("InterRedec") owned American Southern,
American Southern estimates that its potential premium tax liability (for which
Borrower would seek indemnification) is approximately $122,500 with related
penalties and interest of approximately $52,700 and $12,250, respectively.
These amounts are not reserved for in American Southern's GAAP financial
statements.
American Southern has a lawsuit (Civil Action No. 95-2588) pending
with the Department in Florida (the "Florida Premium Tax Litigation"). The
issue revolves around the appropriate retaliatory premium tax to be paid by
American Southern to Florida. The Department is alleging that the Georgia tax
rate is 2.25% and the local premium tax rate is 2.5% for a total rate of 4.75%.
The Florida tax rate is 2%. The Department is effectively saying that the
retaliatory rate should be 2.75%. American Southern's major argument is that
in Georgia there is an investment offset available to all companies that can
reduce the effective Georgia rate from 2.25% to .5% and American Southern has
always qualified for this reduction. With a Georgia rate of .5% and a local
premium tax of 2.5%, the total Georgia tax is 3% compared to Florida's 2% for a
retaliatory rate of 1%.
The amount of tax in dispute is approximately $839,999 for the years
1985 through 1990. Penalties and interest with respect to the disputed tax
amount are approximately $748,000 and $86,700, respectively. If the suit is
lost, Borrower intends to seek indemnification from InterRedec, the owner of
American Southern during the period from 1985 to 1990.
In 1993, this suit was tried and American Southern won. In 1994, the
Florida legislature passed a law which was intended to retroactively change the
way the retaliatory tax was calculated. The Department then asked the trial
judge to rehear the case in light of the new Florida law. The case was heard
in November 1994 and in July 1995 the judge ruled for the Department. The case
is now under appeal.
<PAGE> 104
SCHEDULE 5.15
EMPLOYEE BENEFIT MATTERS
The following is a list of all of the Plans of Borrower, none of which (other
than the Plan described in number 4) is subject to Title IV of ERISA:
1. Vista Leather Group Savings and Retirement Plan (the "Plan").
Borrower's officers and employees participate with Irving Tanning
Company and Seagraves Leather Corporation in a combined qualified
401(k) and 401(a) plan covering all employees of the three companies.
The plan was established under the Group Prototype Profit Sharing and
401(k) Plan No. 3 of State Mutual Life Assurance Company of America.
2. Employers Health Insurance, Emphesys Financial Group, Inc./Group No.
6022397. Borrower's officers and employees participate with officers
and employees of Fuqua Capital Corporation and other Fuqua company
employees in this plan which provides medical, dental and life
insurance coverages for participants at the expense of the employers.
3. UNUM Life Insurance Company of America. Borrower's corporate office
officers and employees participate with officers and employees of
Fuqua Capital Corporation and other Fuqua Companies in this plan which
provides long-term disability coverage.
4. American Southern Insurance Company Retirement Plan. On behalf of
employees who are 21 years of age or older and have been employed for
at least one year, American Southern contributes to an employer funded
defined benefit plan. Normal retirement age under the plan is age 65.
5. Prudential Health Care Plan of Georgia, Inc./Group Agreement No.
57585. American Southern provides medical and life insurance coverage
for its regular, full-time employees and their dependents, and
accidental death and dismemberment insurance for these same employees.
6. The Guardian Life Insurance Company of America/Policy No. 248010-GN.
American Southern provides dental insurance for its regular, full-time
employees and their dependents after completion of one month of
continuous employment.
7. Continental Casualty Company/Policy No. SR-83087420. American
Southern provides long-term disability insurance to regular, full-time
employees after completion of one month of continuous employment. In
conjunction with this insurance, all employees are provided access to
an Employee Assistance Program (EAP) operated by Bensinger, DuPont &
Associates for assessment and referral.
8. Continental Casualty Company/Policy No. SR-83074901. American
Southern provides travel accident insurance for all active, full-time
employees.
<PAGE> 105
SCHEDULE 5.16
PATENT, TRADEMARK, LICENSE AND
OTHER INTELLECTUAL PROPERTY MATTERS
None.
<PAGE> 106
SCHEDULE 5.17
OWNERSHIP OF PROPERTIES
None.
<PAGE> 107
SCHEDULE 5.18
EXISTING INDEBTEDNESS
<TABLE>
<CAPTION>
Description of Indebtedness Estimated Principal, Interest and Expenses Due
--------------------------- ----------------------------------------------
At Closing
-----------
<S> <C> <C>
- Revolving Credit and Term Loan
Agreement between Fleet Bank of Maine
and Irving Tanning Company (together
with all amendments and addenda
thereto) $12,084,939.86
- Demand Promissory Notes between Shawmut
Bank, N.A. and Irving Tanning Company,
dated April 24, 1992 and September 15,
1994 and Term Loan Note between Shawmut
Bank, N.A. and Irving Tanning Company,
dated September 13, 1993. $ 3,685,941.57
</TABLE>
<PAGE> 108
SCHEDULE 5.20
LABOR AND EMPLOYMENT MATTERS
None.
<PAGE> 109
SCHEDULE 5.21
DIVIDEND RESTRICTIONS
Payment of dividends by American Southern to Borrower unless approved
by the Georgia Insurance Commissioner, is limited to the greater of 10% of
statutory net worth or net income, excluding capital gains, of the preceding
year.
<PAGE> 110
SCHEDULE 6.08
FINANCIAL COVENANT CALCULATIONS - SECOND QUARTER 1995
<TABLE>
<CAPTION>
Debt to Capital Ratio ($ amounts in thousands) June 30, 1995
-------------
<S> <C> <C> <C>
a. Funded Debt (including the current a. $33,486
portion thereof of Consolidated
Companies)
b. Funded Debt of Other Persons Guaranteed b. 0
by a Consolidated Company
c. Required Stock Redemptions in next 12 c. 0
months
d. Debt outstanding pursuant to SunTrust d. 0
Line of Credit
e. Adjusted Funded Debt (a+b+c+d) e. $33,486
f. Net Worth of Borrower less Treasury f. $70,438
Stock
g. Total Capitalization (e+f) g. $103,924
h. Leverage Ratio (e/g) h. .322 : 1.00
i. Maximum Leverage Ratio i. .6 : 1.00
j. Default Indicated? j. No
</TABLE>
<TABLE>
<CAPTION>
Interest Coverage Ratio 1994 1995 Total
---------------------- ---------------------- --------------
Preceding 4
Q3 Q4 Q1 Q2 Quarters
-------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
a. Consolidated EBIT a. $3858 $4707 $2562 $3337 $14,464
b. Consolidated Interest b. $ 417 $ 481 $ 547 $ 688 $ 2,133
Expense
c. Ratio of a to b c. 6.78 : 1.00
d. Minimum Ratio d. 2.0 : 1.00
e. Default Indicated? e. No
</TABLE>
<TABLE>
<CAPTION>
Cash Flow Coverage Ratio 1994 1995 Total
---------------------- ---------------------- --------------
Preceding 4
Q3 Q4 Q1 Q2 Quarters
-------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
a. Consolidated EBIT a. $3858 $4707 $2562 $3337 $14,464
b. Depreciation and b. $ 483 $ 447 $ 528 $ 565 $ 2,023
Amortization
c. Consolidated EBITDA c. $16,487
(a+b)
d. Consolidate Funded d. $33,486
Debt
e. Ratio of d/c e. 2.03 : 1.00
f. Maximum Ratio f. 3.5 : 1.00
g. Default Maximum g. No
Indicated?
</TABLE>
<PAGE> 111
SCHEDULE 7.01
OUTSTANDING INDEBTEDNESS
<TABLE>
<CAPTION>
Estimated Principal Amount
---------------------------
Outstanding September 30, 1995
------------------------------
<S> <C> <C>
- Non-negotiable Promissory Note, dated
October 11, 1991, between Borrower and
InterRedec Southern Company, Inc.,
which note has been assigned by
InterRedec Southern Company, Inc. to $11,282,000
the Board of Governors of the Federal
Reserve System.
- Industrial Revenue Bonds and Related
Agreements between Town of Hartland,
Maine, and Irving Tanning Company
- Maturing October 1, 2004 $ 1,159,000
- Maturing November 1, 1997 $ 185,250
- Maturing March 1, 2001 $ 256,500
- Equipment financing obligation to
Poletto due in installments through
July 4, 1996 $ 47,664
- Agreement between the Town of Hartland,
Maine, and Irving Tanning Company,
dated September 26, 1994, related to
General Obligation Bonds
$1,370,000
- Indebtedness described on Schedule
1.01.
</TABLE>
<PAGE> 112
SCHEDULE 7.02
EXISTING LIENS
<TABLE>
<CAPTION>
Secured Party Security
------------- --------
<S> <C>
InterRedec Southern Company, Inc. 49% of the common stock of American Southern
Insurance Company (stock pledge to be released
upon delivery of the letter of credit referred
to in Section 7.01(c) of the Credit Agreement).
Poletto Equipment
Town of Hartland, Maine and holders of Water treatment facilities and waste disposal
industrial revenue and general obligation bonds, facilities
existing lien holders and related security of
bonds when such entity is acquired by Borrower
</TABLE>
<PAGE> 113
SCHEDULE 7.05
EXISTING INVESTMENTS
See attached Exhibits A and B for the statements at September 30, 1995
for Wachovia Bank and Daily Tax Free Income Fund, Inc., respectively, for
investments held by Borrower. These investments are held in the name of
Borrower and are distinct and different from investments held by American
Southern at September 30, 1995.
<PAGE> 114
SCHEDULE 7.05
EXHIBIT A
<PAGE> 115
WACHOVIA CAPITAL MANAGEMENT ACCOUNT NUMBER:
P.O. BOX 4148, MC 1418
ATLANTA, GA 30302
ANNE EDWARDS
VISTA RESOURCES, INC
1201 W PEACHTREE ST, NW
SUITE 5000
ATLANTA, GA 30309
WACHOVIA
<PAGE> 116
YOUR ACCOUNT MANAGER IS:
BILL WHITAKER PAGE: 1
VICE PRESIDENT
404-332-1169 ACCOUNT NUMBER:
________________________________________________________________________________
WACHOVIA BANK OF GEORGIA, N.A.
AS CUSTODIAN FOR
VISTA RESOURCES, INC
STATEMENT
SEPTEMBER 01, 1995 THROUGH SEPTEMBER 29, 1995
WACHOVIA
<PAGE> 117
PAGE: 2
SUMMARY OF ACCOUNT
VISTA RESOURCES INC 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
ESTIMATED CURRENT
TOTAL TAX MARKET ANNUAL YIELD
DESCRIPTION OF ASSETS COST VALUE INCOME (%)
--------------------- --------- ------ --------- -------
<S> <C> <C> <C> <C>
COMMON STOCKS $ 537.55 $ 910.83 $ 17 1.9
PREFERRED STOCKS 4,381,223.63 4,404,303.13 279,761 6.4
BONDS 3,988,750.00 4,016,240.00 250,000 6.2
SHORT-TERM RESERVES AND CASH 805,494.07 805,494.07 44,694 5.5
------------- ------------- -------- ---
TOTAL VALUE OF ACCOUNT $9,176,005.25 $9,226,948.03 $574,472 6.2
============= ============= ======== ===
</TABLE>
THE VALUES USED IN THIS REPORT ARE AS OF THE CLOSE OF BUSINESS ON THE REPORT
DATE OR THE MOST REPRESENTATIVE VALUE AVAILABLE ON THAT DATE.
WACHOVIA
<PAGE> 118
PAGE: 3
LIST OF ASSETS
VISTA RESOURCES INC 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
SHARES ESTIMATED CURRENT
UNITS, OR TOTAL TAX MARKET ANNUAL YIELD
PAR VALUE DESCRIPTION COST VALUE INCOME (%)
- --------- ----------- --------- ------ --------- -------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
-------------
1 ALLIED GROUP INC $ 19.75 $ 32.75 $ 1 3.1
1 BERKLEY WR CORP 28.00 45.38
1 CHUBB CORP 67.25 96.00 2 2.1
1 FOREMOST CORP AMER 20.50 44.25 1 2.3
5 GEICO CORP 191.38 341.25 5 1.5
1 HARTFORD STEAM BOILER 49.25 48.38 2 4.1
INSPECTION & INS CO
2 OHIO CASUALTY CORP 49.50 71.50 3 4.2
1 ORION CAP CORP 20.16 44.38 1 2.3
3 PROGRESSIVE CORP OHIO 49.75 134.25 1 .7
1 SEIBELS BRUCE GROUP INC 5.88 .81
1 SELECTIVE INS GROUP INC 17.00 36.50 1 2.7
1 20TH CENTY INDS CAL 19.13 15.38
COM NO PAR
TOTAL COMMON STOCKS $ 537.55 $ 910.83 $ 17 1.9
----------- ----------- ------- ---
PREFERRED STOCKS
----------------
10,000 ALABAMA PWR CO $260,000.00 $253,750.00 $19,000 7.5
2ND PFD CL A 7.60%
</TABLE>
WACHOVIA
<PAGE> 119
PAGE: 4
LIST OF ASSETS
VISTA RESOURCES INC 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
SHARES ESTIMATED CURRENT
UNITS, OR TOTAL TAX MARKET ANNUAL YIELD
PAR VALUE DESCRIPTION COST VALUE INCOME (%)
--------- ----------- --------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
2,500 BALTIMORE GAS & ELECTRIC CO $265,000.00 $240,312.50 $17,813 7.4
PFD SER 1993 7.125%
5,075 CAROLINA PWR & LT CO 481,504.63 514,478.13 40,346 7.8
PFD $7.95
12,000 DUKE POWER CO 300,000.00 282,000.00 19,128 6.8
PFD SER A1993 6.375%
4,000 DUKE POWER CO 413,000.00 403,000.00 28,160 7.0
PFD PERP 7.04%
USD100.000
3,000 FLORIDA POWER & LIGHT CO 302,625.00 289,875.00 20,250 7.0
PFD SER U 6.75%
2,000 FLORIDA POWER & LIGHT CO 203,750.00 202,000.00 14,100 7.0
PFD SER T 7.05%
8,000 GEORGIA PWR CO 200,000.00 200,000.00 15,400 7.7
PFD CL A %
8,000 GEORGIA PWR CO 200,000.00 212,000.00 17,000 8.0
PFD CL A $2.125
2,320 NEW YORK STATE ELEC & GAS CORP 170,079.00 201,550.00 15,034 7.5
PFD 6.48%
10,000 OHIO EDISON CO 250,000.00 247,500.00 19,370 7.8
PFD 7.75% CL A
10,000 PSI ENERGY INC 256,250.00 253,750.00 18,600 7.3
PFD
4,000 SAVANNAH ELECTRIC & POWER CO 98,500.00 94,000.00 6,640 7.1
PFD 6.64%
</TABLE>
WACHOVIA
<PAGE> 120
PAGE: 5
LIST OF ASSETS
VISTA RESOURCES INC 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
SHARES ESTIMATED CURRENT
UNITS, OR TOTAL TAX MARKET ANNUAL YIELD
PAR VALUE DESCRIPTION COST VALUE INCOME (%)
--------- ----------- --------- ------ --------- -------
<S> <C> <C> <C> <C> <C>
900 SOUTHWESTERN PUB SVC CO $ 61,763.00 $ 92,587.50 $ 7,200 7.8
PFD 8%
12,000 TEXAS UTIL ELEC CO 300,000.00 300,000.00 21,720 7.2
DEP SHS REP1/4 SH $7.22
CUM PFD
5,000 VIRGINIA ELEC & PWR CO 493,752.00 495,000.00
PFD $7.45
5,000 WEST PENN POWER CO 125,000.00 122,500.00
8.00% QUARTERLY
DEBT SECS (QIDS) PFD
TOTAL PREFERRED STOCKS $4,381,223.63 $4,404,303.13 $279,761 6.4
------------- ------------- -------- ---
BONDS
-----
4,000,000 UNITED STATES TREAS NTS $3,988,750.00 $4,016,240.00 $250,000 6.2
08/31/94 6.25% 8/31/1996
TOTAL BONDS $3,988,750.00 $4,016,240.00 $250,000 6.2
------------- ------------- -------- ---
SHORT-TERM RESERVES AND CASH
----------------------------
801,936.73 BILTMORE FDS $ 801,936.73 $ 801,936.73 $ 44,694 5.6
MONEY MKT FD INSTL SH CL-A
CASH 3,557.34 3,557.34
TOTAL SHORT-TERM RESERVES AND CASH $ 805,494.07 $ 805,494.07 $ 44,694 5.5
------------- ------------- -------- ---
TOTAL VALUE OF ACCOUNT $9,176,005.25 $9,226,948.03 $574,472 6.2
============= ============= ======== ===
</TABLE>
THE VALUES USED IN THIS REPORT ARE AS OF THE CLOSE OF BUSINESS ON THE REPORT
DATE OR THE MOST REPRESENTATIVE VALUE AVAILABLE ON THAT DATE.
