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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ABT BUILDING PRODUCTS CORPORATION
(Name of Subject Company)
ABT BUILDING PRODUCTS CORPORATION
(Name of Person(s) Filing Statement)
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COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
000782-10-2
(CUSIP Number of Class of Securities)
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RICHARD E. PARKER
PRESIDENT AND CHIEF OPERATING OFFICER
ABT BUILDING PRODUCTS CORPORATION
ONE NEENAH CENTER, SUITE 600
NEENAH, WISCONSIN 54956
(920) 751-4982
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Person Filing Statement)
WITH A COPY TO:
BRUCE A. GUTENPLAN, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
(212) 373-3000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is ABT Building Products Corporation, a
Delaware corporation (the "Company"). The address of the principal executive
offices of the Company is One Neenah Center, Suite 600, Neenah, Wisconsin
54956-3070. The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-9")
relates is the common stock, par value $.01 per share, of the Company (the
"Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer (the "Offer") by Striper
Acquisition, Inc., a Delaware corporation ("Offeror") and a direct wholly owned
subsidiary of Louisiana-Pacific Corporation, a Delaware corporation ("Parent"),
to purchase all outstanding shares of Common Stock at a price per share of
$15.00, net to the seller in cash, without interest (such price, the "Offer
Consideration"), upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated January 25, 1999 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together and with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 19, 1999, among the Company, Parent and Offeror (the "Merger
Agreement"). The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that after the
purchase of the Common Stock pursuant to the Offer, subject to the satisfaction
or waiver of the conditions set forth in the Merger Agreement, the Offeror will
be merged with and into the Company (the "Merger") and the Company will continue
as the surviving corporation (the "Surviving Corporation") and a wholly owned
subsidiary of Parent. A copy of the Merger Agreement is filed with the
Securities and Exchange Commission (the "SEC") as Exhibit 1 to this Schedule
14D-9 and is incorporated herein by reference in its entirety.
In the Merger, each share of Common Stock (excluding shares of Common Stock
owned by the Company or any of its subsidiaries or by Parent, the Offeror or any
other subsidiary of Parent or the Offeror, and shares of Common Stock owned by
stockholders who have properly exercised their appraisal rights under Delaware
law) issued and outstanding immediately prior to the effective time of the
Merger (the "Effective Time") will be converted at the Effective Time into the
right to receive the Offer Consideration, in cash, without interest and less any
required withholding taxes (the "Merger Consideration").
As a condition and inducement to Parent and the Offeror to enter into the
Merger Agreement, concurrently with the execution and delivery of the Merger
Agreement, Parent and the Offeror have entered into a Stockholder Agreement,
dated as of January 19, 1999 (the "Stockholder Agreement"), with certain
stockholders of the Company (the "Principal Stockholders") who beneficially own
in the aggregate 4,952,554 shares of Common Stock (and one of whom holds options
to purchase an additional 710,000 shares of Common Stock). Pursuant to the
Stockholder Agreement, such stockholders have agreed, among other things, to
validly tender (and not withdraw) all of such shares, representing approximately
46.4% of the outstanding shares of Common Stock pursuant to the Offer made by
Parent and the Offeror. Please refer to the section in this Schedule 14D-9
entitled "Identity and Background--Arrangements with Parent, Offeror and their
respective Executive Officers, Directors or Affiliates--The Stockholder
Agreement." A copy of the Stockholder Agreement is filed with the SEC as Exhibit
2 to this Schedule 14D-9 and is incorporated herein by reference in its
entirety.
As set forth in the Tender Offer Statement on Schedule 14D-1 of the Offeror
enclosed herewith, the address of the principal executive offices of Offeror and
Parent is 111 S.W. Fifth Avenue, Portland, Oregon 97204.
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ITEM 3. IDENTITY AND BACKGROUND.
(A) NAME AND BUSINESS ADDRESS OF PERSON FILING THIS STATEMENT.
The name and business address of the Company, which is the person filing
this Schedule 14D-9, are set forth in Item 1 above.
(B)(1) ARRANGEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES OF THE
COMPANY.
Certain contracts, agreements, arrangements and understandings between the
Company and certain of its executive officers, directors and affiliates,
together with certain employee benefit plans of the Company available to them,
are described on pages 3 through 9 of the Company's Proxy Statement, dated March
30, 1998 (the "1998 Proxy Statement"), relating to the Company's 1998 Annual
Meeting of the Stockholders. A copy of the relevant portions of the 1998 Proxy
Statement are filed with the SEC as Exhibit 3 to this Schedule 14D-9 and are
incorporated herein by reference.
