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EXHIBIT 2
AMENDED AND RESTATED
CONTRIBUTION AND PARTICIPATION AGREEMENT
DATED AS OF
DECEMBER 1, 2000
AMONG
SII ACQUISITION, INC.,
THE INVESTOR STOCKHOLDER LISTED HEREIN
AND
THE CONTINUING HOLDERS LISTED HEREIN
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TABLE OF CONTENTS
<TABLE>
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PAGE
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ARTICLE I DEFINITIONS...................................... 3
Section 1.1 Definitions.................................. 3
ARTICLE II EXCHANGE OF PROPERTY FOR CAPITAL STOCK.......... 6
Section 2.1 Issuance To Investor Stockholder............. 6
Section 2.2 Exchange With Continuing Holders............. 7
Section 2.3 Closing...................................... 7
Section 2.4 Failure By Continuing Holder................. 7
ARTICLE III COVENANTS AND AGREEMENTS OF SII AND INVESTOR
STOCKHOLDER............................................... 8
Section 3.1 Best Efforts................................. 8
Section 3.2 Consent to Certain Business Combinations..... 8
Section 3.3 Participation in Certain Transactions........ 8
ARTICLE IV COVENANTS OF THE CONTINUING HOLDERS............. 9
Section 4.1 Best Efforts................................. 9
Section 4.2 No Sale, Etc................................. 9
Section 4.3 Custodial Arrangements....................... 9
ARTICLE V PUTS AND CALLS................................... 10
Section 5.1 Puts and Calls............................... 10
Section 5.2 Wills........................................ 13
ARTICLE VI RESTRICTIONS ON CONTINUING HOLDER TRANSFERS..... 13
Section 6.1 General Restriction on Transfers by
Continuing Holders..................................... 13
Section 6.2 Permitted Transfers By Continuing Holders.... 13
ARTICLE VII REPRESENTATIONS AND WARRANTIES................. 14
Section 7.1 Representations and Warranties by SII........ 14
Section 7.2 Representations and Warranties by All
Stockholders........................................... 15
Section 7.3 Additional Representations and Warranties by
Continuing Holders..................................... 16
ARTICLE VIII CONDITIONS TO CLOSING......................... 16
Section 8.1 Conditions to Obligations of All Parties..... 16
Section 8.2 Additional Conditions to Obligations of
Continuing Holders..................................... 17
Section 8.3 Additional Conditions to Obligations of
Investor Stockholder and SII........................... 17
ARTICLE IX GENERAL PROVISIONS.............................. 17
Section 9.1 Termination.................................. 17
Section 9.2 Restrictive Legends.......................... 18
Section 9.3 Notices...................................... 18
Section 9.4 Additional Parties........................... 18
Section 9.5 Expenses..................................... 19
Section 9.6 Amendments and Waivers....................... 19
Section 9.7 Successors and Assigns....................... 19
Section 9.8 Georgia Law.................................. 19
Section 9.9 Counterparts; Effectiveness.................. 19
Section 9.10 Captions..................................... 19
Section 9.11 No Rights As Employee........................ 19
Section 9.12 Genders and Plurals.......................... 19
Section 9.13 Severability................................. 19
Section 9.14 Third Party Beneficiary...................... 19
SCHEDULE A -- INVESTOR STOCKHOLDER.......................... 22
SCHEDULE B -- CONTINUING HOLDERS............................ 23
</TABLE>
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AMENDED AND RESTATED CONTRIBUTION
AND PARTICIPATION AGREEMENT
THIS AMENDED AND RESTATED CONTRIBUTION AND PARTICIPATION AGREEMENT
("Agreement") is entered into as of December 1, 2000 among SII ACQUISITION,
INC., a Georgia corporation ("SII"), the INVESTOR STOCKHOLDER listed on Schedule
A hereto and the CONTINUING HOLDERS listed on Schedule B hereto.
WITNESSETH:
WHEREAS, SII has entered into an Agreement and Plan of Merger with Shaw
Industries, Inc. (the "Company") dated as of October 19, 2000 (the "Merger
Agreement") pursuant to which SII will be merged with and into the Company (the
"Merger") with the Company as the surviving corporation in the Merger (the
"Surviving Corporation") and, among other things, each share of common stock,
$.01 par value per share, of SII ("SII Common Stock") will, by virtue of the
Merger, be converted into and become one share of common stock of the Surviving
Corporation ("Surviving Corporation Common Stock");
WHEREAS, in connection with the Merger Agreement, SII, the Investor
Stockholder and certain of the Continuing Holders heretofore entered into the
Contribution and Participation Agreement dated as of October 19, 2000 (the
"Original Agreement") pursuant to which (i) the Investor Stockholder agreed to
contribute shares of common stock, no par value per share, of the Company
("Company Common Stock") owned by it and cash in an amount necessary to
consummate the Merger to SII in exchange for shares of SII Common Stock as
indicated on Schedule A to the Original Agreement and (ii) each Continuing
Holder who was a party to the Original Agreement (collectively, the "Original
Continuing Holders") agreed to contribute the number of shares of Company Common
Stock indicated on Schedule B to the Original Agreement to SII in exchange for
shares of SII Common Stock;
WHEREAS, certain of the Original Continuing Holders transferred a portion
of their Company Common Stock and the parties hereto have agreed to such
transfers and the transferees agree to be bound by the terms of the Agreement;
WHEREAS, the parties hereto have agreed to enter into this Agreement to add
such transferees of Company Common Stock as Continuing Holders and to make
certain other changes to the Original Agreement as agreed to by the parties to
this Agreement;
WHEREAS, the parties hereto intend that the aforementioned contributions
and exchanges by the Investor Stockholder and the Continuing Holders
contemplated by this Agreement will be treated for income tax purposes as
transfers pursuant to Section 351 of the Code and any corresponding provisions
of applicable state income tax statutes;
WHEREAS, SII, the Investor Stockholder and the Continuing Holders desire to
provide herein for certain matters relating to the authorization and issuance of
such shares of SII Common Stock and certain restrictions on the transfer of
shares of SII Common Stock and Surviving Corporation Common Stock;
NOW THEREFORE, in consideration of the foregoing and the covenants set
forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms, as used herein, shall have
the following meanings:
"Additional Contribution Shares" means (i) the shares of SII Common
Stock (which shall be converted into shares of Surviving Corporation Common
Stock upon the Merger) to be issued to the Family Group Stockholders
pursuant to Section 2.2 and designated as "Additional Contribution Shares"
on Schedule B hereto, (ii) any shares of Capital Stock of the Surviving
Corporation issued to the Family
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Group Stockholders with respect to such shares pursuant to any exchange or
right to purchase Capital Stock or as a result of a stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or similar transaction, and (iii) any other shares of
Capital Stock otherwise acquired by a Family Group Stockholder.
"Annual Put" has the meaning set forth in Section 5.1(a)(iii).
"Annual Put Exercise Date" has the meaning set forth in Section
5.1(a)(i).
"Attorneys" has the meaning set forth in Section 4.3.
"Base Book Value" means the Book Value as of December 31, 2000.
"Book Value" means the total net equity of the Company or the
Surviving Corporation, as applicable, as of a particular date, divided by
the total number of shares of Company Common Stock or Surviving Corporation
Common Stock, as applicable, which are outstanding as of such date or which
are issuable upon exercise of any then-outstanding Company Stock Options.
Total net equity shall be calculated in accordance with generally accepted
accounting principles but without taking into account any Merger-related
adjustments thereto, with the result, among others, that the amount of
goodwill reflected in total net equity shall be limited to the amount of
goodwill that would have been so included had the Merger not occurred.
"Call Recipient" has the meaning set forth in Section 5.1(b)(ii).
"Capital Stock" means authorized and issued capital stock of the
Surviving Corporation.
"Closing" means the contribution of cash and shares of Company Common
Stock to SII contemplated hereby and the issuance of SII Common Stock in
exchange therefor.
"Closing Date" means the date of the Closing.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning set forth in the recitals to this Agreement.
"Company Common Stock" means common stock, no par value per share, of
the Company to be exchanged by a Stockholder hereunder for shares of SII
Common Stock.
"Company Stock Options" means options to acquire shares of Company
Common Stock which were issued by the Company pursuant to any of the Option
Plans.