WACHOVIA
<PAGE> 121
PAGE: 6
CASH SUMMARY
VISTA RESOURCES INC 09/01/95 THROUGH 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
AMOUNT TOTAL
------ -----
<S> <C> <C>
OPENING BALANCE 09-01-95 $128,001.67
CASH RECEIPTS
- -------------
DIVIDENDS $37,930.10
SALE OF ASSETS
EQUITY 158.61
----------
TOTAL CASH RECEIPTS 38,088.71
NET SHORT TERM RESERVE PURCHASE AND SALES 162,533.04-
-----------
CLOSING BALANCE 09-29-95 $ 3,557.34
===========
</TABLE>
WACHOVIA
<PAGE> 122
PAGE: 7
STATEMENT DETAIL
VISTA RESOURCES INC 09-01-95 THROUGH 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
CASH RECEIPTS AMOUNT TOTAL
- ------------- ------ -----
<S> <C> <C> <C>
DIVIDENDS
---------
-PREFERRED
DUKE POWER CO
PFD SER A1993 6.375%
09-18-95 DIV $0.398440 ON 12,000 SHS $4,781.28 $4,781.28
FOR PAYABLE DATE OF 09/18/95
DUKE POWER CO
PFD PERP 7.04%
USD100.000
09-18-95 DIV $1.760000 ON 4,000 SHS 7,040.00 7,040.00
FOR PAYABLE DATE OF 09/18/95
FLORIDA POWER & LIGHT CO
PFD SER U 6.75%
09-01-95 DIV $1.687500 ON 3,000 SHS 5,062.50 5,062.50
FOR PAYABLE DATE OF 09/01/95
FLORIDA POWER & LIGHT CO
PFD SER T 7.05%
09-01-95 DIV $1.762500 ON 2,000 SHS 3,525.00 3,525.00
FOR PAYABLE DATE OF 09/01/95
PSI ENERGY INC
PFD
09-01-95 DIV $0.465000 ON 10,000 SHS 4,650.00 4,650.00
FOR PAYABLE DATE OF 09/01/95
</TABLE>
WACHOVIA
<PAGE> 123
PAGE: 8
STATEMENT DETAIL
VISTA RESOURCES INC 09-01-95 THROUGH 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
AMOUNT TOTAL
------ -----
<S> <C> <C> <C>
VIRGINIA ELEC & PWR CO
PFD $7.45
09-20-95 DIV $1.862500 ON 5,000 SHS $9,312.50 $ 9,312.50
FOR PAYABLE DATE OF 09/20/95 ----------
TOTAL PREFERRED $34,371.28
----------
-COMMON
ALLIED GROUP INC
09-26-95 DIV $0.170000 ON 1 SHS 0.17 0.17
FOR PAYABLE DATE OF 09/26/95
FOREMOST CORP AMER
09-15-95 DIV $0.270000 ON 1 SHS 0.27 0.27
FOR PAYABLE DATE OF 09/15/95
GEICO CORP
09-29-95 DIV $0.270000 ON 5 SHS 1.35 1.35
FOR PAYABLE DATE OF 09/29/95
OHIO CASUALTY CORP
09-11-95 DIV $0.380000 ON 2 SHS 0.76 0.76
FOR PAYABLE DATE OF 09/11/95
SELECTIVE INS GROUP INC
09-01-95 DIV $0.280000 ON 1 SHS 0.28 0.28
FOR PAYABLE DATE OF 09/01/95 ----------
TOTAL COMMON $ 2.83
----------
</TABLE>
WACHOVIA
<PAGE> 124
PAGE: 9
STATEMENT DETAIL
VISTA RESOURCES INC 09-01-95 THROUGH 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
AMOUNT TOTAL
------ -----
<S> <C> <C>
-OTHER
BILTMORE FDS
MONEY MKT FD INSTL SH CL-A
09-29-95 DIVIDEND $3,555.99 $ 3,555.99
----------
TOTAL OTHER $ 3,555.99
----------
TOTAL DIVIDENDS $37,930.10
==========
SALE OF ASSETS
--------------
-EQUITY
-COMMON
CINCINNATI FINL CORP
09-01-95 TENDERED TO COMPANY AT 158.61 158.61
$52.87 ON ----------
3 SHARES
AT 52.870
TOTAL COMMON $ 158.61
----------
TOTAL EQUITY $ 158.61
----------
TOTAL SALE OF ASSETS $ 158.61
==========
TOTAL CASH RECEIPTS $38,088.71
==========
</TABLE>
WACHOVIA
<PAGE> 125
PAGE: 10
STATEMENT DETAIL
VISTA RESOURCES INC 09-01-95 THROUGH 09-29-95 ACCOUNT NUMBER:
________________________________________________________________________________
<TABLE>
<CAPTION>
CASH DISBURSEMENTS AMOUNT TOTAL
- ------------------ ------ -----
<S> <C> <C>
PURCHASE OF ASSETS
------------------
-SHORT TERM
BILTMORE FDS
MONEY MKT FD INSTL SH CL-A
PURCHASES FOR PERIOD 09-01-95 THROUGH 09-29-95 (7) $162,533.04- $162,533.04-
-----------
TOTAL SHORT TERM $162,533.04-
-----------
TOTAL PURCHASE OF ASSETS $162,533.04-
===========
TOTAL CASH DISBURSEMENTS $162,533.04-
===========
</TABLE>
WACHOVIA
<PAGE> 126
SCHEDULE 7.05
EXHIBIT B
<PAGE> 127
<TABLE>
<S> <C> <C> <C> <C>
Fund Name Account Number Taxpayer I.D. No. Date
-------------------------------- ------------------- ------------------------ -------------------
DAILY TAX FREE INCOME FUND, INC. 09/29/95
VISTA RESOURCES INC NATIONSBANK OF GEORGIA
1201 W PEACHTREE ST FUNDS MANAGEMENT
STE 5000 FUNDS MANAGEMENT SALES
ATLANTA, GA 30309-0000 600 PEACHTREE ST NE 12TH FLOOR
ATLANTA, GA 30308
000000263983
01068 000001 000000001
Date Transaction Description Dollar Amount Share Price Share Amount Shares Owned
- ---- ----------------------- ------------- ----------- ------------ ------------
09/01 BALANCE FORWARD 3,199,960.680
09/05 PURCHASE BY WIRE 250,000.00 1.00 250,000.000 3,449,960.680
09/06 PURCHASE BY WIRE 190,000.00 1.00 190,000.000 3,639,960.680
09/08 REDEMPTION BY WIRE 25,000.00 1.00 25,000.000 3,614,960.680
09/14 PURCHASE BY WIRE 300,000.00 1.00 300,000.000 3,914,960.680
09/15 MM DIVIDEND REINVEST 10,011.14 1.00 10,011.140 3,924,971.820
09/18 REDEMPTION BY WIRE 460,000.00 1.00 460,000.000 3,464,971.820
09/19 REDEMPTION BY WIRE 8,000.00 1.00 8,000.000 3,456,971.820
09/20 REDEMPTION BY WIRE 3,000.00 1.00 3,000.000 3,453,971.820
09/21 REDEMPTION BY WIRE 150,000.00 1.00 150,000.000 3,303,971.820
09/22 REDEMPTION BY WIRE 20,000.00 1.00 20,000.000 3,283,971.820
09/25 REDEMPTION BY WIRE 175,000.00 1.00 175,000.000 3,108,971.820
09/29 PURCHASE BY WIRE 100,000.00 1.00 100,000.000 3,208,971.820
09/29 ACCOUNT VALUE 3,208,971.82
Summary of Dividends - Year-to-Date
- ------------------------------------------------------------------------------------------------------------------------------------
Income Dividends Short Term Gains Long Term Gains Accrued Unpaid Dividends Total Income Taxes Withheld
- ---------------------- -------------------- -------------------- --------------------------- --------------- -----------------
50,314.37 4,484.93 54,799.30 0.00
AS OF SEPTEMBER 29, 1995 THE FUND'S 7-DAY YIELD
WAS 3.66% WITH AN EFFECTIVE YIELD OF 3.73%.
For information please call 800-221-3079 or 212-830-5220
> Please Use This Form to Purchase Additional Shares.
- ------------------------------------------------------------------------------------------------------------------------------------
Minimum
Fund Name Account Number Taxpayer I.D. No. Investment
----------------------------------- ----------------- ---------------------- -----------------
DAILY TAX FREE INCOME FUND, INC. $100
VISTA RESOURCES INC
1201 W PEACHTREE ST
STE 5000
ATLANTA, GA 30309-0000 Amount Remitted
---------------------------------------------------------------
$
Make checks payable to the fund
/ / Please Check Here for Change of Address -------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Name City State Zip Signature Date
- -------------------------------------- ---------------------- ---------------- ------------- ---------------- ------------
034018600130146300
</TABLE>
<PAGE> 128
Schedule 8.11
Existing Shareholders
<TABLE>
<CAPTION>
Sole Shared
Sole Shared Dispositive Dispositive
Member of Fuqua Family Voting Power Voting Power Power Power Beneficially Owned
---------------------- ------------ ------------ ----- ----- -------------------
<S> <C> <C> <C> <C> <C>
J. B. Fuqua(1) 693,917 435,698 693,917 435,698 1,129,615
J. Rex Fuqua(2) 310,142 435,698 310,142 435,698 745,840
Fuqua Holdings, Inc.(3) 366,000 0 366,000 0 366,000
Fuqua Holdings - I, L.P.(4) 366,000 0 366,000 0 366,000
The Jennifer Calhoun Fuqua Trust(5) 160,843 0 160,843 0 160,843
The Lauren Brooks Fuqua Trust(6) 160,842 0 160,842 0 160,842
The J. B. Fuqua Foundation, Inc.(7) 69,698 0 69,698 0 69,698
</TABLE>
_________________
(1) J. B. Fuqua may be deemed to own beneficially (through the power to direct
the vote and disposition thereof) 1,129,615 shares of the common stock, $2.50
par value per share, of Borrower (the "Common Stock") (372,232 individually,
160,843 as trustee for The Jennifer Calhoun Fuqua Trust, 160,842 shares as
trustee for The Lauren Brooks Fuqua Trust, 69,698 as an officer and director of
The J.B. Fuqua Foundation, Inc., and 366,000 as an officer and director of
Fuqua Holdings, Inc.).
(2) J. Rex Fuqua may be deemed to own beneficially (through the power to direct
the vote and disposition thereof) 745,840 shares of the Common Stock (310,142
individually, 69,698 as an officer and director of The J.B. Fuqua Foundation,
Inc., and 366,000 as an officer and director of Fuqua Holdings, Inc.).
(3) Fuqua Holdings, Inc., the general partner of Fuqua Holdings - I, L.P., may
be deemed to own beneficially (through the power of its sole directors and
shareholders, J.B. Fuqua and J. Rex Fuqua, to direct the vote and disposition
thereof) 366,000 shares of the Common Stock.
(4) Fuqua Holdings - I, L.P., may be deemed to own beneficially (through the
power of J.B. Fuqua and J. Rex Fuqua as the sole directors and shareholders of
Fuqua Holdings, Inc., the general partner of Fuqua Holdings - I, L.P., to
direct the vote and disposition thereof) 366,000 shares of the Common Stock.
(5) The Jennifer Calhoun Fuqua Trust may be deemed to own beneficially (through
the power of its sole trustee, J.B. Fuqua, to direct the vote and disposition
thereof) 160,843 shares of the Common Stock.
(6) The Lauren Brooks Fuqua Trust may be deemed to own beneficially (through
the power of its sole trustee, J.B. Fuqua, to direct the vote and disposition
thereof) 160,842 shares of the Common Stock.
(7) The J.B. Fuqua Foundation, Inc. may be deemed to own beneficially (through
the power of its directors and officers to direct the vote thereof) 69,698
shares of the Common Stock.
<PAGE> 129
EXHIBIT A
FORM OF
REVOLVING CREDIT NOTE
U.S. $________________ November __, 1995
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned FUQUA ENTERPRISES, INC., a
Delaware corporation (herein called the "Borrower"), hereby promises to pay to
the order of __________________, a ___________________________ (herein,
together with any subsequent holder hereof, called the "Lender"), for the
account of its applicable Lending Office, the lesser of (i) the principal sum
of _____________________________________ AND NO/100 UNITED STATES DOLLARS
($_______________) and (ii) the outstanding principal amount of the Advances
made by the Lender to the Borrower as Revolving Loans pursuant to the terms of
the Credit Agreement referred to below on the Maturity Date (as defined in the
Credit Agreement referred to below). The Borrower likewise promises to pay
interest on the outstanding principal amount of each such Advance, at such
interest rates, payable at such times, and computed in such manner, as are
specified for such Advance in the Credit Agreement in strict accordance with
the terms thereof.
The Lender shall record all Advances made pursuant to its Revolving
Credit Commitment under the Credit Agreement and all payments of principal of
such Advances and, prior to any transfer hereof, shall endorse such Advances
and payments on the schedule annexed hereto and made a part hereof, or on any
continuation thereof which shall be attached hereto and made a part hereof or
on the books and records of the Lender, which endorsement shall constitute
prima facie evidence of the accuracy of the information so endorsed; provided,
however, that delay or failure of the Lender to make any such endorsement or
recordation shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement with respect to the Advances evidenced hereby.