In connection with the Merger Agreement, the Board of Directors of the
Company (the "Board") amended the Company's by-laws to provide that newly
created directorships resulting from an increase in the number of Directors and
vacancies occurring on the Board for other reasons may be filled by a vote of a
majority of the directors remaining on the Board of Directors. A copy of the
amendment to the Company's by-laws is filed with the SEC as Exhibit 4 to this
Schedule 14D-9 and is incorporated herein by reference in its entirety.
In addition, the Company entered into a Termination of Fee Agreement with
Kohlberg & Co., L.P., terminating the Fee Agreement, dated as of October 20,
1992, between the Company and Kohlberg & Co., L.P., effective upon the
consummation of the Offer. A copy of the Termination of Fee Agreement is filed
with the SEC as Exhibit 5 to this Schedule 14D-9 and is incorporated herein by
reference in its entirety.
The Company also adopted an Executive Severance Pay Plan (the "Plan"), a
copy of which is filed with the SEC as Exhibit 6 to this Schedule 14D-9 and is
incorporated herein by reference, and entered into a severance arrangement with
Mr. George T. Brophy, its Chairman of the Board and Chief Executive Officer (the
"Severance Arrangement"), a copy of which is filed with the SEC as Exhibit 7 to
this Schedule 14D-9 and is incorporated herein by reference. The Plan covers
certain executive officers of the Company having one or more full years of
service and who are involuntarily terminated due to (i) a job elimination, (ii)
a reduction in force, (iii) any reason other than for cause within one year
following a change of control, or (iv) voluntary termination of their employment
with the Company within the period beginning 60 days and ending 90 days after
the occurrence of a change of control, and provides that such officers' options
will not be forfeited and will immediately vest upon any such termination. Such
officers will also be entitled to receive their monthly salary for 18 months
commencing on the date of their termination, a pro-rata bonus payment (through
the date of their termination) of their bonus entitlement for the year of
termination payable in the following January, an additional bonus payment
equaling the average of the prior three years' bonuses payable at the end of the
18 months following their termination, and various other benefits. Under the
Severance Arrangement, Mr. Brophy will be entitled to certain benefits,
including receiving a lump sum severance payment of $1,777,368 in full
satisfaction of all rights to severance or other post-termination payments (but
excluding his rights with respect to any stock or stock options that he holds)
to which he would be entitled upon a termination of his employment with the
Company without cause or due to a voluntary termination within the period
beginning 60 days and ending 90 days after a change of control. In addition, Mr.
Brophy's unvested stock options will immediately vest and become exercisable
upon a change of control. The Plan and the Severance Arrangement replaced and
superseded prior severance arrangements or programs sponsored by the Company for
the benefit of Mr. Brophy and the officers named in the Plan.
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(B) (2) ARRANGEMENTS WITH PARENT, OFFEROR AND THEIR RESPECTIVE EXECUTIVE
OFFICERS, DIRECTORS OR AFFILIATES.
The Company has entered into the Merger Agreement with Parent and the
Offeror, and Parent and the Offeror have entered into the Stockholder Agreement
with the Principal Stockholders.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the complete
text of the Merger Agreement, which is incorporated by reference and a copy of
which is filed with the SEC as Exhibit 1 to this Schedule 14D-9.