"Company Joinder Agreement" means a form of joinder agreement
reasonably acceptable to the Surviving Corporation pursuant to which a
transferee of a Continuing Holder agrees to be bound by the terms hereof.
"Company Stockholder Approval" has the meaning given to such term in
the Merger Agreement.
"Continuing Holder" means each Family Group Stockholder and each
Management Holder, provided, however, that, at any time, the term
"Continuing Holder" does not include any Person who, following the Merger,
holds no shares of Capital Stock at such time.
"Custodian" has the meaning set forth in Section 2.2.
"Custody Agreement" means the Custody Agreement among SII, each of the
Continuing Holders and the Custodian to be mutually agreed upon by the
parties hereto and the Custodian and entered into pursuant to Section 4.3.
"Designated Individual" means, with respect to a particular Family
Group Entity or Management Holder Entity, the individual whose name is
referenced as such next to the name of such Family Group Entity or
Management Holder Entity on Schedule B hereto.
"Effective Time" means the Effective Time specified in the Merger
Agreement.
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"Elected Year End Book Value" has the meaning set forth in Section
5.1(c).
"Employed Family Group Stockholder" means each of Robert E. Shaw and
Julian Saul.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Family Group Stockholder" means each of the individuals and each
Family Group Entity listed under the heading "Family Group Stockholders" on
Schedule B hereto, provided, however, that, at any time, the term "Family
Group Stockholder" does not include any Person who, following the Merger,
holds no shares of Capital Stock at such time.
"Family Group Entity" means each trust or partnership which is listed
under the subheading "Family Group Entities" under the heading "Family
Group Stockholders" on Schedule B hereto.
"Government Entity" has the meaning given to such term in the Merger
Agreement.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended to the date hereof.
"Immediate Family Members" of a Person means the spouse, children and
grandchildren (including legally adopted children and grandchildren) of
such Person.
"Initial Exercise Date" has the meaning set forth in Section
5.1(a)(i).
"Investor Stockholder Joinder Agreement" means a form of joinder
agreement reasonably acceptable to SII pursuant to which a transferee of
the Investor Stockholder agrees to be bound by the terms hereof.
"Investor Stockholder" means (i) the Investor Stockholder listed on
Schedule A hereto and its successors, and (ii) upon execution of an
Investor Stockholder Joinder Agreement, any transferee of an Investor
Stockholder acquiring shares of Surviving Corporation Common Stock;
provided, however, that, at any time, the term "Investor Stockholder" does
not include any Person who, following the Merger, holds no shares of
Capital Stock at such time.
"Management Contribution Shares" means (i) the shares of SII Common
Stock (which shall be converted into shares of Surviving Corporation Common
Stock upon the Merger) to be issued to the Management Holders pursuant to
Section 2.2, (ii) any shares of Capital Stock of the Surviving Corporation
issued to the Management Holders with respect to such shares pursuant to
any exchange or right to purchase capital stock or as a result of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or similar transaction, and (iii)
any other shares of Capital Stock otherwise acquired by a Management
Holder.
"Management Holder" means each of the individuals and each Management
Holder Entity listed under the heading "Management Holders" on Schedule B
hereto, provided, however, that, at any time, the term "Management Holder"
does not include any Person who, following the Merger, holds no shares of
Capital Stock at such time.
"Management Holder Entity" means each trust or partnership which is
listed under the subheading "Management Holder Entities" under the heading
"Management Holders" on Schedule B hereto.
"Merger" means the merger of SII with and into the Company as
contemplated by the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
October 19, 2000, among the Company, SII and the Investor Stockholder.
"Minimum Contribution Requirement" means (i) the contribution by
Robert E. Shaw, his Immediate Family Members and any entities listed on
Schedule B which are controlled by or established for the benefit of Robert
E. Shaw, or his Immediate Family Members, of a minimum of 6,485,604 shares
of Company Common Stock in exchange for shares of SII Common Stock, and
(ii) the contribution by Julian D. Saul, his Immediate Family Members and
any entities listed on Schedule B which are
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controlled by or established for the benefit of Julian D. Saul or his
Immediate Family Members, of a minimum of 6,485,604 shares of Company
Common Stock in exchange for shares of SII Common Stock, in each case
pursuant to the provisions of this Agreement.
"Minimum Contribution Shares" means (i) the shares of SII Common Stock
(which shall become shares of Surviving Corporation Common Stock upon the
Merger) to be issued hereunder to the Family Group Stockholders and
designated as "Minimum Contribution Shares" on Schedule B hereto, as well
as (ii) any shares of Capital Stock of SII issued to the Family Group
Stockholders with respect to such shares pursuant to any exchange or right
to purchase capital stock or as a result of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or similar transaction.
"Option Plans" has the meaning given to such term in the Merger
Agreement.
"Per Share Amount" means $19.00, as such amount may be appropriately
adjusted to reflect any changes to the Surviving Corporation's
capitalization following the Effective Time.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Power of Attorney" has the meaning set forth in Section 4.3.
"Purchase Price" has the meaning set forth in Section 5.1(c).
"Securities Act" means the Securities Act of 1933, as amended.
"SII" has the meaning set forth in the preamble to this Agreement.
"SII Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Stockholders" means the Investor Stockholder and the Continuing
Holders.
"Surviving Corporation" has the meaning set forth in the recitals to
this Agreement.
"Surviving Corporation Common Stock" has the meaning set forth in the
recitals to this Agreement.
"Triggered Call" has the meaning set forth in Section 5.1(b)(ii).
"Triggered Put" has the meaning set forth in Section 5.1(b)(i).
"Triggering Continuing Holder" has the meaning set forth in Section
5.1(b)(i).
"Triggering Event" has the meaning set forth in Section 5.1(b)(i).
"Year End Book Value" means the Book Value as of December 31st of any
year, beginning December 31, 2001, which shall be (a) calculated after
adding back any costs of the Merger not accrued as of December 31, 2000,
and (b) appropriately adjusted to reflect the Company's (or the Surviving
Corporation's) capitalization as of December 31, 2000 and any subsequent
changes thereto.
ARTICLE II
EXCHANGE OF PROPERTY FOR CAPITAL STOCK
Section 2.1 Issuance to Investor Stockholder. Subject to the terms of
this Agreement, and on the basis of the representations, warranties and
covenants contained herein, at the Closing and concurrently with the exchange
contemplated by Section 2.2 below, (i) SII will issue to the Investor
Stockholder the number of shares of SII Common Stock set forth opposite such
Investor Stockholder's name under the column labeled "Number of Shares of SII
Common Stock" on Schedule A hereto, and (ii) the Investor Stockholder, in
exchange therefor, will contribute to SII (a) by wire transfer of funds, the
amount of cash set forth opposite the Investor Stockholder's name under the
column labeled "Cash Contribution" on Schedule A hereto and (b) such number of
shares of Company Common Stock held of record and beneficially by the Investor
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Stockholder as is set forth opposite the Investor Stockholder's name under the
column labeled "Company Shares" on Schedule A hereto, together with appropriate
powers to transfer such shares of Company Common Stock to SII and irrevocable
powers coupled with an interest with respect to such shares of Company Common
Stock, provided, however, that the amount of cash to be contributed by the
Investor Stockholder pursuant to this Section 2.1 is subject to increase by up
to $98,468,754, and the number of shares of SII Common Stock to be issued to the
Investor Stockholder in exchange for such contribution pursuant to this Section
2.1 is subject to increase by up to 5,182,566 shares (at a rate of one share of
SII Common Stock for each additional $19.00 to be so contributed), to the extent
that additional shares of Company Common Stock are issued after the date of this
Agreement and prior to the Closing pursuant to the exercise of any Company Stock
Options held by any individuals other than the Continuing Holders.