Any principal or, to the extent not prohibited by applicable law,
interest due under this Revolving Credit Note that is not paid on the due date
therefor, whether on the Maturity Date, whether or not resulting from the
acceleration of maturity upon the occurrence of an Event of Default, shall bear
interest from the date due to payment in full at the rate as provided in
Section 3.03(b) of the Credit Agreement.
<PAGE> 130
All payments of principal and interest shall be made in lawful money
of the United States of America in immediately available funds at the Payment
Office of the Agent specified in the Credit Agreement.
This Revolving Credit Note is issued pursuant to, and is one of the
Revolving Credit Notes referred to in, the Credit Agreement dated as of
November __, 1995 among the Borrower, SunTrust Bank, Atlanta, individually and
as Agent, and the other lenders set forth on the signature pages thereof (as
the same may hereafter be amended, modified or supplemented from time to time,
the "Credit Agreement") and each assignee thereof becoming a "Lender" as
provided therein, and the Lender is and shall be entitled to all benefits
thereof and all Security Documents executed and delivered to the Lenders or the
Agent in connection therewith. Terms defined in the Credit Agreement are used
herein with the same meanings. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events.
The Borrower agrees to make payments of principal on the Advances
outstanding hereunder as Revolving Loans on the dates and in the amounts
specified in the Credit Agreement for such Advances in strict accordance with
the terms thereof.
This Revolving Credit Note may be prepaid in whole or in part in
accordance with the terms and conditions of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the
principal of and all accrued interest on this Revolving Credit Note may
automatically become, or be declared, due and payable in the manner and with
the effect provided in the Credit Agreement. The Borrower agrees to pay, and
save the Lender harmless against any liability for the payment of, all
reasonable out-of-pocket costs and expenses, including reasonable attorneys'
fees actually incurred, arising in connection with the enforcement by the
Lender of any of its rights under this Revolving Credit Note or the Credit
Agreement.
THIS REVOLVING CREDIT NOTE HAS BEEN EXECUTED AND DELIVERED IN GEORGIA
AND THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE BORROWER HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
The Borrower expressly waives any presentment, demand, protest or
notice in connection with this Revolving Credit Note, now or hereafter required
by applicable law. TIME IS OF THE ESSENCE OF THIS REVOLVING CREDIT NOTE.
- 2 -
<PAGE> 131
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note
to be executed and delivered under seal by its duly authorized officers as of
the date first above written.
FUQUA ENTERPRISES, INC.
By:
----------------------------------
Name:
Title:
Attest:
----------------------------------
Name:
Title:
[CORPORATE SEAL]
- 3 -
<PAGE> 132
Revolving Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
- -------------------------------------------------------------------------------
- 4 -
<PAGE> 133
EXHIBIT B
NOTICE OF BORROWING
SunTrust Bank, Atlanta, as Agent
for the Lenders parties to the
Credit Agreement referenced below
25 Park Place
23rd Floor
Atlanta, Georgia 30303
[Date]
Re: FUQUA ENTERPRISES, INC.
Ladies and Gentlemen:
The undersigned, FUQUA ENTERPRISES, INC., a Delaware
corporation (the "Borrower"), refers to the Credit Agreement, dated as
of November 6, 1995 (the "Credit Agreement"; the terms defined therein
being used herein as therein defined), among the undersigned, the
lenders (the "Lenders") from time to time parties thereto and SunTrust
Bank, Atlanta, as Agent, and hereby gives you irrevocable notice
pursuant to Section 3.01(a) of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement (the
"Proposed Borrowing"), and in that connection sets forth below the
information relating to such Borrowing as required by Section 3.01(a)
of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is
_________, 19__.
(ii) The Proposed Borrowing shall be comprised of [Base
Rate Advances] [Eurodollar Advances].*
(iii) The amount of the Proposed Borrowing is
$_____________________.
[(iv) The Interest Period for the Proposed Borrowing if
comprised of Eurodollar Advances is ______
month[s].]**
--------------------
* Total number of outstanding Borrowings may not exceed six.
** Not applicable if the Proposed Borrowing is to be comprised
of Base Rate Advances.
<PAGE> 134
The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on the
date of the Proposed Borrowing before and after giving effect
thereto:
(a) there exists no Default or Event of Default;
(b) all representations and warranties of Borrower
contained in the Credit Agreement are true and correct in all
material respects with the same effect as though such
representations and warranties had been made on and as of the
date of the Proposed Borrowing (except to the extent such
representations and warranties specifically relate to an
earlier date in which case they shall be true and correct as of
such date);
(c) since the date of the most recent financial
statements of the Consolidated Companies described in Section
5.14 of the Credit Agreement, there has occurred no change
which has had or could reasonably be expected to have a
Materially Adverse Effect (whether or not any notice with
respect to such change has been furnished to the Lenders
pursuant to Section 6.07 of the Credit Agreement);
(d) there is no action or proceeding instituted or
pending before any court or other governmental authority or, to
the knowledge of Borrower, threatened (i) which reasonably
could be expected to have a Materially Adverse Effect, or (ii)
seeking to prohibit or restrict one or more Credit Party's
ownership or operation of any portion of its business or
assets, or to compel one or more Credit Party to dispose of or
hold separate all or any portion of its businesses or assets,
where such portion or portions of such business(es) or assets,
as the case may be, constitute a material portion of the total
businesses or assets of the Consolidated Companies taken as a
whole; and
(e) the Proposed Borrowing and the use of proceeds
thereof shall not contravene, violate or conflict with, or
involve the Agent or any Lender in a violation of, any law,
rule, injunction, or regulation, or determination of any court
of law or other governmental authority applicable to Borrower.
Very truly yours,
FUQUA ENTERPRISES, INC.
By:
----------------------------
Name:
Title:
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EXHIBIT C
FORM OF
NOTICE OF CONTINUATION/CONVERSION
SunTrust Bank, Atlanta, as Agent
for the Lenders parties to the
Credit Agreement referenced below
25 Park Place
23rd Floor
Atlanta, Georgia 30303
[Date]
Re: FUQUA ENTERPRISES, INC.
Ladies and Gentlemen:
The undersigned, FUQUA ENTERPRISES, INC., a Delaware
corporation (the "Borrower"), refers to the Credit Agreement,
dated as of November __, 1995 (the "Credit Agreement"; the terms
defined therein being used herein as therein defined), among the
undersigned, the lenders (the "Lenders") from time to time
parties thereto and SunTrust Bank, Atlanta, as Agent, and hereby
gives you irrevocable notice pursuant to Section 3.01(b) of the
Credit Agreement that the undersigned hereby requests the
[conversion] [continuation] of a Borrowing under the Credit
Agreement as specified below in accordance with Section 3.01(b)
of the Credit Agreement:
[The Borrower hereby requests the conversion of a
Borrowing comprised of Base Rate Advances to a Borrowing
comprised of Eurodollar Advances, as follows:
(i) the Business Day of the proposed conversion is
_________, 19__.
(ii) the amount of the Borrowing is $_________.
(iii) the Interest Period applicable to the
Eurodollar Advances upon such conversion shall
be ____ month(s).]
<PAGE> 136
[The Borrower hereby requests the conversion of a
Borrowing comprised of Eurodollar Advances to a Borrowing
comprised of Base Rate Advances, as follows:
(i) the Business Day of the proposed conversion,
which shall be the last day of the current Interest
Period applicable to the Borrowing to be converted, is
_________, 19__.
(ii) the amount of the Borrowing to be converted
is $____________________.]
[The Borrower hereby requests the continuation of
a Borrowing comprised of Eurodollar Advances for an
additional Interest Period, as follows:
(i) the Business Day of the proposed continuation,
which shall be the last day of the current Interest
Period applicable to the Borrowing to be continued, is
_________, 19__.
(ii) the amount of the Borrowing to be continued
is $____________________.
(iii) the Interest Period applicable to the
Eurodollar Advances upon such continuation shall be
____ month(s).]
The undersigned hereby certifies that the following
statement is true on the date hereof, and will be true on the
date of the proposed continuation or conversion:
No Default or Event of Default exists or shall result
from such proposed continuation or conversion.]*
Very truly yours,
FUQUA ENTERPRISES, INC.
By:
---------------------------
Name:
Title:
--------------------
* Applicable only upon the conversion to, or continuation of, a
Borrowing comprised of Eurodollar Advances.
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<PAGE> 137
EXHIBIT D
CLOSING CERTIFICATE
The undersigned, being the _____________________ of FUQUA
ENTERPRISES, INC., a Delaware corporation (the "Borrower"),
hereby gives this certificate to induce SUNTRUST BANK, ATLANTA, a
Georgia banking corporation, and each of the other lenders named
on the signature pages to the Credit Agreement defined below
(collectively referred to as the "Lenders"), SunTrust Bank,
Atlanta, as agent for itself and the other Lenders (in such
capacity, the "Agent"), to consummate certain financial
accommodations with the Borrower pursuant to the terms of the
Credit Agreement dated as of even date herewith (the "Credit
Agreement"). Capitalized terms used herein and not defined
herein have the same meanings assigned to them in the Credit
Agreement:
The undersigned hereby certifies to the Agent and the
Lenders that:
1. In his/her aforesaid capacity as the _________________ of
the Borrower, [s]he has knowledge of the business and financial
affairs of the Borrower sufficient to issue this certificate and
is authorized and empowered to issue this certificate for and on
behalf of the Borrower.
2. All representations and warranties contained in the Credit
Agreement are true and correct on and as of the date hereof.
3. After giving effect to the Loans to be made to the Borrower
pursuant to the Credit Agreement on the date hereof, no Default
or Event of Default has occurred and is continuing.
4. Since the date of the audited financial statements of the
Consolidated Companies described in Section 5.14 of the Credit
Agreement, there has been no change which has had or could
reasonably be expected to have a Materially Adverse Effect.
5. Except as may be described on Schedule 5.05 of the Credit
Agreement, no action or proceeding has been instituted or is
pending before any court or other governmental authority, or, to
the knowledge of the Borrower, threatened (i) which reasonably
could be expected to have a Materially Adverse Effect, or (ii)
seeking to prohibit or restrict one or more Credit Party's
ownership or operation of any portion of its businesses or
assets, where such portion or portions of such businesses or
assets, as the case may be, constitute a material portion of the
total businesses or assets of the Consolidated Companies, taken
as a whole.
<PAGE> 138
6. The Advances to be made on the date hereof are being used
solely for the purposes provided in the Credit Agreement, and
such Advances and use of proceeds thereof will not contravene,
violate or conflict with, or involve the Agent or any Lender in a
violation of, any law, rule, injunction, or regulation, or
determination of any court of law or other governmental
authority, applicable to the Borrower.
7. Based upon the Agent's representation that the information
provided pursuant to Sections 4.01(k) through (n) is
satisfactory, the conditions precedent set forth in Sections 4.01
and 4.02 of the Credit Agreement have been or will be satisfied
(or have been waived pursuant to the terms of the Credit
Agreement) prior to or concurrently with the making of the
Revolving Loans under the Credit Agreement on the date hereof.
8. The execution, delivery and performance by the Credit
Parties of the Credit Documents will not violate any Requirement
of Law or cause a breach or default under any of their respective
Contractual Obligations.
9. Each of the Credit Parties has the corporate power and
authority to make, deliver and perform the Credit Documents to
which it is a party and has taken all necessary corporate action
to authorize the execution, delivery and performance of such
Credit Documents. No consents or authorization of, or filing
with, any Person (including, without limitation, any governmental
authority), is required in connection with the execution,
delivery or performance by any Credit Party, or the validity or
enforceability against any Credit Party, of the Credit Documents,
other than such consents, authorizations or filings which have
been made or obtained.
IN WITNESS WHEREOF, the undersigned has executed this
certificate solely in his/her aforesaid capacity as of this ____
day of November, 1995.
-----------------------------------
Title:
---------------------------
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<PAGE> 139
EXHIBIT E
FORM OF OPINION OF BORROWER'S COUNSEL
November 6, 1995
To: Each of the Lenders party to the
Credit Agreement referenced below
and each assignee thereof that
becomes a "Lender" as provided
therein and SunTrust Bank,
Atlanta, as Agent
Re: Credit Agreement dated as of November 6, 1995, by and among
Fuqua Enterprises, Inc., each of the Lenders listed on the
signature pages thereto and SunTrust Bank, Atlanta, as Agent
thereunder (the "Credit Agreement")
Ladies and Gentlemen:
This opinion is furnished pursuant to Section 4.01 of the Credit
Agreement. Terms used herein which are defined in the Credit Agreement shall
have the respective meanings set forth or referred to in the Credit Agreement,
unless otherwise defined herein.
We have acted as counsel to Fuqua Enterprises, Inc., a Delaware
corporation (the "Company"), Irving Tanning Company, a Delaware corporation
("Irving") and Kroy Tanning Company, Incorporated, a Delaware corporation
("Kroy"; each of Kroy and Irving may be referred to herein as a "Subsidiary",
and the Company, Irving and Kroy may be collectively referred to herein as the
"Credit Parties"), in connection with the preparation, negotiation, execution
and delivery of the following documents (collectively, the "Credit Documents"):
1. The Credit Agreement;
2. The Revolving Credit Notes;
3. The Note Assignment; and
4. The other instruments, documents, certificates, agreements and
writings executed and delivered by the Credit Parties in
connection with the closing of the Credit Agreement.
In connection with this opinion, we have examined and relied on the
executed originals of the Credit Documents and the following certificates,
instruments and documents relating to the Credit Parties:
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<PAGE> 140
1. Officer's Certificate of the Chief Financial Officer
of the Company, a copy of which is attached hereto as Exhibit A-1;
2. Officer's Certificate of the Assistant Treasurer of
Irving, a copy of which is attached hereto as Exhibit A-2;
3. Officer's Certificate of the Assistant Treasurer of
Kroy, a copy of which is attached hereto as Exhibit A-3;
4. Certificates of the Secretaries of State or other
appropriate governmental agency of (a) the state of the Company's
incorporation regarding its existence and good standing and (b) the
states listed on Exhibit B attached hereto regarding the Company's
qualification to do business and good standing in those states;
5. Certificates of the Secretaries of State or other
appropriate governmental agency of (a) the respective state of each
Subsidiary's incorporation regarding its existence and good standing
and (b) the states listed on Exhibit B attached hereto regarding such
Subsidiary's qualification to do business and good standing in those
states; and
6. The documents described on Exhibit C attached hereto
(collectively, the "Listed Contractual Obligations").
We have also made such investigations of law and fact as we have
deemed necessary as the basis for the opinions expressed herein.
Whenever our opinion herein with respect to the existence or absence
of facts is indicated to be based on our knowledge or awareness, it is intended
to signify that during the course of our representation of the Credit Parties
as herein described, no information has come to the attention of Paul M.
Cushing, Bryan E. Davis, Richard W. Grice, Williams S. Ortwein, Richard J.
Oelhafen or Randolph A. Moore which would give us actual knowledge of the
existence or absence of such facts.
We have assumed the genuineness of all signatures (other than those on
behalf of the Credit Parties on the Credit Documents) on, and authenticity of,
all documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as copies.
With respect to any element of mutuality which may be required in
order to support the enforceability of the Credit Documents, we have assumed
that the Lenders and the Agent have all requisite power and authority to enter
into and perform their respective obligations under the Credit Agreement and
the other Credit Documents to which they are parties, that the Credit Agreement
and such other Credit Documents have
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been duly authorized, executed and delivered by the Lenders and the Agent, and
that the Credit Agreement and such other Credit Documents constitute the legal,
valid and binding obligations of the Lenders and the Agent. Further, to the
extent applicable law requires that the Lenders or Agent act in accordance with
duties of good faith and fair dealing, in a commercially reasonable manner, or
otherwise in compliance with applicable legal requirements (including, without
limitation, federal and state securities laws) in exercising their respective
rights and remedies under the Credit Documents, we have assumed that the
Lenders and Agent will fully comply with such legal requirements,
notwithstanding any provisions of the Credit Documents that purport to grant
the Lenders or Agent the right to act or fail to act in a manner contrary to
such legal requirements, or based on its sole judgment or in its sole
discretion or provisions of similar import.
With respect to the opinions expressed in paragraph 1(c) below
regarding the qualification and good standing of the Credit Parties in certain
jurisdictions, such opinions are based solely upon certificates provided by
agencies of those states described in items 3 and 4 above, copies of which have
been delivered to you at the closing of the Credit Agreement, and such opinions
are limited to the meaning ascribed to such certificates by each applicable
state agency.
Based on the foregoing, and subject to the qualifications and
assumptions contained herein, we are of the opinion that:
1. Each of the Credit Parties (a) is validly existing as a
corporation and in good standing under the laws of its state of incorporation,
(b) has the corporate power and authority to own and operate its properties and
to conduct its business as now conducted and (c) is qualified as a foreign
corporation in, and is in good standing under the laws of, the jurisdictions
set forth on Exhibit B attached hereto, as applicable.
2. Each of the Credit Parties has the corporate power and
authority to make, deliver and perform the Credit Documents to which it is a
party and has taken all necessary corporate action to authorize the execution,
delivery and performance of such Credit Documents.
3. No consent, approval or authorization of, or registration,
declaration or filing with, (i) any United States federal or (ii) any state,
local or other governmental authority of the State of Georgia is required in
connection with the execution, delivery, performance, validity or
enforceability of the Credit Documents or the use of the proceeds of the Loans.
4. The execution, delivery and performance by each of the Credit
Parties of the Credit Documents to which it is a party do not and will not (a)
violate (i) any existing law, rule or regulation of the United States of
America or of the State of Georgia applicable to such Credit Party, (ii) the
certificate or articles of incorporation or by-laws of such Credit Party or
(iii) the terms of any Listed Contractual Obligation nor (b) result in
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<PAGE> 142
the creation of any Lien on the property or assets of any Credit Party pursuant
to the terms of any of the Listed Contractual Obligations.
5. Each of the Credit Parties has duly authorized, executed and
delivered each Credit Document to which it is a party. Each of the Credit
Documents constitutes the legal, valid and binding obligations of each of the
Credit Party that is a party thereto, enforceable against such Credit Party in
accordance with its terms. The provisions of the Credit Documents with respect
to payment of interest, fees, costs, and other charges for the use of money do
not violate the interest and usury laws as in effect in the State of Georgia.
6. None of the Credit Parties is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
7. The making of any Revolving Loans and the application of the
proceeds thereof as provided in the Credit Agreement do not violate Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System.
8. To our knowledge, except as reflected in Schedule 5.05 to the
Credit Agreement, there is no litigation or proceeding pending or threatened
against any Credit Party which could have a Material Adverse Effect.
Our opinions set forth above are subject to the following
qualifications:
A. We are licensed to practice law only in the State of Georgia
but are generally familiar with, and have reviewed in connection with this
transaction relevant portions of, the General Business Corporation Law of the
State of Delaware. Accordingly, we express no opinion as to matters of law
other than federal laws of the United States of America, the laws of the State
of Georgia and matters set forth in the published statutes of the General
Corporation Law of the State of Delaware. The opinions expressed in this
opinion letter do not address federal securities laws and regulations
administered by the Securities and Exchange Commission (other than the Public
Utility Holding Company Act of 1935 and the Investment Company Act of 1940),
any state "Blue Sky" laws and regulations, or laws and regulations relating to
commodity (and other) futures and indices and other similar instruments.
B. Enforceability of the Credit Documents is subject to (i)
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the enforcement of creditors' rights generally, and (ii) general policies of
equity, regardless of whether enforceability is considered in a proceeding in
equity or at law.
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<PAGE> 143
C. No opinion is expressed with respect to the validity, binding
effect, or enforceability of:
(a) any provision of a Credit Document requiring
indemnification for, or providing exculpation, release, or exemption
from liability for, action or inaction, to the extent such action or
inaction involves negligence or willful misconduct, or to the extent
such indemnification, exculpation, release or exemption from liability
is otherwise contrary to public policy;
(b) any provision of a Credit Document imposing increased
interest rates or late payment charges upon delinquency in payment or
other default or providing for liquidated damages or for premiums on
prepayment, acceleration, or termination, to the extent any such
provisions may be deemed to be penalties or forfeitures;
(c) any provision of a Credit Document that has the
effect of waiving the right to jury trial, statutes of limitation,
marshaling of assets or similar requirements, or consenting or waiving
objections to the jurisdiction of certain courts, or the venue or
forum for judicial actions;
(d) any provision of a Credit Document providing that
waivers or consents by a party may not be given effect unless in
writing or in compliance with particular requirements, or that a
party's course of dealing, course of performance, or the like or
failure or delay in taking action may not constitute a waiver of
related rights or provisions, or that one or more waivers may not
under certain circumstances constitute a waiver of other matters of
the same kind;
(e) any provision of a Credit Document providing that a
party has the right to pursue multiple remedies without regard to
other remedies elected or that all remedies are cumulative;
(f) any provision of a Credit Document purporting to
require payment by any Credit Party of any Lender's or the Agent's
attorneys' fees without compliance with the applicable requirements of
O.C.G.A. Section 13-1-11;
(g) any provision of a Credit Document providing that
modifications to such document may only be made in writing or that the
provisions of such document are severable;
(h) any provision of a Credit Document purporting to
permit the exercise, under certain circumstances, of rights or
remedies without notice or without providing opportunity to cure
failures to perform;
(i) any provision of a Credit Document purporting to
grant rights of setoff otherwise than in accordance with applicable
law; and
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<PAGE> 144
(j) any provision of a Credit Document purporting to
require a waiver of defenses, setoffs, or counterclaims against the
Lenders or Agent.
D. We note that certain waivers of notices and other rights and
remedial provisions contained in the Credit Documents may be unenforceable
under applicable law, but the Credit Documents contain adequate other
provisions for enforcing payment of the obligations evidenced, guaranteed or
secured thereby and for the practical realization of the rights and remedies
afforded thereby, and the inclusion of such waivers, rights and remedial
provisions in the Credit Documents does not affect the legality, validity or
binding effect of such Credit Documents or affect the enforceability of the
other provisions of the Credit Documents.
E. Our knowledge of the business and affairs of each of the
Credit Parties and of the implications thereof on the applicability of any laws
to them is based solely on the officer's certificates attached hereto.
F. For purposes of the opinions expressed in paragraph 5 above,
we have assumed that the interest and other fees and charges, whether or not
denominated as "interest," which may be received by the Agent and the Lenders
in respect of the Loans and the other financial accommodations to be made under
the Credit Documents and the interest and other fees and charges which are
actually received by the Agent and the Lenders in respect of such loans and
financial accommodations will not exceed five percent (5%) per month of the
amount of such loans and financial accommodations. Further, we express no
opinion as to the enforceability of any provision of the Credit Documents which
purports to charge interest on unpaid interest.
This opinion has been delivered solely for the benefit of the Lenders,
the Agent, their respective counsel and successors and permitted assigns, and
may not be relied upon by any other person or entity or for any other purpose
without the express written permission of the undersigned.
Very truly yours,
ALSTON & BIRD
By:
---------------------------
A Partner
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<PAGE> 145
EXHIBIT A-1
OFFICER'S CERTIFICATE
I, Brady W. Mullinax, Jr., Vice President_Finance, Treasurer and Chief
Financial Officer of Fuqua Enterprises, Inc., a Delaware corporation (the
"Company"), hereby acknowledge and agree that Alston & Bird may rely and will
be relying on this Certificate in rendering their opinion (the "Opinion") in
connection with the transactions contemplated by that certain Credit Agreement
dated as of the date hereof (the "Credit Agreement") by and among the Company,
the lenders from time to time party thereto (the "Lenders") and SunTrust Bank,
Atlanta, as agent (the "Agent"). Capitalized terms used herein and not
otherwise defined herein have the respective meanings given them in, or by
reference in, the Opinion.
I hereby certify to Alston & Bird that, to the best of my knowledge:
1. A copy of the Opinion has been provided to the undersigned in
connection with the certifications made herein. Further, the undersigned is
familiar with each of the Credit Documents.
2. Alston & Bird may rely on all certificates from the Company or
state officials provided to the Agent or any Lender in connection with the
Credit Agreement as if the same were addressed to Alston & Bird. The
certificate of incorporation and bylaws of the Company have not been amended,
revoked or otherwise changed since the date of certification by the Secretary
of State of the State of Delaware of the copy of such certificate delivered to
the Agent under the Credit Agreement. The Company is current in its net worth
and income tax payments and filings to the Georgia Department of Revenue.
3. The resolutions of the Board of Directors and the Executive
Committee of the Board of Directors of the Company reviewed and relied upon by
Alston & Bird are true, complete and correct, the resolutions have not been
amended or revoked since the date adopted and are the only resolutions relating
to the matters that are the subject matter of the Opinion. Further, the
Company's relevant corporate resolutions were adopted in compliance with any
procedural requirements of the Company's certificate of incorporation and
bylaws and the Delaware Corporation Laws.
4. The Company currently is engaged in the businesses described
in Item 1 of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "Annual Report"), which description is incorporated
herein. Additionally, since that time the Company has agreed to (i) sell
American Southern Insurance Company and its subsidiaries and (ii) acquire Basic
American Medical Products, Inc., and has publicly expressed its intent to enter
the health and safety products manufacturing field.
5. The Company has not received any notice from the Secretary of
State of the State of Delaware of a determination that any grounds exist for
administratively
<PAGE> 146
dissolving the Company and the Company has not received notice of the
commencement of any action to judicially dissolve the Company. Neither the
Board of Directors nor the shareholders of the Company have taken any action
with respect to the dissolution of the Company, and the Company has not filed
any notice of intent to dissolve with the State of Delaware.
6. The Company owns or leases places of business in only the
States of Georgia and New York.
7. All directors signing the Company's consent resolution
authorizing the transactions contemplated by the Credit Agreement were duly
appointed and incumbent in their offices at the time of all relevant corporate
action and at all relevant times thereafter.
8. Except as set forth on Exhibit C to the Opinion, the Company
is not a party to or bound by any contract, agreement, indenture, lease or
other document the violation or termination of which could have a Materially
Adverse Effect.
9. Other than the Securities and Exchange Commission and the New
York Stock Exchange and except as discussed in Item 1. of the Annual Report,
the Company does not regularly deal with or report to any federal or state
governmental agency or authority.
10. Except as set forth on Schedule 5.05 to the Credit Agreement,
there is no litigation or proceeding pending or threatened against the Company
or any of its properties, which could have a Materially Adverse Effect or any
outstanding judicial or administrative decree, writ, judgment or order to which
the Company or any of its properties is subject which has had or could have a
Materially Adverse Effect.
11. The Company is not engaged principally, or as one of its
important activities, in the business of purchasing or carrying "margin stock"
(as defined below), and no part of the proceeds of any Loans to the Company or
any Intercompany Loans to any other Consolidated Company will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock. For purposes of this
certificate, the term "margin stock" shall mean (i) any equity security
registered or having unlisted trading privileges on a national securities
exchange; (ii) any OTC margin stock; (iii) any OTC security designated as
qualified for trading in the National Market System; (iv) any debt security
convertible into or carrying a subscription right to purchase a margin stock;
(v) any warrant or right to subscribe to or purchase a margin stock; or (vi)
any security issued by an investment company registered under Section 8 of the
Investment Company Act of 1940 other than (a) a company licensed under the
Small Business Investment Act of 1958, as amended; or (b) a company which has
at least 95 percent of its assets continuously invested in government or
municipal securities; or (c) a company which issues face-amount certificates.
12. The Company is not, nor does it hold itself out as being
primarily, nor does it propose to engage primarily, in the business of
investing, reinvesting, or trading in
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<PAGE> 147
securities. The Company is not engaged nor does it propose to engage in the
business of issuing face-amount certificates of the installment type, nor has
the Company been engaged in such business nor does it have any such certificate
outstanding. The Company is not engaged nor does it propose to engage in the
business of investing, reinvesting, owning, holding or trading in securities,
and it neither owns nor does it propose to acquire investment securities having
a value exceeding 40% of the value of the Company's total assets (exclusive of
government securities and cash items) on an unconsolidated basis. The Company
is not controlled by an entity that satisfies any of the foregoing criteria.
13. The Company does not, directly or indirectly, own, control or
hold, with the power to vote ten percent or more of the outstanding voting
securities of (i) any company which owns or operates facilities used for the
generation, transmission, or distribution of electric energy for sale, or any
company which owns or operates facilities used for the distribution at retail
of natural or manufactured gas for heat, light, or power (any such company
shall be referred to herein as a "Public Utility"), or (ii) any company which
directly or indirectly owns, controls or holds with power to vote, the voting
securities of any Public Utility, or (iii) any company whose voting securities
are directly or indirectly owned, controlled or held with power to vote, by any
company which directly or indirectly owns, controls or holds with power to
vote, the voting securities of any Public Utility. The Company has not
received notification from the Securities and Exchange Commission that,
pursuant to the Public Utility Holding Company Act of 1935, the Commission has
determined that (i) the Company, or (ii) any person the Company directly or
indirectly owns, controls or holds with power to vote, the voting securities
of, or (iii) any person which directly or indirectly owns, controls or holds
with power to vote, the voting securities of the Company, constitutes a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding company."
14. The undersigned is not aware of any consent, approval or
authorization of, or registration, declaration or filing with, (i) any United
States federal or (ii) any state, local, or other governmental authority of the
State of Georgia, required in connection with the execution, delivery,
performance, validity or enforceability of the Credit Documents or the use of
the proceeds of the Loans.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Certificate as of November 6, 1995.
By:
--------------------------------------------
Brady W. Mullinax, Jr.
Vice President-Finance, Treasurer and Chief
Financial Officer of Fuqua Enterprises, Inc.