Section 2.2 Exchange with Continuing Holders. Subject to the terms of
this Agreement, and on the basis of the representations, warranties and
covenants contained herein, at the Closing and concurrently with the
contribution contemplated by Section 2.1 above, (i) each Continuing Holder,
severally and not jointly, will contribute, convey, transfer, assign and deliver
to SII, through a custodian to be mutually agreed upon by the parties hereto
(the "Custodian") and pursuant to the Custody Agreement, a certificate or
certificates representing such number of shares of Company Common Stock held of
record and beneficially by the Continuing Holder as is set forth opposite the
Continuing Holder's name under the column labeled "Company Shares" on Schedule B
hereto, together with appropriate powers to transfer such shares of Company
Common Stock to SII and irrevocable powers coupled with an interest with respect
to such shares of Company Common Stock, and (ii) in exchange therefor, SII shall
issue to the Continuing Holder the number of shares of SII Common Stock set
forth opposite such Continuing Holder's name under the column labeled "Number of
Shares of SII Common Stock" (which, with respect to Family Group Stockholders,
shall be designated on Schedule B as either "Minimum Contribution Shares" or
"Additional Contribution Shares") on Schedule B hereto, which shares shall be
delivered to the Custodian on behalf of such Continuing Holder and held by the
Custodian pursuant to the Custody Agreement.
Section 2.3 Closing. The Closing shall occur at the offices of Powell,
Goldstein, Frazer & Murphy LLP, Sixteenth Floor, 191 Peachtree Street, N.E.,
Atlanta, Georgia 30303, at such time and date determined by SII that is within
two (2) business days following satisfaction of the conditions to Closing set
forth in Article VIII, provided that the Closing shall occur prior to
consummation of the Merger.
Section 2.4 Failure by Continuing Holder. If any Continuing Holder shall
default in the performance of any of his or its obligations hereunder, including
without limitation such Continuing Holder's failure or refusal to deliver or
cause to be delivered to SII any of the Continuing Holder's shares of Company
Common Stock required to be delivered to SII hereunder, or otherwise fail to
meet any of SII's conditions to Closing set forth herein, or if this Agreement
shall be terminated with respect to such Continuing Holder in accordance with
the terms hereof, then such default or failure of condition or termination shall
not relieve any of the other Continuing Holders of any obligation hereunder,
and, to the extent such failure or refusal by a Continuing Holder results in a
failure by the Continuing Holders to satisfy the Minimum Contribution
Requirement, each of SII and the Investor Stockholder, at its sole option, and
without prejudice to any rights against any such Continuing Holder with whom it
does not complete the transactions contemplated hereby, may either complete the
transactions contemplated hereby with the other Continuing Holders on the terms
provided herein, or refuse, without liability, to consummate such transactions
and thereby terminate all of its obligations hereunder; provided that if any
Continuing Holder fails or refuses to comply with its obligations hereunder, or
if this Agreement is otherwise terminated with respect to a Continuing Holder in
accordance with its terms, but neither SII nor the Investor Stockholder elects
(to the extent permitted by this Section 2.4) to terminate its obligations
hereunder, then SII shall, in exchange for the purchase price therefor (which
shall be equal to the additional consideration which is required to be paid
pursuant to the Merger for the outstanding shares of Company Common Stock held
by such Continuing Holder with whom SII does not complete the transactions
contemplated hereby), issue to the Investor Stockholder at the Closing an
additional number of shares of SII Common Stock as is equal to the number of
shares of SII Common Stock that would have otherwise been issued to such
Continuing Holder, and the Investor Stockholder shall purchase such additional
shares of SII Common Stock for such purchase price at the Closing.
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ARTICLE III
COVENANTS AND AGREEMENTS OF SII AND INVESTOR STOCKHOLDER
Section 3.1 Best Efforts. SII and the Investor Stockholder, severally and
not jointly, agree with each Continuing Holder that SII and the Investor
Stockholder will, (i) throughout the period prior to the Effective Time,
exercise its reasonable best efforts to consummate the Merger, including without
limitation voting shares of Company Common Stock which it owns, if any, and
shares of Company Common Stock for which it has a proxy, if any, in favor of the
Merger, or executing a written consent with respect thereto, and causing the
conditions to the Company's obligation to consummate the Merger set forth in
Section 8.3 of the Merger Agreement to be met and satisfied as quickly as
reasonably possible, and (ii) throughout the period prior to the Closing,
exercise its reasonable best efforts to cause the conditions to the Continuing
Holders' obligations under this Agreement set forth in Section 8.2 hereof to be
met and satisfied as quickly as reasonably possible; provided, however, that the
provisions of this Section 3.1 shall not require SII or the Investor Stockholder
to waive any closing conditions set forth in any agreements to which such Person
is a party.
Section 3.2 Consent to Certain Business Combinations. Until such time as
the Investor Stockholder, together with its direct and indirect wholly owned
subsidiaries, owns more than 95% of the outstanding shares of Surviving
Corporation Common Stock, the Company shall not merge or consolidate with or
into any other company which is not engaged in the manufacture, distribution
and/or sale of floor coverings (meaning that such company does not derive at
least 90% of its revenues from Standard Industrial Classification 2273), or
acquire all or substantially all of the assets or 50% or more of the outstanding
securities of any such company, without obtaining the prior written consent of
Continuing Holders owning more than 50% of the total number of shares of
Surviving Corporation Common Stock which are held by the Continuing Holders at
the time of such proposed transaction.
Section 3.3 Participation in Certain Transactions. If the Investor
Stockholder and/or any of its wholly owned subsidiaries which own shares of
Surviving Corporation Common Stock propose to enter into a transaction with any
unaffiliated third party pursuant to which more than 50% of the total amount of
outstanding shares of Surviving Corporation Common Stock will be sold or
otherwise transferred by the Investor Stockholder and/or any of its wholly owned
subsidiaries to such third party, the Investor Stockholder shall cause such
third party to deliver a written offer to each Continuing Holder providing for
the purchase of all shares of Surviving Corporation Common Stock owned by such
Continuing Holder for the same per share price and on the other terms which
apply to the transaction between such third party and the Investor Stockholder
or its subsidiary. Upon receipt of any such written offer, each Continuing
Holder shall have the right to elect (which election must be set forth in
writing and delivered to the Investor Stockholder within ten (10) business days
of receipt of such written offer), to either (a) participate in such transaction
at the per share price and on the other terms applicable to such transaction, or
(b) require the Investor Stockholder (or, at the election of the Investor
Stockholder, any of its direct or indirect wholly owned subsidiaries) to
purchase all (but not less than all) of his or its shares of Surviving
Corporation Common Stock, at the Purchase Price, which shall be calculated
applying the Year End Book Value for the year immediately preceding the date of
delivery of such third party written offer and as otherwise provided in Section
5.1(e), as if such transaction were a Triggered Put. Any such election shall be
binding on the applicable Continuing Holder. If the Continuing Holder elects to
participate in such third party transaction, the closing of such transaction
will be governed by the terms of such transaction. If the Continuing Holder
instead elects to require the Investor Stockholder (or its subsidiary) to
purchase his or its shares of Surviving Corporation Common Stock pursuant to
clause (b) above, the closing of the purchase by the Investor Stockholder (or,
at its election, its subsidiary) of such Continuing Holder's shares of Surviving
Corporation Common Stock shall take place on the later of (x) the date of the
closing of the Investor Stockholder's (and/or its subsidiary's) sale of its
shares of Surviving Corporation Common Stock to the third party purchaser, and
(y) the date which is five (5) business days after the date on which the
applicable Year End Book Value can first be calculated (which closing date shall
be no later than ninety (90) days after the end of the year which is used to
calculate such Year End Book Value), and the provisions of Section 5.1(b)(iv)
shall otherwise apply to such closing as if such transaction were a Triggered
Put.
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ARTICLE IV
COVENANTS OF THE CONTINUING HOLDERS
Section 4.1 Best Efforts. Each Continuing Holder, severally and not
jointly, agrees with SII and the Investor Stockholder that he or it will, (a)
subject to applicable fiduciary duties of such Continuing Holder, if any,
throughout the period prior to the Effective Time, cooperate fully with the
Company and exercise his or its reasonable best efforts to (i) consummate the
Merger, (ii) cause the Company to perform its obligations under the Merger
Agreement, and (iii) cause the Company to meet and satisfy the conditions of SII
set forth in Sections 8.1 and 8.2 of the Merger Agreement as quickly as
reasonably possible, and (b) throughout the period prior to the Closing,
exercise his or its reasonable best efforts to cause the conditions of SII and
the Investor Stockholder set forth in Sections 8.1 and 8.3 hereof to be met and
satisfied as quickly as reasonably possible; provided, however, that the
provisions of this Section 4.1 shall not prevent any Continuing Holder who is a
member of the Board of Directors of the Company, in his capacity as such a
director, from taking such actions, if any, as are permitted by Section 7.4 of
the Merger Agreement.