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EXHIBIT A-2
OFFICER'S CERTIFICATE
I, Brady W. Mullinax, Jr., Assistant Treasurer of Irving Tanning
Company, a Delaware corporation (the "Company"), hereby acknowledge and agree
that Alston & Bird may rely and will be relying on this Certificate in
rendering their opinion (the "Opinion") in connection with the transactions
contemplated by that certain Credit Agreement dated as of the date hereof (the
"Credit Agreement") by and among the Company, the lenders from time to time
party thereto (the "Lenders") and SunTrust Bank, Atlanta, as agent (the
"Agent"). Capitalized terms used herein and not otherwise defined herein have
the respective meanings given them in, or by reference in, the Opinion.
I hereby certify to Alston & Bird that, to the best of my knowledge:
1. A copy of the Opinion has been provided to the undersigned in
connection with the certifications made herein. Further, the undersigned is
familiar with each of the Credit Documents.
2. Alston & Bird may rely on all certificates from the Company or
state officials provided to the Agent or any Lender in connection with the
Credit Agreement as if the same were addressed to Alston & Bird. The
certificate of incorporation and bylaws of the Company have not been amended,
revoked or otherwise changed since the date of certification by the Secretary
of State of the State of Delaware of the copy of such certificate delivered to
the Agent under the Credit Agreement.
3. The resolutions of the Board of Directors of the Company
reviewed and relied upon by Alston & Bird are true, complete and correct, the
resolutions have not been amended or revoked since the date adopted and are the
only resolutions relating to the matters that are the subject matter of the
Opinion. Further, the Company's relevant corporate resolutions were adopted in
compliance with any procedural requirements of the Company's certificate of
incorporation and bylaws and the Delaware Corporation Laws.
4. The Company is engaged in the business of producing leather
and finished leather from cowhide for a variety of consumer goods as more
particularly described in Item 1. of Fuqua Enterprises, Inc. Annual Report on
Form 10- K filed March 22, 1995 with the Securities and Exchange Commission
(the "Annual Report"), which description is incorporated herein.
5. The Company has not received any notice from the Secretary of
State of the State of Delaware of a determination that any grounds exist for
administratively dissolving the Company and the Company has not received notice
of the commencement of any action to judicially dissolve the Company. Neither
the board of directors nor the shareholders of the Company have taken any
action with respect to the dissolution of the
<PAGE> 149
Company, and the Company has not filed any notice of intent to dissolve with
the State of Delaware.
6. The Company owns or leases places of business in Hong Kong and
the States of Maine and New York.
7. All directors signing the Company's consent resolution
authorizing the transactions contemplated by that certain Credit Agreement were
duly appointed and incumbent in their offices at the time of all relevant
corporate action and at all relevant times thereafter.
8. Except as set forth on Exhibit C, the Company is not a party
to or bound by any contract, agreement, indenture, lease or other document the
violation or termination of which could have a Materially Adverse Effect.
9. Other than the Securities and Exchange Commission and various
state securities authorities and except as discussed in Item 1. of the Annual
Report, the Company does not regularly deal with or report to any federal or
state governmental agency or authority.
10. Except as set forth on Schedule 5.05 to the Credit Agreement,
there is no litigation or proceeding pending or threatened against the Company
or any of its properties, which could have a Material Adverse Effect or any
outstanding judicial or administrative decree, writ, judgment or order to which
the Company or its properties is subject which has had or could have a
Materially Adverse Effect.
11. The Company is not engaged principally, or as one of its
important activities, in the business of purchasing or carrying "margin stock"
(as defined below), and no part of the proceeds of any Loans to the Company or
any Intercompany Loans to any other Consolidated Company will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock. For purposes of this
certificate, the term "margin stock" shall mean (i) any equity security
registered or having unlisted trading privileges on a national securities
exchange; (ii) any OTC margin stock; (iii) any OTC security designated as
qualified for trading in the National Market System; (iv) any debt security
convertible into or carrying a subscription right to purchase a margin stock;
(v) any warrant or right to subscribe to or purchase a margin stock; or (vi)
any security issued by an investment company registered under Section 8 of the
Investment Company Act of 1940 other than (a) a company licensed under the
Small Business Investment Act of 1958, as amended; or (b) a company which has
at least 95 percent of its assets continuously invested in government or
municipal securities; or (c) a company which issues face-amount certificates.
12. The Company is not, nor does it hold itself out as being
primarily, nor does it propose to engage primarily, in the business of
investing, reinvesting, or trading securities. The Company is not engaged nor
does it propose to engage in the business of
- 2 -
<PAGE> 150
issuing face-amount certificates of the installment type, nor has the Company
been engaged in such business nor does it have any such certificate
outstanding. The Company is not engaged nor does it propose to engage in the
business of investing, reinvesting, owning, holding or trading in securities,
and it neither owns nor does it propose to acquire investment securities having
a value exceeding 40% of the value of the Company's total assets (exclusive of
government securities and cash items) on an unconsolidated basis.
13. The Company does not, directly or indirectly, own, control, or
hold, with the power to vote ten percent or more of the outstanding voting
securities of (i) any company which owns or operates facilities used for the
generation, transmission, or distribution of electric energy for sale, or any
company which owns or operates facilities used for the distribution at retail
of natural or manufactured gas for heat, light, or power (any such company
shall be referred to herein as a "Public Utility"), or (ii) any company which
directly or indirectly owns, controls or holds with power to vote, the voting
securities of any Public Utility, or (iii) any company whose voting securities
are directly or indirectly owned, controlled or held with power to vote, by any
company which directly or indirectly owns, controls or holds with power to
vote, the voting securities of any Public Utility. The Company has not
received notification from the Securities and Exchange Commission that,
pursuant to the Public Utility Holding Company Act of 1935, the Commission has
determined that (i) the Company, or (ii) any person the Company directly or
indirectly owns, controls or holds with power to vote, the voting securities
of, or (iii) any person which directly or indirectly owns, controls or holds
with power to vote, the voting securities of the Company, constitutes a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding company."
14. The undersigned is not aware of any consent, approval or
authorization of, or registration, declaration or filing with, (i) any United
States federal or (ii) any state, local, or other governmental authority of the
State of Georgia, required in connection with the execution, delivery,
performance, validity or enforceability of the Credit Documents or the use of
the proceeds of the Loans.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Certificate as of November 6, 1995.
By:
---------------------------------------------
Brady W. Mullinax, Jr., Assistant Treasurer
Irving Tanning Company
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<PAGE> 151
EXHIBIT A-3
OFFICER'S CERTIFICATE
I, Brady W. Mullinax, Jr., Assistant Treasurer of Kroy Tanning
Company, Incorporated, a Delaware corporation (the "Company"), hereby
acknowledge and agree that Alston & Bird may rely and will be relying on this
Certificate in rendering their opinion (the "Opinion") in connection with the
transactions contemplated by that certain Credit Agreement dated as of the date
hereof (the "Credit Agreement") by and among the Company, the lenders from time
to time party thereto (the "Lenders") and SunTrust Bank, Atlanta, as agent (the
"Agent"). Capitalized terms used herein and not otherwise defined herein have
the respective meanings given them in, or by reference in, the Opinion.
I hereby certify to Alston & Bird that, to the best of my knowledge:
1. A copy of the Opinion has been provided to the undersigned in
connection with the certifications made herein. Further, the undersigned is
familiar with each of the Credit Documents.
2. Alston & Bird may rely on all certificates from the Company or
state officials provided to the Agent or any Lender in connection with the
Credit Agreement as if the same were addressed to Alston & Bird. The
certificate of incorporation and bylaws of the Company have not been amended,
revoked or otherwise changed since the date of certification by the Secretary
of State of the State of Delaware of the copy of such certificate delivered to
the Agent under the Credit Agreement.
3. The resolutions of the Board of Directors of the Company
reviewed and relied upon by Alston & Bird are true, complete and correct, the
resolutions have not been amended or revoked since the date adopted and are the
only resolutions relating to the matters that are the subject matter of the
Opinion. Further, the Company's relevant corporate resolutions were adopted in
compliance with any procedural requirements of the Company's certificate of
incorporation and bylaws and the Delaware Corporation Laws.
4. The Company is engaged in the business of producing leather
and finished leather from deerskin and lambskin for a variety of consumer goods
as more particularly described in Item 1. of Fuqua Enterprises, Inc. Annual
Report on Form 10-K filed March 22, 1995 with the Securities and Exchange
Commission (the "Annual Report"), which description is incorporated herein.
5. The Company has not received any notice from the Secretary of
State of the State of Delaware of a determination that any grounds exist for
administratively dissolving the Company and the Company has not received notice
of the commencement of any action to judicially dissolve the Company. Neither
the board of directors nor the shareholders of the Company have taken any
action with respect to the dissolution of the
<PAGE> 152
Company, and the Company has not filed any notice of intent to dissolve with
the State of Delaware.
6. The Company owns or leases places of business in only the
State of Maine.
7. All directors signing the Company's consent resolution
authorizing the transactions contemplated by that certain Credit Agreement were
duly appointed and incumbent in their offices at the time of all relevant
corporate action and at all relevant times thereafter.
8. Except as set forth on Exhibit C to the Opinion, the Company
is not a party to or bound by any contract, agreement, indenture, lease or
other document the violation or termination of which could have a Materially
Adverse Effect.
9. Other than the Securities and Exchange Commission and various
state securities authorities and except as discussed in Item 1. of the Annual
Report, the Company does not regularly deal with or report to any federal or
state governmental agency or authority.
10. Except as set forth on Schedule 5.05 to the Credit Agreement,
there is no litigation or proceeding pending or threatened against the Company
or any of its properties, which could have a Materially Adverse Effect or any
outstanding judicial or administrative decree, writ, judgment or order to which
the Company or its properties are subject which has had or could have a
Materially Adverse Effect.
11. The Company is not engaged principally, or as one of its
important activities, in the business of purchasing or carrying "margin stock"
(as defined below), and no part of the proceeds of any Loans to the Company or
any Intercompany Loans to any other Consolidated Company will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock. For purposes of this
certificate, the term "margin stock" shall mean (i) any equity security
registered or having unlisted trading privileges on a national securities
exchange; (ii) any OTC margin stock; (iii) any OTC security designated as
qualified for trading in the National Market System; (iv) any debt security
convertible into or carrying a subscription right to purchase a margin stock;
(v) any warrant or right to subscribe to or purchase a margin stock; or (vi)
any security issued by an investment company registered under Section 8 of the
Investment Company Act of 1940 other than (a) a company licensed under the
Small Business Investment Act of 1958, as amended; or (b) a company which has
at least 95 percent of its assets continuously invested in government or
municipal securities; or (c) a company which issues face-amount certificates.
12. The Company is not, nor does it hold itself out as being
primarily, nor does it propose to engage primarily, in the business of
investing, reinvesting, or trading securities. The Company is not engaged nor
does it propose to engage in the business of issuing face-amount certificates
of the installment type, nor has the Company been
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<PAGE> 153
engaged in such business nor does it have any such certificate outstanding.
The Company is not engaged nor does it propose to engage in the business of
investing, reinvesting, owning, holding or trading in securities, and it
neither owns nor does it propose to acquire investment securities having a
value exceeding 40% of the value of the Company's total assets (exclusive of
government securities and cash items) on an unconsolidated basis.
13. The Company does not, directly or indirectly, own, control, or
hold, with the power to vote ten percent or more of the outstanding voting
securities of (i) any company which owns or operates facilities used for the
generation, transmission, or distribution of electric energy for sale, or any
company which owns or operates facilities used for the distribution at retail
of natural or manufactured gas for heat, light, or power (any such company
shall be referred to herein as a "Public Utility"), or (ii) any company which
directly or indirectly owns, controls or holds with power to vote, the voting
securities of any Public Utility, or (iii) any company whose voting securities
are directly or indirectly owned, controlled or held with power to vote, by any
company which directly or indirectly owns, controls or holds with power to
vote, the voting securities of any Public Utility. The Company has not
received notification from the Securities and Exchange Commission that,
pursuant to the Public Utility Holding Company Act of 1935, the Commission has
determined that (i) the Company, or (ii) any person the Company directly or
indirectly owns, controls or holds with power to vote, the voting securities
of, or (iii) any person which directly or indirectly owns, controls or holds
with power to vote, the voting securities of the Company, constitutes a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding company."
14. The undersigned is not aware of any consent, approval or
authorization of, or registration, declaration or filing with, (i) any United
States federal or (ii) any state, local, or other governmental authority of the
State of Georgia, required in connection with the execution, delivery,
performance, validity or enforceability of the Credit Documents or the use of
the proceeds of the Loans.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Certificate as of November 6, 1995.
By:
-------------------------------------------
Brady W. Mullinax, Jr., Assistant Treasurer
Kroy Tanning Company, Incorporated
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<PAGE> 154
EXHIBIT B
Jurisdictions of Qualification
Company
Delaware
Georgia
Maine
New York
Irving
Delaware
Maine
New York
Kroy
Delaware
Maine
Massachusetts
<PAGE> 155
EXHIBIT C
Listed Contractual Obligations
1. Agreement between Town of Hartland, Maine and Irving Tanning Company
dated September 26, 1994 related to General Obligation Bonds.
2. Management Agreement between Vista and Fuqua National Corporation
dated April 10, 1989.
3. Assignment to Fuqua Capital Corporation of the Management Agreement
between Vista and Fuqua National Corporation.
4. First Amendment to Management Agreement between Fuqua Capital
Corporation and Vista dated September 14, 1994.
5. Lease Agreement between Vista (Leasee) and Sumitomo Life Realty (N.Y.)
Inc. (Lessor) dated January 17, 1990.
6. First Amendment to the Lease Agreement between Vista (Lessee) and
Sumitomo Life Realty (N.Y.) Inc. dated September 6, 1990.
7. Second Amendment to the Lease Agreement between Vista (Lessee) and
Sumitomo Life Realty (N.Y.) Inc. dated February 21, 1992.
8. Third Amendment to the Lease Agreement between Vista (Lessee) and
Sumitomo Life Realty (N.Y.) Inc. dated October 28, 1994.
9. Sublease Agreement between Vista and Fuqua Capital Corporation dated
October 31, 1994.
10. Lease Agreement between American Southern (Leasee) and Northcreek
Associates (Lessor) dated July 10, 1989.
11. First Amendment to the Lease Agreement between American Southern
(Leasee) and Northcreek Associates (Lessor) dated April 23, 1990.
12. Lease Agreement between Empire State Building Company (Lessor) and
Vista (Lessee) dated March 1, 1993 along with Lease Modification
Agreement and Space Deletion Agreement dated February 18, 1994.
13. Consulting Agreement between American Southern Insurance Company and
The Seibels Bruce Group, Inc. dated May 17, 1995.
<PAGE> 156
14. International Sales Representative Agreement between Irving Tanning
Company, Inc. and Fineco Leather Ltd. dated June 1, 1995.
15. Agreement between IBP, Inc. and Irving Tanning Company, Inc. dated
June 10, 1994.