Section 4.2 No Sale, Etc. Each Continuing Holder hereby covenants and
agrees with SII and the Investor Stockholder that, other than as expressly
permitted hereby or pursuant to a Voting Agreement of even date herewith between
such Continuing Holder, SII and the Investor Stockholder, pending the Closing,
such Continuing Holder will not (a) sell, transfer, assign, pledge, hypothecate
or otherwise encumber or dispose of any of the Continuing Holder's shares of
Company Common Stock or Company Stock Options, other than, with respect to any
such Company Stock Options, to the extent such Company Stock Options are
transferred to the Company upon the exercise thereof and with respect to shares
of Company Common Stock, as payment or withholding on account of the exercise
price of Company Stock Options, (b) give a proxy with respect thereto, (c) limit
the right to vote any of such shares in any manner, or (d) agree to do any of
the foregoing.
Section 4.3 Custodial Arrangements. Within ten (10) calendar days
following the date hereof, the Continuing Holders will duly execute and deliver
a power of attorney in a form reasonably acceptable to SII ("Power of Attorney")
appointing and constituting the Persons designated therein, and each of them,
with full power of substitution, as the lawful agents and attorneys-in-fact of
each Continuing Holder (the "Attorneys") for the purpose of delivering and
assigning hereunder the shares of Company Common Stock to be contributed by such
Continuing Holder to SII in accordance with the terms hereof. Certificates in
negotiable form for such shares of Company Common Stock of such Continuing
Holder shall be placed in custody by such date, for the purpose of making
delivery of the shares of Company Common Stock under this Agreement, pursuant to
the terms of the Custody Agreement which shall be duly executed by such
Continuing Holder by such date (other than such shares of Company Common Stock
as will be acquired by the Continuing Holders upon the exercise of Company Stock
Options, which shall be delivered to the Custodian upon the issuance thereof).
In addition, each Continuing Holder's shares of SII Common Stock and, following
the Merger, Surviving Corporation Common Stock shall be delivered upon issuance
to, and held by, the Custodian pursuant to the Custody Agreement. Each
Continuing Holder severally agrees that the shares of Company Common Stock and
SII Common Stock (and, following the Merger, Surviving Corporation Common Stock)
represented by the certificates to be held in custody for him or it under the
Custody Agreement will be held for the benefit of and coupled with and subject
to the interest of SII (and, following the Merger, the Surviving Corporation)
hereunder, that the arrangements made by such Continuing Holder for such custody
and the appointment of the Attorneys by such Continuing Holder will be
irrevocable, and that the obligations of such Continuing Holder hereunder and
under the Custody Agreement shall not be terminated by operation of law, whether
by the death or incapacity of the Continuing Holder or the occurrence of any
other event. If the Continuing Holder should die or become incapacitated or if
any other such event should occur before the delivery of the shares of Company
Common Stock hereunder, certificates for such securities shall be delivered by
the Attorneys in accordance with the terms and conditions of this Agreement and
the Custody Agreement and actions taken by the Attorneys pursuant to the Power
of Attorney or the Custody Agreement shall be as valid as if such death,
incapacity or other event had not occurred, regardless of whether or not the
Attorneys, or any of them, shall have received notice thereof.
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ARTICLE V
PUTS AND CALLS
Section 5.1 Puts and Calls.
(a) Annual Put.
(i) Family Group Stockholder Annual Put. On March 31, 2002 (the
"Initial Exercise Date"), each Family Group Stockholder shall have the
right to require the Investor Stockholder to purchase, and the Investor
Stockholder, following the exercise of any such put, shall be obligated
to purchase (or cause any of its direct or indirect wholly owned
subsidiaries to purchase) from such Family Group Stockholder, upon the
terms and subject to the conditions of this Agreement, (1) up to ten
percent (10%) of such Family Group Stockholder's Minimum Contribution
Shares, and (2) up to thirty-three and one-third percent (33 1/3%) of
such Family Group Stockholder's Additional Contribution Shares, if any,
at the Purchase Price. On each anniversary of the Initial Exercise Date
(each such date, along with the Initial Exercise Date, referred to
herein as an "Annual Put Exercise Date"), each Family Group Stockholder
shall have the right to require the Investor Stockholder to purchase,
and the Investor Stockholder, following the exercise of any such put,
shall be obligated to purchase (or cause any of its direct or indirect
wholly owned subsidiaries to purchase) from such Family Group
Stockholder, upon the terms and subject to the conditions of this
Agreement, (1) up to ten percent (10%) of such Family Group
Stockholder's Minimum Contribution Shares, (2) up to thirty-three and
one-third percent (33 1/3%) of such Family Group Stockholder's
Additional Contribution Shares, if any, and (3) any additional Minimum
Contribution Shares or Additional Contribution Shares owned by such
Family Group Stockholder which such Family Group Stockholder had the
right on any prior Annual Put Exercise Date to, but did not, put to the
Investor Stockholder pursuant to this Section 5.1(a)(i), at the Purchase
Price, provided that (1) in no event shall any Family Group Stockholder
at any time have a right to put more than one hundred percent (100%) of
such Family Group Stockholder's Minimum Contribution Shares and
Additional Contribution Shares to the Investor Stockholder pursuant
hereto, and (2) upon a Triggering Event, the shares of Surviving
Corporation Common Stock owned by the Triggering Holder shall no longer
be subject to this Section 5.1(a)(i) and may only be put to the Investor
Stockholder pursuant to Section 5.1(b)(i).
(ii) Management Holder Annual Put. On the Initial Exercise Date,
each Management Holder shall have the right to require the Investor
Stockholder to purchase, and the Investor Stockholder, following the
exercise of any such put, shall be obligated to purchase (or cause any
of its direct or indirect wholly owned subsidiaries to purchase) from
such Management Holder, upon the terms and subject to the conditions of
this Agreement, at the Purchase Price, up to thirty-three and one-third
percent (33 1/3%) of such Management Holder's Management Contribution
Shares. On each subsequent Put Exercise Date, each Management Holder
shall have the right to require the Investor Stockholder to purchase,
and the Investor Stockholder, following the exercise of any such put,
shall be obligated to purchase (or cause any of its direct or indirect
wholly owned subsidiaries to purchase) from such Management Holder, upon
the terms and subject to the conditions of this Agreement, (1) up to
thirty-three and one third percent (33 1/3%) of such Management Holder's
Management Contribution Shares, and (2) any additional Management
Contribution Shares which such Management Holder had the right on any
prior Put Exercise Date to, but did not, put to the Investor Stockholder
pursuant to this Section 5.1(a)(ii), at the Purchase Price, provided
that (1) in no event shall any Management Holder at any time have a
right to put more than one hundred percent (100%) of such Management
Holder's Management Contribution Shares to the Investor Stockholder
pursuant hereto, and (2) upon a Triggering Event, the shares of
Surviving Corporation Common Stock owned by the Triggering Holder shall
no longer be subject to this Section 5.1(a)(ii) and may only be put to
the Investor Stockholder pursuant to Section 5.1(b)(i).
(iii) Notice of Exercise of Annual Put. If a Family Group
Stockholder or Management Holder wishes to exercise a put right pursuant
to Section 5.1(a)(i) or (ii), as applicable (any such
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put, an "Annual Put"), such Stockholder shall provide written notice to
such effect to the Investor Stockholder (which notice must be received
by the Investor Stockholder by no later than the applicable Annual Put
Exercise Date) and specifying the number of shares of Surviving
Corporation Common Stock to be put to the Investor Stockholder.