16. Stock Purchase Agreement among Vista, Concorde Finance & Investment,
Inc., InterRedec, Inc., InterRedec Southern Company, Inc. and American
Southern Company dated September 17, 1991.
17. Non-negotiable Promissory Note between Vista and InterRedec Southern
Company, Inc. dated October 11, 1991.
18. Stock Pledge and Security Agreement between Vista and InterRedec
Southern Company, Inc. dated October 11, 1991.
19. Escrow Agreement among Vista, InterRedec Southern Company, Inc. and
First Union National Bank of Georgia dated October 11, 1991.
20. Agreement and Plan of Merger among Basic American Medical Products,
Inc., BA Acquisition Corporation and Fuqua Enterprises, Inc. dated
October 6, 1995.
21. Stock Purchase Agreement between Atlantic American Corporation and
Fuqua Enterprises, Inc. dated October 16, 1995.
<PAGE> 157
EXHIBIT F
FORM OF
COMPLIANCE CERTIFICATE
SunTrust Bank, Atlanta, as Agent
and each of the Lenders party
to the Credit Agreement referenced
below
Re: Fuqua Enterprises, Inc.
Gentlemen:
The undersigned, ______________________, being the chief financial
officer of Fuqua Enterprises, Inc., a Delaware corporation (the "Borrower"),
hereby delivers this Compliance Certificate to the Agent and Lenders as
required by the terms of that certain Credit Agreement dated as of November
___, 1995 by and among SunTrust Bank, Atlanta, individually and as Agent, the
Borrower and the Lenders party thereto (the "Credit Agreement"). All terms
used herein without definition shall have the meaning set forth in the Credit
Agreement.
1. The undersigned is duly authorized to execute and deliver this
certificate on behalf of the Borrower in his or her capacity as the chief
financial officer of the Borrower.
2. The calculations set forth in Attachment 1 hereto are true and
accurate computations of the financial covenants and the other provisions
identified on such Attachment in accordance with the terms of the Credit
Agreement.
[Add for quarterly reports: 3. The consolidated financial statements
of the Consolidated Companies attached hereto for the fiscal quarter ending
____________________ fairly present in all material respects the financial
condition of the Consolidated Companies as at the end of such fiscal quarter on
a consolidated basis, and the results of operations and statements of cash
flows of the Consolidated Companies for such fiscal quarter and such portion of
Borrower's fiscal year, in accordance with GAAP consistently applied (subject
to normal year-end audit adjustments and the absence of certain footnotes).]
4. Based upon a review of the activities of Consolidated
Companies and the financial statements attached hereto during the period
covered thereby, there exists no Event of Default or Default under the Credit
Agreement.
--------------------------------------
Name:
Title:
<PAGE> 158
Attachment No. 1 to Compliance Certificate
The Compliance Certificate attached hereto is as of
___________________________ and pertains to the period from
___________________________ to __________________________.
<TABLE>
<S> <C> <C>
1. Debt to Capital Ratio - Calculated Quarterly
a. Funded Debt (including the current portion
thereof) of the Consolidated Companies
--------------
b. Funded Debt of Other Persons Guaranteed
by a Consolidated Company
--------------
c. Required Stock Redemptions in next
12 months
--------------
d. Debt outstanding pursuant to
SunTrust Line of Credit
--------------
e. Adjusted Funded Debt (a+b+c+d)
--------------
f. Net Worth of Borrower less
Treasury Stock
--------------
g. Total Capitalization (e+f)
--------------
h. Leverage Ratio e/g %
--------------
i. Maximum Leverage Ratio .6:1:00
--------------
j. Default Indicated? Yes/No
2. Interest Coverage Ratio - Calculated Quarterly
For Preceding Four Quarters
a. Consolidated EBIT
--------------
b. Consolidated Interest Expense
--------------
c. Ratio of (a)/(b)
--------------
d. Minimum Ratio 2.0:1.0
--------------
e. Default Indicated? Yes/No
3. Cash Flow Coverage Ratio - Calculated Quarterly
For Preceding Four Quarters
a. Consolidated Net Income (Loss)
--------------
b. Depreciation and Amortization
--------------
c. Consolidated EBITDA (a+b)
--------------
d. Consolidated Funded Debt
--------------
e. Ratio of (c)/(d)
--------------
f. Minimum Ratio 3.5:1.0
--------------
g. Default Indicated? Yes/No
</TABLE>
<PAGE> 159
4. Indebtedness (Section 7.01)
List all outstanding Indebtedness incurred since later of Closing Date
or date of last Compliance Certificate and indicate provision of Credit
Agreement permitting the same:
_____________________________________________________
_____________________________________________________
_____________________________________________________
5. Liens (Section 7.02)
a. Amount of Indebtedness permitted
by Section 7.01(d) Secured by Liens $
-------------
b. Amount Permitted $5,000,000.00
c. Default Indicated? Yes/No
6. Dividends (Section 7.04)
Total Amount of all repurchases of
capital stock during current fiscal
year $
-------------
Amount Permitted: $1,000,000
-------------
Default Indicated? Yes/No
7. Stock Ownership
Amount of Shares of Voting Stock
owned by Fuqua Family as of date hereof
-------------
Amount Required 720,000
-------------
Default Indicated? Yes/No
8. Intercompany Loans
As listed below:
Note Delivered
Obligor Obligee Amount Outstanding Pursuant to Assignment?
- ------- ------- ------------------ -----------------------
Yes/No
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<PAGE> 160
EXHIBIT G
ASSIGNMENT AND ACCEPTANCE AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT (the "Assignment
Agreement") dated as of _____________, 19__ between
______________________________________________ ("Assignor") and
__________________________________ ("Assignee"). All capitalized terms used
herein and not otherwise defined shall have the respective meanings provided
such terms in the Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, Assignor is a party to a Credit Agreement, dated as
of November 6, 1995 (as amended to the date hereof, the "Credit Agreement"),
among Fuqua Enterprises, Inc., a Delaware corporation (the "Borrower"), various
financial institutions (including Assignor, the "Lenders") and SunTrust Bank,
Atlanta, as Agent (the "Agent"); and
WHEREAS, Assignor has a Revolving Credit Commitment of
$___________ under the Credit Agreement pursuant to which it has made
outstanding Advances of $______________ and Letter of Credit Obligations of
$_________________; and
WHEREAS, Assignor and Assignee wish Assignor to assign to
Assignee its rights under the Credit Agreement with respect to a portion of its
Revolving Credit and of its outstanding Advances and Letter of Credit
Obligations; and
WHEREAS, Assignor and Assignee wish Assignee to assume the
obligations of Assignor under the Credit Agreement to the extent of the rights
so assigned;
NOW THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
1. Assignment. Assignor hereby assigns to Assignee,
without recourse, or representation or warranty (other than expressly provided
herein) and subject to Section 4(b) hereof, ___% as the "Assignee's Share"
("Assignee's Share") of all of Assignor's rights, title and interest arising
under the Credit Agreement relating to Assignor's Revolving Credit Commitment,
including with respect to Assignee's Share of the Advances and Letter of Credit
Obligations heretofore made by the Assignor under the Revolving Credit
Commitment pursuant to the Credit Agreement. The dollar amount of Assignee's
Share of Assignor's Revolving Credit Commitment is $__________, the dollar
amount of Assignee's Share of Assignor's outstanding Advances under the
Revolving Credit Commitments is $__________ and the dollar amount of Assignee's
Share of Assignor's outstanding Letter of Credit Obligations is
$_________________________.
<PAGE> 161
2. Assumption. Assignee hereby assumes from Assignor
all of Assignor's obligations arising under the Credit Agreement relating to
Assignee's Share of Assignor's Revolving Credit Commitment and of the Advances
and Letter of Credit Obligations outstanding thereunder. It is the intent of
the parties hereto that Assignor shall be released from all of its obligations
under the Credit Agreement relating to Assignee's Share.
3. Assignments; Participations. Assignee may not assign
all or any part of the rights granted to it hereunder. Assignee may sell or
grant participations in all or any part of the rights granted to it hereunder
in accordance with the provisions of Section 10.06 of the Credit Agreement.
4. Payment of Interest and Fees to Assignee.
(a) As of the date hereof interest is payable by the
Borrower in respect of Assignee's Share of the Eurodollar Advances at a rate
equal to ___% per annum above LIBOR and a Commitment Fee equal to ___% per
annum and a Letter of Credit Fee equal to ____% per annum on the Assignee's
Share of the average daily unused portion of the Revolving Credit Commitment
and the Letter of Credit Obligations, respectively.
(b) Notwithstanding anything to the contrary
contained in this Assignment Agreement, if and when Assignor receives or
collects any payment of interest on any Advance attributable to Assignee's
Share or any payment of the Commitment Fee or Letter of Credit Fee attributable
to Assignee's Share which, in any such case, are required to be paid to
Assignee pursuant to clause (a) above, Assignor shall distribute to Assignee
such payment but only to the extent such interest or fee accrued after the
Assignment Effective Date (as hereinafter defined).
(c) Notwithstanding anything to the contrary
contained in this Assignment Agreement, if and when Assignee receives or
collects any payment of interest on any Advance or any payment of the
Commitment Fee or Letter of Credit Fee which, in any such case, is required to
be paid to Assignor pursuant to clause (a) above, Assignee shall distribute to
Assignor such payment.
5. Payments on Assignment Effective Date. In
consideration of the assignment by Assignor to Assignee of Assignee's Share of
Assignor's Revolving Credit Commitment, Advances and Letter of Credit
Obligations as set forth above, Assignee agrees to pay to Assignor on or prior
to the Assignment Effective Date an amount specified by Assignor in writing on
or prior to the Assignment Effective Date which represents Assignee's Share of
the principal amount of the respective Advances made by Assignor pursuant to
the Revolving Credit Commitment and outstanding on the Assignment Effective
Date.
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<PAGE> 162
6. Effectiveness. (a) This Assignment Agreement shall
become effective on the date (the "Assignment Effective Date") (which is at
least five days after the date hereof) on which (i) Assignor and Assignee shall
have signed a copy hereof (whether the same or different copies) and, in the
case of Assignee, shall have delivered same to Assignor, (ii) the Borrower
shall have consented hereto, (iii) a copy of the fully executed Assignment, a
fee of $3,000 and the Notes evidencing the Revolving Credit Commitment assigned
hereby shall have been delivered to the Agent, and (iv) Assignee shall have
paid to Assignor the amount set forth in Section 5.
(b) It is agreed that all interest on any Advance
attributable to Assignee's Share and all Commitment Fees and Letter of Credit
Fees attributable to Assignee's Share, which, in each case, accrues on and
after the Assignment Effective Date shall be paid directly to the Assignee in
accordance with the terms of the Credit Agreement.
7. Amendment of Credit Agreement. On the Assignment
Effective Date the Credit Agreement shall be amended by deeming the signature
of Assignee herein as a signature to the Credit Agreement. The Assignee shall
be deemed a "Lender" for all purposes under the Credit Agreement and shall be
subject to and shall benefit from all of the rights and obligations of a Lender
under the Credit Agreement. The address of the Assignee for notice purposes
shall be as set forth below, and the Credit Agreement shall be amended by
deeming such signature page and address to be included thereon. Without
limiting the generality of the foregoing, Assignee agrees that it will perform
its obligations as a Lender under the Credit Agreement as required by the terms
thereof and Assignee appoints and authorizes the Agent to take such actions as
Agent on its behalf and exercise such powers under the Credit Agreement and the
other loan documents as are delegated to the Agent by the terms of the Credit
Agreement and the other credit documents, together with such powers as are
reasonably incidental thereto.
8. Representations and Warranties. Each of the Assignor
and the Assignee represents and warrants to the other party as follows:
(a) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment Agreement
and to fulfill its obligations under, and to consummate the transactions
contemplated by, this Assignment Agreement;
(b) the making and performance by it of this
Assignment Agreement and all documents required to be executed and delivered by
it hereunder do not and will not violate any law or regulation of the
jurisdiction of its incorporation or any other law or regulation applicable to
it;
-3-
<PAGE> 163
(c) this Assignment Agreement has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms; and
(d) all consents, licenses, approvals,
authorizations, exemptions, registrations, filings, opinions and declarations
from or with any agency, department, administrative authority, statutory
corporation or judicial entity necessary for the validity or enforceability of
its obligations under this Assignment Agreement have been obtained, and no
governmental authorizations other than any already obtained are required in
connection with its execution, delivery and performance of this Assignment
Agreement.
9. Expenses. The Assignor and the Assignee agree that
each party shall bear its own expenses in connection with the preparation and
execution of this Assignment Agreement.
10. Miscellaneous. (a) Assignor shall not be responsible
to Assignee for the execution (by any party other than the Assignor),
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of the Credit Agreement, the Notes or the Note Assignments or for
any representations, warranties, recitals or statements made therein or in any
written or oral statement or in any financial or other statements, instruments,
reports, certificates or any other documents made or furnished or made
available by Assignor to Assignee or by or on behalf of the Borrower or any
other Credit Party to Assignor or Assignee in connection with the Credit
Agreement, the Notes or the Note Assignments and the transactions contemplated
thereby. Assignor shall not be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in the Credit Agreement, the Notes or the
Note Assignments or as to the use of the proceeds of the Advances or as to the
existence or possible existence of any event which constitutes an Event of
Default or which with the giving of notice or the passage of time or both would
constitute an Event of Default.
(b) Assignee represents and warrants that it has
made its own independent investigation of the financial condition and affairs
of the Borrower and each other Credit Party in connection with the making of
the Advances and the assignment of Assignee's Share of Assignor's Revolving
Credit Commitment and of Assignor's Advances to Assignee hereunder and has made
and shall continue to make its own appraisal of the creditworthiness of the
Borrower and each other Credit Party. Assignor shall have no duty or
responsibility either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of Assignee or to provide
Assignee with any credit or other information with respect thereto, whether
coming into its possession before the making of the Advances or at any time or
times thereafter and shall further have no responsibility with respect to the
accuracy of, or the completeness of, any
-4-
<PAGE> 164
information provided to Assignee, whether by Assignor or by or on behalf of
either the Borrower or any other Credit Party.
(c) THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
GEORGIA.
(d) No term or provision of this Assignment
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by both parties.
(e) This Assignment Agreement may be executed in
one or more counterparts, each of which shall be an original but all of which,
taken together, shall constitute one and the same instrument.
(f) The Assignor may at any time or from time to
time grant to others assignments or participations in its Revolving Credit
Commitment or the Advances and Letter of Credit Obligations but not in the
portions thereof assigned to Assignee pursuant to this Assignment Agreement.
The Assignor represents and warrants that it has not at any time prior to the
Assignment Effective Date encumbered or assigned the portion of its Revolving
Credit Commitment or Advances being assigned hereunder.
(g) All payments hereunder or in connection
herewith shall be made in Dollars and in immediately available funds, if
payable to the Assignor, to the account of the Assignor at its address as
designated in the Credit Agreement, and, if payable to the Assignee, to the
account of the Assignee's address, as designated on the signature page hereof.