(iv) Closing of Purchase Pursuant to Annual Put. The closing of
the purchase of a Continuing Holder's shares of Surviving Corporation
Common Stock by the Investor Stockholder or its wholly owned subsidiary
pursuant to Section 5.1(a)(i) or (ii) shall take place on the later of
(1) the applicable Annual Put Exercise Date, and (2) the date which is
twenty (20) business days after the receipt by the Investor Stockholder
of the required notice of exercise of such Annual Put. Such closing
shall take place at 11:00 a.m. Eastern Time at the principal offices of
the Company, or at such other time or place as the parties to such
transaction may agree upon. At such closing, (A) the Continuing Holder
shall sell to the Investor Stockholder or its designated subsidiary full
right, title and interest in and to the shares of Surviving Corporation
Common Stock so purchased, free and clear of all liens, security
interests or adverse claims of any kind and nature, and shall deliver to
the Investor Stockholder or such subsidiary appropriate stock transfer
powers duly endorsed, (B) the Custodian, on such Continuing Holder's
behalf, shall deliver to the Investor Stockholder or such subsidiary a
certificate or certificates representing the shares of Surviving
Corporation Common Stock sold, with all necessary transfer tax stamps
affixed thereto at the expense of the Continuing Holder, and (C) the
Investor Stockholder or such subsidiary shall wire transfer cash to an
account designated in writing by the Continuing Holder in an amount
equal to the Purchase Price applicable to the shares of Surviving
Corporation Common Stock so purchased.
(b) Triggered Put and Call.
(i) Triggered Put. At any time after (1) the death of a Continuing
Holder or, with respect to a Family Group Entity or Management Holder
Entity, its Designated Individual, (2) the termination of employment of
an Employed Family Group Stockholder by the Surviving Corporation (or,
if he or she is employed by a subsidiary of the Surviving Corporation,
by such subsidiary) for any reason (including as a result of such
Employed Family Group Stockholder's disability, but not including a
voluntary termination of employment (other than as a result of his or
her disability) by such Employed Family Group Stockholder), or (3) the
termination of a Management Holder's employment by the Surviving
Corporation (or, if he or she is employed by a subsidiary of the
Surviving Corporation, by such subsidiary) for any reason (whether
voluntary or involuntary, and including as a result of such Management
Holder's disability) (any such event under clauses (1), (2) or (3), a
"Triggering Event"), the estate of such Continuing Holder, the trustee
or other duly authorized person on behalf of such Family Group Entity or
Management Holder Entity, the terminated Family Group Stockholder or the
terminated Management Holder, as applicable (such estate, trustee or
other authorized person, Employed Family Group Stockholder or Management
Holder, the "Triggering Continuing Holder"), shall have the right to
require the Investor Stockholder to purchase, and the Investor
Stockholder, following the exercise of any such put, shall be obligated
to purchase (or cause any of its wholly owned subsidiaries to purchase)
from such Triggering Continuing Holder, upon the terms and subject to
the conditions of this Agreement, all, but not less than all, of the
shares of Surviving Corporation Common Stock owned by such Triggering
Continuing Holder at the Purchase Price. Any such put of shares of
Surviving Corporation Common Stock to the Investor Stockholder pursuant
to this Section 5.1(b)(i) is referred to herein as a "Triggered Put."
(ii) Triggered Call. At any time after the occurrence of a
Triggering Event, the Investor Stockholder shall have the right to
purchase from the estate of the Continuing Holder, the trustee or other
authorized individual on behalf of the applicable Family Group Entity or
Management Holder Entity, the terminated Family Group Stockholder or the
terminated Management Holder, as applicable, and such estate, trustee,
Employed Family Group Stockholder or Management Holder, as applicable
(the recipient of any such call, a "Call Recipient"), shall be obligated
to sell to the Investor Stockholder (or any of its wholly owned
subsidiaries), upon the terms and subject to the
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conditions of this Agreement, all, but not less than all, of the shares
of Surviving Corporation Common Stock owned by such Call Recipient, at
the Purchase Price (a "Triggered Call").
(iii) Notice of Exercise. A Triggered Put or Triggered Call may be
exercised by (1) in the case of a Triggered Put, delivery by the
Triggering Continuing Holder to the Investor Stockholder of written
notice to such effect, and (2) in the case of a Triggered Call, delivery
by the Investor Stockholder to the Call Recipient of written notice to
such effect. Any notice of exercise of a Triggered Put must specify
which Elected Year End Book Value shall apply to the calculation of the
applicable Purchase Price, provided, however, that (A) if a notice of
exercise of a Triggered Put, so specifying which Elected Year End Book
Value shall apply to the Purchase Price calculation, is not delivered
within thirty (30) days of the applicable Triggering Event, the Elected
Year End Book Value shall be the Year End Book Value for the year during
which such notice is delivered, and (B) notwithstanding the provisions
of Section 5.1(c), if the Investor Stockholder delivers a notice of a
Triggered Call to the applicable Call Recipient within the first thirty
(30) days immediately following the applicable Triggering Event, such
Call Recipient may, within ten (10) days of receipt of such notice,
deliver a written notice to the Investor Stockholder specifying which
Elected Year End Book Value shall apply to the calculation of the
applicable Purchase Price, which Elected Year End Book Value shall then
be binding for purposes of such calculation.
(iv) Closing of Purchase Pursuant to Triggered Put or Triggered
Call. The closing of the purchase of a Continuing Holder's shares of
Surviving Corporation Common Stock by the Investor Stockholder or its
wholly owned subsidiary pursuant to Section 5.1(b)(i) or (ii) shall take
place on the later of (1) the date which is twenty (20) business days
after the delivery of a notice of exercise to the Investor Stockholder
or the Call Recipient, as applicable, pursuant to Section 5.1(b)(iii),
and (2) the date which is five (5) business days after the date on which
the applicable Elected Year End Book Value can first be calculated
(which closing date shall be no later than ninety (90) days after the
end of the year which is used to calculate such Elected Year End Book
Value). Such closing shall take place at 11:00 a.m. Eastern Time at the
principal offices of the Company, or at such other time or place as the
parties to such transaction may agree upon. At such closing, (A) the
Triggering Continuing Holder shall sell to the Investor Stockholder or
its designated subsidiary full right, title and interest in and to the
shares of Surviving Corporation Common Stock so purchased, free and
clear of all liens, security interests or adverse claims of any kind and
nature, and shall deliver to the Investor Stockholder or such subsidiary
appropriate stock transfer powers duly endorsed, (B) the Custodian, on
such Triggering Continuing Holder's behalf, shall deliver to the
Investor Stockholder or such subsidiary a certificate or certificates
representing the shares of Surviving Corporation Common Stock sold, with
all necessary transfer tax stamps affixed thereto at the expense of the
Triggering Continuing Holder, and (C) the Investor Stockholder or such
subsidiary shall wire transfer cash to an account designated in writing
by the Triggering Continuing Holder in an amount equal to the Purchase
Price applicable to the shares of Surviving Corporation Common Stock so
purchased.
(c) Purchase Price. With respect to any shares of Surviving
Corporation Common Stock subject to an Annual Put, Triggered Put or
Triggered Call, the purchase price shall equal the product of (i) the
number of shares of Surviving Corporation Common Stock subject thereto, and
(ii) the purchase price per share, which shall equal the Per Share Amount,
plus the amount, if any, by which the applicable Year End Book Value
exceeds the Base Book Value, provided that, if the Year End Book Value is
less than the Base Book Value, the purchase price per share shall equal the
Per Share Amount minus the lesser of (1) the amount by which the Base Book
Value exceeds the applicable Year End Book Value, and (2) the sum,
calculated on a per share basis, of all cash dividends and other
distributions paid by the Surviving Corporation to the Stockholders since
the Merger. The applicable Year End Book Value shall be (x) with respect to
the exercise of an Annual Put, the Year End Book Value for the year
immediately preceding the applicable Annual Put Exercise Date, (y) with
respect to the exercise of a Triggered Put (and subject to the provisions
of Section 5.1(b)(iii)), at the election of the Triggering Continuing
Holder, either (1) the Year End Book Value for the year immediately
preceding the date the notice of
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exercise of such Triggered Put is delivered to the Investor Stockholder
pursuant to Section 5.1(b)(iii), or (2) the Year End Book Value (upon
determination thereof) for the year during which such notice of exercise is
so delivered, and (z) with respect to the exercise of a Triggered Call (and
subject to the provisions of Section 5.1(b)(iii)), the Year End Book Value
(upon determination thereof) for the year during which such notice of
exercise is so delivered (whichever Year End Book Value is to be applied to
the calculation of the purchase price pursuant to clauses (y) or (z), as
applicable, the "Elected Year End Book Value"). The applicable purchase
price as determined pursuant to this Section 5.1(c) is referred to herein
as the "Purchase Price."
(d) Any percentage calculated pursuant to this Section 5.1 shall be
based on the total number of Minimum Contribution Shares, Additional
Contribution Shares or Management Contribution Shares, as applicable, which
were issued to the applicable Stockholder at the Closing.
Section 5.2 Wills. Each Continuing Holder which is a natural person
agrees to keep in place a valid will and to include in such will a direction and
authorization to his executor to comply with the provisions of this Agreement
and to sell his shares of Surviving Corporation Common Stock in accordance with
this Agreement. Each Continuing Holder which is a Family Group Entity or
Management Holder Entity agrees to amend its trust agreement or other governing
agreement as necessary (and to keep such amended agreement in place) to permit
the provisions of this Agreement to be binding on and enforceable against such
Family Group Entity or Management Holder Entity.
ARTICLE VI
RESTRICTIONS ON CONTINUING HOLDER TRANSFERS
Section 6.1 General Restriction on Transfers by Continuing
Holders. Except (a) as expressly permitted in Section 6.2 or (b) for transfers
to the estate of such Continuing Holder upon his death (which transfer shall be
subject to a Triggered Call as set forth in Section 5.1(b)(ii)), no Continuing
Holder shall sell, assign, pledge, encumber, transfer, devise or otherwise
dispose of any shares of SII Common Stock or Surviving Corporation Common Stock
or Company Stock Options which he or it may now or hereafter own or any
pecuniary interest in any such shares, grant any option or right to purchase
such shares or any beneficial interest therein or engage in any swap, hedge,
derivative or other transaction to reduce the risk of ownership thereof. Any
such purported transfer, disposition, grant or transaction, except in compliance
with this Agreement, shall be null and void.
Section 6.2 Permitted Transfers By Continuing Holders. Each Continuing
Holder, at any time, may transfer any shares of SII Common Stock or Surviving
Corporation Common Stock which he may now or hereafter own (a) to any third
Person with the prior written consent of the Investor Stockholder, which consent
may be withheld in the Investor Stockholder's absolute discretion but, if given,
shall specify the identity of the Person to whom such transfer may be made, the
price and terms of such proposed transfer and any conditions which the Investor
Stockholder, in its discretion, chooses to impose on such transfer or on the
proposed transferee, or (b) to the Investor Stockholder or its designated
subsidiary in accordance with Article V; provided, with respect to clause (a),
that (x) the transferee of any such shares of SII Common Stock or Surviving
Corporation Common Stock shall have executed a Company Joinder Agreement and (y)
the Company shall have received an opinion of counsel reasonably satisfactory to
it to the effect that registration of such shares with the Commission under the
Securities Act is not required.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties by SII. SII hereby represents
and warrants to each of the Stockholders as follows:
(a) SII is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia, and it has the requisite
corporate power to carry on its business as it is now being conducted.
(b) SII has all requisite corporate power and authority to enter into
the Merger Agreement and this Agreement and to perform its obligations
hereunder and thereunder, including the offer, issuance, sale and delivery
by it of shares of SII Common Stock pursuant to this Agreement.
(c) The execution, delivery and performance by SII of the Merger
Agreement and this Agreement, including the offer, issuance, sale and
delivery by SII of shares of SII Common Stock pursuant to this Agreement,
are within SII's corporate power, and have been duly authorized by all
necessary corporate action by SII.
(d) Subject to SII's compliance with the requirements of the Exchange
Act, and except for compliance with the HSR Act and any similar
requirements of foreign jurisdictions, (i) the execution and delivery of
the Merger Agreement by SII, (ii) the execution and delivery of this
Agreement by SII, (iii) the consummation by SII of the transactions
contemplated hereby and thereby, and (iv) the compliance by SII with the
terms and provisions of the Merger Agreement and this Agreement, will not
conflict with or result in a default under, any law or regulation
applicable to SII, the certificate of incorporation or bylaws of SII, or
any agreement, judgment, injunction, order, decree or other instrument
binding upon SII.
(e) This Agreement has been duly and validly executed and delivered by
SII and constitutes the valid and binding agreement of SII, enforceable
against SII in accordance with its terms, except to the extent limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights. The Merger Agreement, when
it is executed and delivered by SII, will have been duly and validly
executed and delivered by it and will constitute its valid and binding
agreement, enforceable against SII in accordance with its terms, except to
the extent limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights.
(f) All shares of SII Common Stock, when issued and delivered against
payment therefor in accordance with this Agreement, will have been duly
authorized, validly issued and fully paid and will be nonassessable and
free and clear of any lien, option or preemptive or other right or claim of
SII except as set forth in this Agreement.
(g) SII is not in violation of or in default under any term or
provision of any charter, by-law, mortgage, indenture, agreement,
instrument, statute, rule, regulation, judgment, decree, order, writ or
injunction applicable to it, such that such violations or defaults in the
aggregate might materially and adversely affect the ability of SII to
perform its obligations under this Agreement or the Merger Agreement.
(h) SII acknowledges that the shares of Company Common Stock to be
contributed to SII pursuant hereto may be "restricted securities" within
the meaning of Rule 144 of the Commission, that the disposition of the
shares of Company Common Stock to be contributed to SII pursuant hereto is
subject to compliance with the Securities Act and the regulations
thereunder, and that the shares of Company Common Stock to be contributed
to SII may be legended accordingly, and SII agrees to acquire such shares
of Company Common Stock for investment and not with the intention of
engaging in a distribution of such shares within the meaning of the
Securities Act.
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Section 7.2 Representations and Warranties by All Stockholders.
(a) Each Stockholder which is not an individual, by execution of this
Agreement, hereby severally and not jointly represents and warrants to the
other Stockholders and to SII as follows:
(i) The execution, delivery and performance of this Agreement by
such Stockholder have been duly authorized by all requisite corporate or
other appropriate action. This Agreement has been duly executed and
delivered by such Stockholder and constitutes the valid and binding
obligation of such Stockholder enforceable in accordance with its terms,
except to the extent limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of
creditors' rights;
(ii) Subject to compliance with the HSR Act and any similar
requirements of foreign jurisdictions, neither the execution nor
delivery of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance with the terms and provisions
hereof, will conflict with, or result in a breach of, the terms,
conditions or provisions of, or constitute a default under, the charter
or by-laws or agreement or certificate of partnership or limited
partnership of such Stockholder, or of any applicable law, or of any
order, writ, injunction or decree of any court, administrator or
arbitrator, or of any trust agreement or other agreement or instrument
which is applicable to such Stockholder under which such Stockholder is
obligated or by which any of such Stockholder's property is bound; and
(iii) Such Stockholder is acquiring the shares of SII Common Stock
acquired hereunder (and the shares of Surviving Corporation Common Stock
into which such shares of SII Common Stock will be converted) for its
own account, and not with a view to any resale or distribution thereof.
Such Stockholder understands that such shares are "restricted
securities" within the meaning of Rule 144 of the Commission and that if
such Stockholder in the future should decide to dispose of such shares,
it may do so only in compliance with the Securities Act and any
applicable state blue sky or securities laws and that such shares may be
legended accordingly. Such Stockholder further understands that the
transferability of such shares is further restricted by the terms of
this Agreement.
(b) Each Stockholder who is an individual, by execution of this
Agreement, hereby severally and not jointly represents and warrants to the
other Stockholders and to SII as follows:
(i) This Agreement has been duly executed and delivered by such
Stockholder and constitutes the valid and binding obligation of such
Stockholder enforceable in accordance with its terms, except to the
extent limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors'
rights.
(ii) Subject to compliance with the HSR Act and any similar
requirements of foreign jurisdictions, neither the execution nor
delivery of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance with the terms and provisions
hereof, will conflict with or result in a breach of, the terms,
conditions or provisions of, or constitute a default under, any
applicable law, or of any order, writ, injunction or decree of any
court, administrator or arbitrator or of any agreement or instrument
which is applicable to such Stockholder, under which such Stockholder is
obligated or by which any of such Stockholder's property is bound.
(iii) Such Stockholder is acquiring the shares of SII Common Stock
acquired hereunder (and the shares of Surviving Corporation Common Stock
into which such shares of SII Common Stock will be converted) for its
own account, and not with a view to any resale or distribution thereof.