(h) This Assignment Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Neither of the parties hereto may assign or transfer
any of its rights or obligations under this Assignment Agreement without the
prior consent of the other party.
(i) All representations and warranties made
herein and indemnities provided for herein shall survive the consummation of
the transaction contemplated hereby.
(j) The Assignee acknowledges receipt of copies
of the documents received in connection with the transactions contemplated by
the Credit Agreement and this Assignment Agreement.
-5-
<PAGE> 165
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement as of the date first above written.
[NAME OF ASSIGNOR]
By:
------------------------------------
Title:
Assignee's Share of [NAME OF ASSIGNEE]
Revolving Credit Commitment:
$ By:
----------------------------- ------------------------------------
Title:
Address:
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
Tel. No:
------------------------
Fax No:
------------------------
CONSENTED TO AS OF THE
DATE SET FORTH ABOVE:
FUQUA ENTERPRISES, INC.
By:
-----------------------------------------------
Title:
-----------------------------------------
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<PAGE> 166
EXHIBIT H
NOTE ASSIGNMENT AGREEMENT
THIS NOTE ASSIGNMENT AGREEMENT (the "Assignment") dated as of
November 6, 1995, made by FUQUA ENTERPRISES, INC., a Delaware corporation (the
"Borrower") and each of the Subsidiaries of the Borrower named on the
signature pages hereof or from time to time becoming a party hereto (the
"Assigning Subsidiaries" and together with the Borrower, collectively, the
"Assignors" and individually, an "Assignor"), in favor of SUNTRUST BANK,
ATLANTA a Georgia banking corporation, (the "Agent"), in its capacity as agent
for banks and other lending institutions parties to the Credit Agreement (as
hereinafter defined) and each assignee thereof becoming a "Lender" as provided
therein (the "Lenders").
PRELIMINARY STATEMENTS:
(1) Certain lenders (together with other lenders that may
from time to time become parties thereto, the "Lenders"), the Agent and the
Borrower have entered into that certain Credit Agreement dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement", the terms defined therein and not otherwise defined herein
being used herein as therein defined).
(2) Pursuant to the Credit Agreement, the Lenders have
agreed to allow certain Intercompany Loans to and from the Borrower and its
Subsidiaries and between Subsidiaries of the Borrower upon the condition that
such Intercompany Loans are evidenced by an Intercompany Note which has been
pledged to the Agent for the benefit of the Lenders to secure the Obligations
of the Borrower.
(3) The parties hereto wish to enter into this Assignment
in fulfillment of the above-referenced condition.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each of the Assignors hereby agrees with the Agent as follows:
SECTION 1. ASSIGNMENT. As collateral (collectively the
"Assigned Collateral") to secure the Secured Obligations (as defined in Section
2) each of the Assignors hereby:
(a) collaterally assigns and grants to the Agent, for the
ratable benefit of the Lenders, a lien on and a security interest in,
all of Assignor's right, title and interest in and to the Intercompany
Loans owing to each party hereto from the Borrower or any Subsidiary
of the Borrower, each
<PAGE> 167
Intercompany Note evidencing any such Intercompany Loan and all other
instruments evidencing such Intercompany Loans, all other Intercompany
Loan Documents and all renewals and extensions thereof, accessions
thereto and substitutions therefor, whether now owned or held or
hereafter owned or held by any such Assignor; and
(b) collaterally assigns and grants to the Agent, for the
ratable benefit of the Lenders, to the maximum extent permitted by
applicable law, a lien on and a security interest in, all Proceeds of
the foregoing. Proceeds shall have the meaning assigned that term
under the Uniform Commercial Code as in effect in the State of Georgia
or under other relevant law and, in any event, shall include, but not
be limited to, any and all (i) instruments representing obligations
to pay amounts in respect of Assigned Collateral and (ii) other
amounts from time to time paid or payable under or in connection with
any of the Assigned Collateral.
Each of the parties hereto acknowledges and agrees that the assignment and
security interest created by this Assignment is, and is intended to be, a first
priority security interest with respect to all Intercompany Loans, Intercompany
Notes, Intercompany Loan Documents or other Assigned Collateral, whether now
existing or hereafter incurred or executed.
SECTION 2. SECURED OBLIGATIONS. This Assignment secures, and
the Assigned Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by acceleration or
otherwise of all payments and other Obligations of the Borrower now existing or
hereafter arising, whether for principal, premium or interest (all such
obligations being the "Secured Obligations").
SECTION 3. NO RELEASE. Nothing set forth in this Assignment
shall relieve any Assignor from the performance of any term, covenant,
condition or agreement on such Assignor's part to be performed or observed
under or in respect of any of the Assigned Collateral or from any liability to
any entity under or in respect of any of the Assigned Collateral or impose any
obligation on the Agent or any Lender to perform or observe any such term,
covenant, condition or agreement on any Assignor's part to be so performed or
observed or impose any liability on the Agent or any Lender for any act or
omission on the part of any Assignor relating thereto or for any breach of any
representation or warranty on the part of any Assignor contained in this
Assignment, or in respect of the Assigned Collateral or made in connection
herewith or therewith. This paragraph shall survive the termination of this
Assignment and the discharge of each Assignor's other obligations hereunder.
SECTION 4. DELIVERY OF ASSIGNED COLLATERAL. All certificates
or instruments representing or evidencing the Intercompany Loans from the
Borrower or any Subsidiary of the
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<PAGE> 168
Borrower, including without limitation, the Intercompany Notes, upon delivery
thereof to any Assignor, shall be promptly delivered to and held by the Agent
pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Each Assignor
represents and warrants as follows:
(a) Such Assignor is, and at the time of the delivery of
the Assigned Collateral pursuant to Section 4 of this Assignment will
be, the legal and beneficial owner of the Assigned Collateral free and
clear of any Lien except for the Lien and security interest created by
this Assignment;
(b) Such Assignor has full corporate power and authority
and legal right to pledge all the Assigned Collateral pursuant to this
Assignment and make the transfers contemplated by Section 4 hereof;
(c) No consent of any other party (including, without
limitation, stockholders or creditors of such Assignor) and no
consent, authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or other Person is required
either (i) for the transfer by such Assignor of the Assigned
Collateral as contemplated by this Assignment or for the execution,
delivery or performance of this Assignment by such Assignor or (ii)
for the exercise by the Agent of the remedies in respect of the
Assigned Collateral pursuant to this Assignment, except as may be
required in connection with such disposition by laws affecting the
offering and sale of instruments generally or as otherwise required by
laws affecting creditors in general in connection with the exercise of
remedies by a secured party;
(d) Except as otherwise permitted by this Assignment, the
Assignors at all times will be the sole beneficial owners of the
Assigned Collateral;
(e) All information set forth herein relating to the
Assigned Collateral is accurate and complete in all material respects
as of the date hereof.
SECTION 6. SUPPLEMENTS, FURTHER ASSURANCES. Each Assignor
agrees that at any time and from time to time, at the expense of the Borrower,
any Assignor will promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or that the Agent
may reasonably request, in order to protect any security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any Assigned Collateral.
-3-
<PAGE> 169
SECTION 7. PAYMENTS ON NOTES.
(a) As long as no Event of Default shall have occurred
and be continuing under the terms of this Assignment, each Assignor shall be
entitled to receive and retain, and to utilize free and clear of the lien of
this Assignment, any and all payments of interest and principal in respect of
the Assigned Collateral; provided, however, that any and all payments in the
form of securities or notes shall be, and shall be forthwith delivered to the
Agent to hold as, Assigned Collateral and shall, if received by any Assignor,
be received in trust for the benefit of the Agent, be segregated from the other
property or funds of such Assignor, and be forthwith delivered to the Agent as
Assigned Collateral in the same form as so received (with any necessary
endorsement).
(b) Upon the occurrence and during the continuance of an
Event of Default under the terms of this Assignment, all rights of each
Assignor to receive payments of interest or principal which it would otherwise
be authorized to receive and retain pursuant to Section 7(a) above shall cease
and all rights shall thereupon become vested in the Agent who shall thereupon
have the sole right to receive and hold such payments during the continuance of
such Event of Default.
(c) All payments which are received by any Assignor
contrary to the provisions of Section 7(b) above shall be received in trust for
the benefit of the Agent, shall be segregated from other funds of such Assignor
and shall be forthwith paid over to the Agent as Assigned Collateral in the
same form as so received (with any necessary endorsement).
SECTION 8. COVENANTS. Each of the Assignors hereby covenants
and agrees as follows:
(a) Not to encumber the Assigned Collateral with any
Lien, other than the Lien of this Assignment;
(b) To permit, and cause each of its Subsidiaries to
permit, any representative of the Agent or any Lender, at the Agent's
or such Lender's expense, to visit and inspect any of its property, to
examine its books and records and to make copies and take extracts
therefrom, and to discuss its affairs, finances and accounts with its
officers, all at such reasonable times, upon reasonable prior notice,
and as often as the Agent or such Lender may reasonably request;
provided that, no notice shall be required in the event that an Event
of Default has occurred and is continuing; and
(c) Not to sell or otherwise dispose of, or grant any
option or warrant with respect to, any of the Assigned Collateral; and
-4-
<PAGE> 170
(d) To assign hereunder, in accordance with Sections 2
and 7, any and all additional instruments, agreements and other
documents which are to become part of the Assigned Collateral.
SECTION 9. AGENT APPOINTED ATTORNEY-IN FACT. Each of the
Assignors hereby appoints the Agent as such Assignor's attorney-in-fact, with
full authority in the place and stead of such Assignor and in the name of such
Assignor or otherwise, from time to time in the Agent's discretion to take any
action and to execute any instrument which the Agent may deem necessary or
advisable to accomplish the purposes of this Assignment; provided that, unless
an Event of Default has occurred and is continuing, the Agent shall not
exercise its rights pursuant to this Section 9 until five (5) days after
written request to the Assignor to take such action or to execute such
instrument. If such Assignor fails to perform any agreement contained herein
within five (5) days after receipt of a written request to do so from the
Agent, the Agent may itself perform, or cause performance of, such agreement.
SECTION 10. REMEDIES UPON DEFAULT; DECISIONS RELATING TO
EXERCISE OF REMEDIES.
A. DEFINITION OF EVENTS OF DEFAULT. The following
specified events shall constitute events of default ("Events of Default"):
(a) The occurrence of any "Event of Default" pursuant to
the Credit Agreement (as such term is defined therein);
(b) any representation, warranty or statement made or
deemed to be made by any of the Assignor or any of its officers under
or in connection with this Assignment shall have been incorrect in any
material respect when made or deemed to be made; or
(c) any the Assignor shall fail to observe or perform any
covenant or agreement set forth in this Assignment.
B. REMEDIES UPON DEFAULT. If any Event of Default under
this Assignment shall have occurred and be continuing, the Agent may from
time to time exercise, in its sole discretion and without further notice or
demand, with respect to the Assigned Collateral, in addition to other rights
and remedies provided for herein or otherwise available to it, all of the
rights and remedies of a secured party under the Uniform Commercial Code (the
"Code") in effect in the State of Georgia.
SECTION 11. APPLICATION OF PROCEEDS. After and during the
continuance of an Event of Default described in Section 10, any cash held by
the Agent as Assigned Collateral and all cash proceeds received by the Agent
(all such cash being "Proceeds") in respect of any sale of, collection from, or
other realization upon
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<PAGE> 171
all or any part of the Assigned Collateral pursuant to the exercise by the
Agent of its remedies as a secured creditor as provided in Section 12 of this
Assignment shall be applied promptly from time to time by the Agent:
FIRST, to the payment of the reasonable costs and expenses of
such sale, collection or other realization, including all expenses,
liabilities and advances made or incurred by the Agent or the Lenders
in connection therewith;
SECOND, to the payment of the Secured Obligations then due; and
THIRD, after payment in full of all Secured Obligations, to
the Assignor owed such indebtedness, or its successors or assigns, or
to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any surplus then
remaining from such Proceeds.
SECTION 12. EXPENSES. The Assignors, jointly and severally,
will upon demand pay to the Agent and each Lender the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, which the Agent or any Lender may actually incur
in connection with (i) the administration of this Assignment, (ii) the custody
or preservation of, or the sale of, collection from, or other realization upon,
any of the Assigned Collateral, (iii) the exercise or enforcement of any of the
rights of the Agent or any Lender hereunder or (iv) the failure by any Assignor
to perform or observe any of the provisions hereof except where such expenses
result solely from the gross negligence or willful misconduct of the Agent or
such Lender.
SECTION 13. NO WAIVER. No failure on the part of the Agent
or any Lender to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Agent or any
Lender of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein provided are to the full extent permitted by law cumulative and
are not exclusive of any remedies provided by law.
SECTION 14. AMENDMENTS, ETC. This Assignment may not be
amended, modified or waived except with the written consent of each of the
Assignors and the Agent. Any amendment, modification or supplement of or to
any provision of this Assignment, any termination or waiver of any provision of
this Assignment and any consent to any departure by any Assignor from the terms
of any provision of this Assignment shall be effective only in the specific
instance and for the specific purpose for which made or given. No notice to or
demand upon any Assignor in any instance hereunder shall entitle such Assignor
or any other Assignor to any
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<PAGE> 172
other or further notice or demand in similar or other circumstances.
SECTION 15. TERMINATION. This Assignment shall terminate
upon the payment in full in cash in the applicable currency of all Secured
Obligations, and then the Agent shall, upon the request and at the expense of
the Assignors, forthwith assign, transfer and deliver, against receipt and
without recourse to the Agent or any Lender, such of the Assigned Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof to
or on the order of the Assignor.
SECTION 16. NOTICES. All notices, demands, instructions and
other communications required or permitted to be given to or made upon any
party hereto shall be in writing sent by first-class, registered or certified
mail, postage prepaid and addressed as follows:
(1) If to Agent, at the address specified in the Credit
Agreement, and
(2) If to Assignors, at the address specified on the
signature page hereto for such Assignor.
Either the Agent or any Assignor may change its address for notice purposes by
notice to the other parties as specified herein.
SECTION 17. ADDITIONAL ASSIGNORS. Upon execution and delivery
by any Subsidiary of the Borrower of an instrument in the form of Annex 1, such
Subsidiary of the Borrower shall become an Assignor hereunder with the same
force and effect as if originally named an Assignor herein (each an "Additional
Assignor"). The execution and delivery of any such instrument shall not
require the consent of any Assignor hereunder. The rights and obligations of
each Assignor hereunder shall remain in full force and effect notwithstanding
the addition of any Additional Assignor as a party to this Assignment.
SECTION 18. CONTINUING SECURITY INTEREST; SUCCESSORS AND
ASSIGNS. This Assignment shall create a continuing security interest in the
Assigned Collateral and shall (i) remain in full force and effect until payment
in full in cash in the applicable currency of all Secured Obligations or
otherwise terminated pursuant to Section 15, (ii) be binding upon the
Assignors, their respective successors and assigns, and (iii) inure, together
with the rights and remedies of the Agent hereunder, to the benefit of the
Agent, each Lender and each of its successors, transferees and assigns.