Such Stockholder understands that such shares are "restricted
securities" within the meaning of Rule 144 of the Commission and that if
such Stockholder in the future should decide to dispose of such shares
to a third party, it may do so only in compliance with the Securities
Act and any applicable state blue sky or securities laws and that such
shares may be legended accordingly. Such Stockholder further understands
that the transferability of such shares is further restricted by the
terms of this Agreement.
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(c) Each Stockholder, by execution of this Agreement, hereby severally
and not jointly represents and warrants to the other Stockholders and to
SII as follows:
(i) Such Stockholder acknowledges that the offering and sale of the
shares of SII Common Stock (and the shares of Surviving Corporation
Common Stock into which such shares of SII Common Stock will be
converted) pursuant to this Agreement is intended to be exempt from
registration under the Securities Act. In furtherance thereof, the
Stockholder represents and warrants that:
(A) Such Stockholder is an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act or has such knowledge
and experience in financial and business matters that such
Stockholder is capable of evaluating the merits and risks of, and
such Stockholder is able to bear the economic risk of, his
acquisition of the shares of SII Common Stock (and the shares of
Surviving Corporation Common Stock into which such shares of SII
Common Stock will be converted).
(B) Such Stockholder has been given the opportunity to ask
questions of, and receive answers from, SII concerning the terms and
conditions of the offering of such shares and other matters
pertaining to an investment therein, and has been given the
opportunity to obtain such additional information necessary in order
for such Stockholder to evaluate the merits and risks of an
investment in such shares to the extent SII possesses such
information or can acquire it without unreasonable effort or expense.
(ii) Such Stockholder acknowledges that SII is entering into this
Agreement in reliance upon such Stockholder's representations and
warranties in this Agreement.
Section 7.3 Additional Representations and Warranties by Continuing
Holders. Each Continuing Holder, by execution of this Agreement, hereby
severally and not jointly represents and warrants to the other Stockholders and
to SII as follows:
(a) Such Continuing Holder now has or upon the exercise of Company
Stock Options owned by such Continuing Holder will have, and at the Closing
will have, good and marketable title to the shares of Company Common Stock
shown on Schedule B as being contributed by such Continuing Holder, free
and clear of all liens, pledges, encumbrances, equities and claims
whatsoever, except those contemplated under this Agreement. Upon the
delivery of such shares of Company Common Stock and the exchange of SII
Common Stock therefor in accordance with the terms hereof and the Custody
Agreement, SII will receive good and marketable title to such shares of
Company Common Stock, free and clear of all liens, encumbrances, equities
and claims whatsoever, other than such liens, encumbrances, equities and
claims created by SII.
(b) On the Closing Date, all transfer taxes which are required to be
paid by such Continuing Holder in connection with his transfer and
contribution of his shares of Company Common Stock to SII will have been
fully paid or provided for by him.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Obligations of All Parties. The respective
obligations of each of the parties under this Agreement shall be subject to the
fulfillment, at or prior to the Closing, of the following conditions, none of
which may be waived:
(a) The applicable waiting period under the HSR Act shall have expired
and, if required to be obtained under applicable law prior to the
consummation of the Merger, the consent or approval of any Government
Entity in any foreign jurisdiction shall have been received;
(b) The Company Stockholder Approval shall have been obtained; and
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(c) There shall not be any preliminary or permanent injunction in
effect or other order by any federal or state court which prohibits the
consummation of the transactions contemplated by this Agreement or the
Merger Agreement.
Section 8.2 Additional Conditions to Obligations of Continuing
Holders. The obligations of each Continuing Holder to consummate the
transactions contemplated to occur at the Closing shall be subject to the
fulfillment, at or prior to the Closing, of the following conditions unless
waived by such Continuing Holder:
(a) Each of the Investor Stockholder and SII shall have performed in
all material respects its agreements contained in this Agreement required
to be performed on or prior to the Closing, and each of the Investor
Stockholder and SII shall have performed in all material respects its
agreements contained in the Merger Agreement required to be performed on or
prior to the Effective Time (except for those agreements which are not
capable of being performed until after the Closing).
(b) The representations and warranties of SII and the Investor
Stockholder set forth in this Agreement shall be true in all material
respects as of the date of this Agreement and as of the Closing as if made
as of such time, and the representations and warranties of the Investor
Stockholder and SII set forth in the Merger Agreement shall be true in all
material respects as of the date of the Merger Agreement and as of the
Closing as if made as of such time.
Section 8.3 Additional Conditions to Obligations of Investor Stockholder
and SII. The obligations of the Investor Stockholder and SII to consummate the
transactions contemplated to occur at the Closing shall be subject to the
fulfillment, at or prior to the Closing, of the following conditions unless
waived by the Investor Stockholder and SII:
(a) The Continuing Holders shall have performed in all material
respects their respective agreements contained in this Agreement required
to be performed on or prior to the Closing, and the Company shall have
performed in all material respects its agreements contained in the Merger
Agreement required to be performed on or prior to the Effective Time
(except for those agreements which are not capable of being performed until
after the Closing).
(b) The representations and warranties of the Continuing Holders set
forth in this Agreement shall be true in all material respects as of the
date of this Agreement and as of the Closing as if made as of such time,
and the representations and warranties of the Company set forth in the
Merger Agreement shall be true in all material respects as of the date of
the Merger Agreement and as of the Closing as if made as of such time.
(c) All conditions of SII to the consummation of the Merger at the
Effective Time (except for those conditions, if any, which would not be
capable of being fulfilled until after the Closing) shall have been
fulfilled or waived in writing.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Termination. In addition to the rights of SII and Investor
Stockholder set forth in Section 2.4, the obligations of the parties to
consummate the transactions contemplated to occur at the Closing may be
terminated at any time prior to the Closing:
(a) By the mutual consent of SII and the Investor Stockholder, on the
one hand, and, with respect to any Continuing Holder, by such Continuing
Holder, on the other hand, it being agreed that (1) the mutual termination
respecting a Continuing Holder shall not, subject to the provisions of
Section 2.4, affect the rights of any other Continuing Holder unless so
consented to by such other Continuing Holder and (2) SII and the Investor
Stockholder shall not consent to any termination respecting a Continuing
Holder pursuant to this Section 9.1(a) if such termination would result in
a failure of the Continuing Holders to meet the Minimum Contribution
Requirement;
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(b) By any Continuing Holder with respect to such Continuing Holder
(subject to the provisions of Section 2.4) or by SII or the Investor
Stockholder if the Closing shall not have occurred on or before the outside
termination date set forth in the Merger Agreement for consummation of the
Merger.
In the event of any termination under this Section 9.1, this Agreement, as
between the terminating parties, shall forthwith become void and there shall be
no liability under this Agreement on the part of any of such terminating parties
for such termination. Nothing contained herein shall relieve any party from any
liability resulting from a breach of this Agreement.
Section 9.2 Restrictive Legends.
(a) Each certificate evidencing shares of SII Common Stock to be
issued to the Continuing Holders (and the shares of Surviving Corporation
Common Stock into which such shares of SII Common Stock will be converted)
shall contain the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES
AND REGULATIONS THEREUNDER (THE "ACT"), OR UNDER THE SECURITIES LAWS OF
ANY STATE; AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT, AND, IF
APPLICABLE, THE SECURITIES LAWS OF ANY STATE OR AN EXEMPTION THEREFROM."
"BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE
REPRESENTS THAT IT IS ACQUIRING THE SHARES REPRESENTED BY THIS
CERTIFICATE FOR ITS OWN ACCOUNT AND AGREES TO COMPLY IN ALL RESPECTS
WITH APPLICABLE SECURITIES LAWS AND THE PROVISIONS OF THE AMENDED AND
RESTATED CONTRIBUTION AND PARTICIPATION AGREEMENT DATED AS OF DECEMBER
1, 2000 (THE "CONTRIBUTION AGREEMENT"), A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY."
"THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE, OR OTHER
DISPOSITION OF THE SHARES EVIDENCED BY THIS CERTIFICATE, OR ANY INTEREST
IN SAID SHARES, IS PROHIBITED EXCEPT AS PERMITTED BY THE TERMS OF THE
CONTRIBUTION AGREEMENT. NO SUCH SALE, ASSIGNMENT, TRANSFER, PLEDGE,
ENCUMBRANCE OR OTHER DISPOSITION SHALL BE EFFECTIVE UNLESS MADE IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE CONTRIBUTION AGREEMENT."
Section 9.3 Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including wire, telecopy, or similar
writing) and shall be given to such party at its address or telecopy number set
forth on the signature pages hereof or such other address or telecopy number as
such party may hereafter specify for this purpose by notice to the Secretary of
SII. Each such notice, request or other communication shall be effective (i) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section and the appropriate confirmation is received, (ii) if
given by mail, three business days after such communication is deposited in the
mails registered or certified, return receipt requested, with postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when delivered at
the address specified in this Section.
Section 9.4 Additional Parties. Any person who executes a Company Joinder
Agreement shall be deemed to be a Management Holder and shall be bound by all
obligations and, except to the extent limited in said joinder agreement,
entitled to all rights and privileges of a Management Holder as if he, she or it
had been an original signatory to this Agreement. Any person who executes an
Investor Joinder Agreement shall be deemed to be an Investor Stockholder and
shall be bound by all obligations and, except to the extent limited in said
joinder agreement, entitled to all rights and privileges of an Investor
Stockholder as if he, she or it had been an original signatory to this
Agreement.
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<PAGE> 19
Section 9.5 Expenses. Whether or not the transactions contemplated to
occur at the Closing are consummated, all costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such
expenses (it being understood that the costs and expenses of the Continuing
Holders in negotiating this Agreement are to be paid by the Company).
Section 9.6 Amendments and Waivers. Any provision of this Agreement may
be amended if, but only if, such amendment is in writing and is signed by SII,
the Investor Stockholder and any Continuing Holder whose rights or duties are
affected thereby. Any provision of this Agreement may be waived if, but only if,
such waiver is in writing and is signed by SII, the Investor Stockholder and
each Continuing Holder whose rights or duties are affected by such waiver.
Section 9.7 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns (including any person who acquires any shares
of Surviving Corporation Common Stock and agrees to be bound by the provisions
hereof as if originally the party hereto who purchased or originally acquired
such shares of Surviving Corporation Common Stock).
Section 9.8 Georgia Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Georgia.
Section 9.9 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto were upon the same instrument.
Section 9.10 Captions. The captions in this Agreement are included for
convenience of reference only, do not constitute a part hereof and shall be
disregarded in the construction hereof.
Section 9.11 No Rights As Employee. Nothing in this Agreement shall
affect in any manner whatsoever any rights of SII, the Surviving Corporation or
their affiliates to terminate a Continuing Holder's employment for any reason,
with or without cause, subject to any written employment agreement to which a
Continuing Holder may be a party.
Section 9.12 Genders and Plurals. Where the context so indicates, the
masculine pronoun shall include the feminine pronoun and the singular shall
include the plural.
Section 9.13 Severability. In case any one or more of the provisions or
parts of a provision contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision or any other jurisdiction, but this Agreement shall be
reformed and construed in any such jurisdiction as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provision or part shall be reformed so that it would be valid, legal
and enforceable to the maximum extent permitted in such jurisdiction.
Section 9.14 Third Party Beneficiary. The parties hereto agree that the
Company shall be a third party beneficiary of this Agreement, entitled to
enforce its provisions in accordance with its terms.
19
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SII Acquisition, Inc.
By: /s/ MARC D. HAMBURG
--------------------------------------
Its: Vice President
--------------------------------------
Berkshire Hathaway Inc.
By: /s/ MARC D. HAMBURG
--------------------------------------
Its: Vice President
--------------------------------------
/s/ ROBERT E. SHAW
--------------------------------------
Robert E. Shaw
Robert E. Shaw, L.P.
By: /s/ ROBERT E. SHAW
--------------------------------------
Its: General Partner
--------------------------------------
/s/ ANNA SUE SHAW
--------------------------------------
Anna Sue Shaw
/s/ ROBERT E. SHAW, JR.
--------------------------------------
Robert E. Shaw, Jr.
/s/ SUSAN S. YOUNG
--------------------------------------
Susan S. Young
/s/ THOMAS TRIPP SHAW
--------------------------------------
Thomas Tripp Shaw
/s/ LEWIS CLAYTON SHAW
--------------------------------------
Lewis Clayton Shaw
Julian D. Saul Trust
By: /s/ JULIAN D. SAUL
--------------------------------------
Its: Trustee
--------------------------------------
Anita Saul Trust
By: /s/ ANITA SAUL
--------------------------------------
Its: Trustee
--------------------------------------
20
<PAGE> 21
Little Family Limited Partnership
By: /s/ NORRIS LITTLE
--------------------------------------
Its: General Partner
--------------------------------------
/s/ WILLIAM C. LUSK
--------------------------------------
William C. Lusk
/s/ VANCE D. BELL
--------------------------------------
Vance D. Bell
/s/ GERALD EMBRY
--------------------------------------
Gerald Embry
/s/ SPRIGHT D. HOLLAND
--------------------------------------
Spright D. Holland
/s/ KENNETH G. JACKSON
--------------------------------------
Kenneth G. Jackson
/s/ JEFFREY TODD MEADOWS
--------------------------------------
Jeffrey Todd Meadows
/s/ PERCY D. MERRITT
--------------------------------------
Percy D. Merritt
/s/ HENRY H. LONG
--------------------------------------
Henry H. Long
/s/ JULIUS C. SHAW, JR.
--------------------------------------
Julius C. Shaw, Jr.
/s/ ANITA SAUL
--------------------------------------
Anita Saul
21
<PAGE> 22
SCHEDULE A
INVESTOR STOCKHOLDER
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME CASH CONTRIBUTION COMPANY SHARES SII COMMON STOCK
---- ----------------- -------------- -------------------
<S> <C> <C> <C>
Berkshire Hathaway Inc................... $2,016,686,315 2,194,200 108,335,585
</TABLE>
22
<PAGE> 23
SCHEDULE B
CONTINUING HOLDERS
FAMILY GROUP STOCKHOLDERS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
SII COMMON STOCK
---------------------------
MINIMUM ADDITIONAL
COMPANY CONTRIBUTION CONTRIBUTION
NAME SHARES SHARES SHARES
---- --------- ------------ ------------
<S> <C> <C> <C>
Robert E. Shaw.............................................. 6,634,348 6,485,604 148,744
Anna Sue Shaw............................................... 64,652 -- 64,652
Robert E. Shaw, Jr.......................................... 200,000 -- 200,000
Susan S. Young.............................................. 350,000 -- 350,000
Thomas Tripp Shaw........................................... 200,000 -- 200,000
Lewis Clayton Shaw.......................................... 450,000 -- 450,000
Anita Saul.................................................. 22,510 22,510 --
</TABLE>
FAMILY GROUP ENTITIES
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
SII COMMON STOCK
---------------------------
MINIMUM ADDITIONAL
COMPANY CONTRIBUTION CONTRIBUTION
NAME DESIGNATED INDIVIDUAL SHARES SHARES SHARES
---- --------------------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Robert E. Shaw, L.P........................ Robert E. Shaw 100,000 -- 100,000
Julian D. Saul Family Trust................ Julian D. Saul 6,267,883 6,267,883 --
Anita Saul Family Trust.................... Julian D. Saul 195,211 195,211 --
</TABLE>
MANAGEMENT HOLDERS
<TABLE>
<CAPTION>
NUMBER OF SHARES
COMPANY OF
NAME SHARES SII COMMON STOCK
---- ------- ----------------
<S> <C> <C>
William C. Lusk............................................. 300,000 300,000
Vance D. Bell............................................... 112,332 112,332
Gerald Embry................................................ 80,830 80,830
Spright D. Holland.......................................... 23,535 23,535
Kenneth G. Jackson.......................................... 49,748 49,748
Jeffrey Todd Meadows........................................ 14,651 14,651
Percy D. Merritt............................................ 51,532 51,532
Henry H. Long............................................... 30,029 30,029
Julius C. Shaw, Jr. ........................................ 543,045 543,045
</TABLE>
MANAGEMENT HOLDER ENTITIES:
<TABLE>
<CAPTION>
NUMBER OF SHARES
COMPANY OF
NAME DESIGNATED INDIVIDUAL SHARES SII COMMON STOCK
---- --------------------- ------- ----------------
<S> <C> <C> <C>
Little Family Limited Partnership.................. Norris Little 112,332 112,332
</TABLE>
23