SECTION 19. GOVERNING LAW. This Assignment shall be governed
by, and construed in accordance with, the laws of the State of Georgia without
regard to the principles of conflicts of laws thereof.
-7-
<PAGE> 173
SECTION 20. EXECUTION IN COUNTERPARTS. This Assignment may
be executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute one and the same Assignment.
IN WITNESS WHEREOF, each of the Assignors has caused this
Assignment to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
ASSIGNORS:
ADDRESS: FUQUA ENTERPRISES, INC.
One Atlantic Center
1201 W. Peachtree Street
Suite 5000
Atlanta, GA 30309-3424
By:
-------------------------------------
Title:
-----------------------------
Attest:
-------------------------------------
Title:
-----------------------------
[CORPORATE SEAL]
ADDRESS: IRVING TANNING COMPANY
One Atlantic Center
1201 W. Peachtree Street
Suite 5000
Atlanta, GA 30309-3424
By:
-------------------------------------
Title:
-----------------------------
Attest:
-------------------------------------
Title:
-----------------------------
[CORPORATE SEAL]
-8-
<PAGE> 174
ANNEX 1
SUPPLEMENT
TO
NOTE ASSIGNMENT AGREEMENT
THIS SUPPLEMENT TO NOTE ASSIGNMENT AGREEMENT (this "Supplement
to Note Agreement"), dated as of ___________, 19__, made by
______________________, a ________ corporation (the "Additional Assignor"), in
favor of SUNTRUST BANK, ATLANTA, a Georgia banking corporation (the "Agent"),
in its capacity as agent for banks and other lending institutions parties to
the Credit Agreement (as hereinafter defined) and each assignee thereof
becoming a "Lender" as provided therein (the "Lenders").
PRELIMINARY STATEMENTS:
(1) Certain lenders (together with other lenders
that may from time to time become parties thereto, the "Lenders"), the Agent
and the Borrower have entered into that certain Credit Agreement dated as of
November 6, 1995 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined).
(2) Pursuant to the Credit Agreement, the Lenders
have agreed to allow certain Intercompany Loans to and from the Borrower and
its Subsidiaries and between Subsidiaries of the Borrower upon the condition
that such Intercompany Loans are evidenced by an Intercompany Note which has
been pledged to the Agent for the benefit of the Lenders to secure the
Obligations of the Borrower.
(3) The Borrower and certain Subsidiaries of the
Borrower (collectively, the "Assignors") have executed and delivered that
certain Note Assignment Agreement dated as of November 6, 1995 (the "Note
Assignment Agreement") pursuant to which the Assignors have assigned and
granted to the Agent, for the benefit of the Lenders, a lien on and a security
interest in, all of their right title and interest in and to the Intercompany
Loans, the Intercompany Notes and the Intercompany Loan Documents to secure all
of the Obligations of the Borrower under the Credit Agreement and the other
Credit Documents (as defined in the Credit Agreement);
(4) It is a condition subsequent to the Lenders'
obligation to make loans to the Borrower under the Credit Agreement that the
Additional Assignor execute and deliver to the Agent this Supplement to Note
Agreement, and the Additional Assignor desires to execute and deliver this
Supplement to Note Agreement to satisfy such condition subsequent;
<PAGE> 175
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Additional Assignor hereby agrees with the Agent as follows:
1. DEFINED TERMS. Capitalized terms not otherwise defined herein which
are used in the Note Assignment Agreement are used herein with the meanings
specified for such terms in the Note Assignment Agreement.
2. ADDITIONAL ASSIGNOR. The Additional Assignor agrees that it shall be
and become an Assignor for all purposes of the Note Assignment Agreement and
shall be fully bound thereby to the same extent and with the same effect as
though the Additional Assignor had been one of the Assignor originally
executing and delivering the Note Assignment Agreement. Without limiting the
foregoing, the Additional Assignor hereby agrees with the Agent that:
(a) As collateral (collectively the "Assigned
Collateral") to secure the Secured Obligations (as defined in Section 2(b)) the
Additional Assignors hereby:
(i) collaterally assigns and grants to the Agent, for the
ratable benefit of the Lenders, a lien on and a security interest in,
all of the Additional Assignor's right, title and interest in and to
the Intercompany Loans owing to each party hereto from the Borrower or
any Subsidiary of the Borrower, each Intercompany Note evidencing any
such Intercompany Loan and all other instruments evidencing such
Intercompany Loans, all other Intercompany Loan Documents and all
renewals and extensions thereof, accessions thereto and substitutions
therefor, whether now owned or held or hereafter owned or held by such
Additional Assignor; and
(b) collaterally assigns and grants to the Agent, for the
ratable benefit of the Lenders, to the maximum extent permitted by
applicable law, a lien on and a security interest in, all Proceeds of
the foregoing. Proceeds shall have the meaning assigned that term
under the Uniform Commercial Code as in effect in the State of Georgia
or under other relevant law and, in any event, shall include, but not
be limited to, any and all (i) instruments representing obligations
to pay amounts in respect of Assigned Collateral and (ii) other
amounts from time to time paid or payable under or in connection with
any of the Assigned Collateral.
Each of the parties hereto acknowledges and agrees that the assignment and
security interest created by this Assignment is, and is intended to be, a first
priority security interest with respect to all Intercompany Loans, Intercompany
Notes, Intercompany Loan Documents or other Assigned Collateral, whether now
existing or hereafter incurred or executed.
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<PAGE> 176
(b) This Assignment secures, and the Assigned Collateral
is collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by acceleration or otherwise of all payments and
other Obligations of the Borrower now existing or hereafter arising, whether
for principal, premium or interest (all such obligations being the "Secured
Obligations").
All references in the Note Assignment Agreement to "Assignors" or any
"Assignor" shall be deemed to include and to refer to the Additional Assignor.
3. GOVERNING LAW. This Supplement to Note Agreement shall be governed
by, and construed in accordance with, the laws of the State of Georgia without
regard to the principles of conflicts of laws thereof.
IN WITNESS WHEREOF, the Additional Assignor has caused this
Supplement to Note Agreement to be duly executed and delivered under seal by
its duly authorized officers as of the date first above written.
Address for Notices: ADDITIONAL ASSIGNOR:
---------------------------------
By:
--------------------------------------------
Title:
--------------------------------------
Attest:
----------------------------------------
Title:
----------------------------------
[CORPORATE SEAL]
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<PAGE> 177
EXHIBIT A
1. Promissory Note, dated as of November 6, 1995, made by Irving Tanning
Company in favor of Fuqua Enterprises, Inc., in the maximum principal
amount of $60,000,000.
2. Promissory Note, dated as of November 6, 1995, made by Kroy Tanning
Company, Incorporated in favor of Irving Tanning Company, in the
maximum principal amount of $60,000,000.
<PAGE> 178
EXHIBIT I
FORM OF INTERCOMPANY NOTE
$________________ Atlanta, Georgia
______________, 199_
FOR VALUE RECEIVED, the undersigned, _______________________, a
_______________ corporation (the "Borrower") hereby unconditionally promises to
pay to the order of FUQUA ENTERPRISES, INC. (together with any other holder
hereof, the "Lender"), at its office at 1201 West Peachtree Street, Suite 5000,
Atlanta, Georgia 30309 or at such other address as may be specified by the
Lender to the Borrower, the principal sum of ___________________________ AND
___/100 DOLLARS ($_________________), or such lesser or greater amount as may
be the aggregate principal amount outstanding of all advances (each an
"Advance") made by the Lender to the Borrower pursuant to this Note.
The Borrower agrees to pay principal at said office, in like money,
from time to time on DEMAND by the Lender. The Borrower further agrees to pay
interest at said office, in like money, on the outstanding principal balance of
Advances owing hereunder at the variable rate equal to (a) the lowest rate of
interest payable from time to time by Fuqua Enterprises, Inc. on Revolving
Loans outstanding under and as defined in the Credit Agreement dated as of
November __, 1995 (the "Credit Agreement") by and among Fuqua Enterprises,
Inc., certain Lenders from time to time party thereto and SunTrust Bank,
Atlanta, as Agent (the "Agent") or (b) if no such Revolving Loans shall be then
outstanding under the Credit Agreement or if such Credit Agreement shall have
been terminated, at the rate of interest publicly announced by the Agent as its
prime lending rate. All accrued and unpaid interest shall be payable on
DEMAND.
The date and amount of each Advance made by the Lender to the Borrower
under this Note, each repayment of principal in respect thereof and the accrual
of interest under this Note, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, endorsed by the Lender on Schedule I
attached hereto; provided, however, that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligation of the Borrower
to make a payment when due of any amount owing under this Note. Any such
recordations or endorsements made by the Lender on its books or this Note shall
be conclusive and binding on the Borrower absent manifest error.
<PAGE> 179
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Note under seal as of the date written above.
---------------------------------
By:
------------------------------
Name:
-----------------------
Title:
----------------------
<PAGE> 180
SCHEDULE I
Amount of Amount of Outstanding
Date Borrowing Payment Principal Balance Notation
- ---- --------- --------- ----------------- --------
<PAGE> 1
EXHIBIT 11
FUQUA ENTERPRISES, INC.
NUMBER OF SHARES USED IN COMPUTING EARNINGS PER SHARE
SEPTEMBER 30, 1995
PRIMARY EARNINGS PER SHARE:
TREASURY STOCK METHOD:
<TABLE>
<CAPTION>
NUMBER OF
TRADING TOTAL TOTAL
MONTH DAYS HIGH LOW
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
July 20 $ 422.375 $ 416.625
August 23 531.875 525.875
September 20 476.875 472.500
-- ---------- ----------
63 $1,431.125 $1,415.000 $2,846.125
== ========== ========== ==========
AVERAGE: $2,846.125 divided by 63 divided by 2 = $22.588
<CAPTION>
OPTIONS
OUTSTANDING SHARES PRICE EXTENSION
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
47,750 $ 8.500 $ 405,875
46,250 9.500 439,375
10,000 20.375 203,750
20,000 20.375 407,500
5,000 21.000 105,000
15,000 20.625 309,375
500 8.500 4,250
150,000 20.500 3,075,000
------- ----------
Total 294,500 $4,950,125
======= ==========
- -----------------------------------------------------------------------------------------------------------
Average Price (above) $ 22.588
----------
Total Extension Divided by Average Price 219,146
Options Outstanding 294,500
----------
Common Stock Equivalents 75,354
Average Shares Outstanding (see page 2) 3,793,924
----------
Use for Primary Earnings Per Share (3rd quarter) 3,869,278
----------
Use for Primary Earnings Per Share (1st quarter) 3,864,957
----------
Use for Primary Earnings Per Share (2nd quarter) 3,857,212
----------
Use for Primary Earnings Per Share (1st nine months) 3,863,816
----------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
-continued-
1
<PAGE> 2
EXHIBIT 11
FULLY DILUTED EARNINGS PER SHARE:
AVERAGE NUMBER OF SHARES OUTSTANDING:
<TABLE>
<CAPTION>
BEGINNING ENDING NUMBER SHARES
DATE DATE OF DAYS OUTSTANDING EXTENSION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7-1-95 7-10-95 10 3,768,424 37,684,240
7-11-95 7-31-95 21 3,772,169 79,215,549
8-1-95 8-7-95 7 3,772,169 26,405,183
8-7-95 8-28-95 21 3,783,269 79,448,649
8-28-95 8-31-95 3 3,813,269 11,439,807
9-1-95 9-15-95 15 3,823,269 57,349,035
9-16-95 9-29-95 14 3,833,169 53,664,366
9-30-95 9-30-95 1 3,834,169 3,834,169
-- -----------
92 349,040,998
== ===========
Average Number of Shares Outstanding 3,793,924
===========
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLOSING PRICE - 9/30/95
<S> <C>
$ 23.875
==========
Total option extensions (from page 1) divided by closing price: 207,335
Options outstanding: 294,500
----------
Common stock equivalents: 87,165
Average shares outstanding (from above): 3,793,924
----------
Fully diluted shares: 3,881,089
Less primary shares (from page 1): 3,869,278
----------
Additional shares 11,811
----------
Percentage: .31%
</TABLE>
(Note: Less than 3%, no fully diluted presentation required.)
2
<TABLE> <S> <C>
<ARTICLE> CT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1995 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
IN OCTOBER 1995, FUQUA ENTERPRISES, INC. AGREED TO SELL ITS INSURANCE OPERATIONS
AND, AS A RESULT, ITS RESULTS OF OPERATIONS THROUGH SEPTEMBER 30, 1995 HAVE
BEEN RECLASSIFIED AS DISCONTINUED OPERATIONS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<TOTAL-ASSETS> 170,870
<COMMON> 9,759
0
0
<OTHER-SE> 62,558
<TOTAL-LIABILITY-AND-EQUITY> 170,870
<TOTAL-REVENUES> 96,762
<INCOME-TAX> 1,340
<INCOME-CONTINUING> 2,498
<DISCONTINUED> 1,438
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,936
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1995 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
IN OCTOBER 1995, FUQUA ENTERPRISES, INC. AGREED TO SELL ITS INSURANCE OPERATIONS
AND, AS A RESULT, ITS RESULTS OF OPERATIONS THROUGH SEPTEMBER 30, 1995 HAVE
BEEN RECLASSIFIED AS DISCONTINUED OPERATIONS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 4,652
<SECURITIES> 8,465
<RECEIVABLES> 17,545
<ALLOWANCES> (450)
<INVENTORY> 23,885
<CURRENT-ASSETS> 56,037
<PP&E> 27,967
<DEPRECIATION> (12,898)
<TOTAL-ASSETS> 71,253
<CURRENT-LIABILITIES> 5,773
<BONDS> 28,039
<COMMON> 9,759
0
0
<OTHER-SE> 27,038
<TOTAL-LIABILITY-AND-EQUITY> 71,253
<SALES> 96,186
<TOTAL-REVENUES> 96,762
<CGS> 83,929
<TOTAL-COSTS> 91,752
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,172
<INCOME-PRETAX> 3,838
<INCOME-TAX> 1,340
<INCOME-CONTINUING> 2,498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,498
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1995 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
IN OCTOBER 1995, FUQUA ENTERPRISES, INC. AGREED TO SELL ITS INSURANCE OPERATIONS
AND, AS A RESULT, ITS RESULTS OF OPERATIONS THROUGH SEPTEMBER 30, 1995 HAVE
BEEN RECLASSIFIED AS DISCONTINUED OPERATIONS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 46,913
<DEBT-CARRYING-VALUE> 3,282
<DEBT-MARKET-VALUE> 3,319
<EQUITIES> 9,213
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 59,408
<CASH> 9,708
<RECOVER-REINSURE> 10,884
<DEFERRED-ACQUISITION> 2,331
<TOTAL-ASSETS> 99,617
<POLICY-LOSSES> 38,738
<UNEARNED-PREMIUMS> 19,147
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 3,000
0
0
<OTHER-SE> 32,520
<TOTAL-LIABILITY-AND-EQUITY> 99,617
0
<INVESTMENT-INCOME> 0
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 1,438
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,438
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