THE OFFER. The Merger Agreement provides for the commencement of the Offer,
Without the prior written consent of the Company, the Offeror has agreed not to
(and the Parent has agreed to cause the Offeror not to) (i) decrease or change
the form of the Offer Consideration or decrease the number of shares of Common
Stock sought pursuant to the Offer, (ii) amend any term of the Offer in any
manner adverse to holders of shares of Common Stock, (iii) change the conditions
to the Offer, (iv) impose additional conditions to the Offer, (v) waive the
condition that there shall be validly tendered and not withdrawn prior to the
time the Offer expires a number of shares of Common Stock (together with any
shares of Common Stock then owned by Parent or any of its subsidiaries) which
constitutes a majority of the shares of Common Stock outstanding on a
fully-diluted basis on the date of purchase, or (vi) extend the expiration date
of the Offer beyond the initial expiration date of the Offer (except that the
Offeror may, without the consent of the Company, (a) extend the Offer if, at the
then scheduled expiration date of the Offer any of the conditions to the
Offeror's obligation to purchase shares of Common Stock in the Offer is not
satisfied, until such time as such condition is satisfied or waived, and (b)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the SEC or the staff thereof); provided, however, that, except as
set forth above and subject to applicable legal requirements, the Offeror may
amend the Offer or waive any condition to the Offer in its sole discretion. The
Merger Agreement also provides that the Parent shall provide the Offeror on a
timely basis funds necessary to purchase any shares of Common Stock that the
Offeror becomes obligated to purchase pursuant to the Merger and the Parent
shall be liable on a direct and primary basis for the Offeror's obligations
under the Merger Agreement.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
purchase by Offeror pursuant to the Offer of such number of shares of Common
Stock (together with any shares of Common Stock then owned by Parent or any of
its subsidiaries) which represents a majority of the outstanding shares of
Common Stock (on a fully diluted basis) on the date of purchase, and from time
to time thereafter, (i) Parent will be entitled to designate such number of
directors, rounded up to the next whole number as will give Parent
representation on the Board equal to the product of (x) the number of directors
on the Board (giving effect to any increase in the number of directors pursuant
to the Merger Agreement) and (y) the percentage that such number of shares of
Common Stock so purchased (together with any shares of Common Stock then owned
by Parent or any of its subsidiaries), bears to the aggregate number of shares
of Common Stock outstanding on the date of purchase (such number being the
"Board Percentage"), and (ii) the Company will, upon request by Parent, promptly
cause Parent's designees constituting the Board Percentage to be elected to the
Board by (x) increasing the size of the Board or (y) using reasonable efforts to
secure the resignations of such number of directors as is necessary to enable
Parent's designees to be elected to the Board and will use its best efforts to
cause Parent's designees promptly to be so elected, subject in all instances to
compliance with Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14f-1 promulgated thereunder. Following the
election or appointment of Parent's designees pursuant to the Merger Agreement
and prior to the Effective Time, any amendment or termination of the Merger
Agreement, waiver of the obligations or other acts of Parent or the Offeror or
waiver of
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the Company's rights thereunder will require the concurrence of a majority of
the Continuing Directors (defined as those directors of the Company then in
office who were directors of the Company on the date of the Merger Agreement and
who voted to approve the Merger Agreement and such additional directors of the
Company, if any, who are not affiliated with Parent, the Offeror or any of their
affiliates and who were designated as "Continuing Directors" by a majority of
the directors who were Continuing Directors at the time of such designation).
The Company is today mailing to the stockholders of the Company a copy of an
Information Statement prepared in accordance with Rule 14f-1 promulgated under
the Exchange Act, relating to the possible designation by Parent, pursuant to
the Merger Agreement, of certain persons to be appointed to the Board otherwise
than at a meeting of the stockholders of the Company.
CONSIDERATION TO BE PAID IN THE MERGER. The Merger Agreement provides that,
on the terms and subject to the conditions set forth in the Merger Agreement and
in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), the Offeror will be merged with and into the Company at the Effective
Time. In the Merger, each share of Common Stock issued and outstanding
immediately prior to the Effective Time (excluding shares of Common Stock owned
by the Company or any of its subsidiaries or shares of Common Stock owned by
Parent, the Offeror or any other subsidiary of Parent and Dissenting Shares (as
defined in the Merger Agreement)) will be converted into the right to receive
the Offer Consideration, payable to the holder thereof without any interest
thereon, less any required withholding taxes, upon surrender and exchange of a
certificate representing such shares of Common Stock. Each share of the capital
stock of the Offeror issued and outstanding immediately prior to the Effective
Time will be converted into and become one fully paid and nonassessable share of
Common Stock, par value $0.01 per share, of the Surviving Corporation, which
will thereupon become a wholly owned subsidiary of Parent. Each share of Common
Stock and all other shares of capital stock of the Company that are owned by the
Company or any subsidiary of the Company and all shares of Common Stock owned by
Parent, the Offeror or any other subsidiary of Parent will be canceled and
retired and will cease to exist and no consideration will be delivered or
deliverable in exchange therefor. The Merger will become effective upon the
filing of a certificate of merger with the Secretary of State of the State of
Delaware or at such time thereafter as is provided in the certificate of merger.
COMPANY STOCK OPTIONS. The Merger Agreement provides that, at the Effective
Time, each then-outstanding option to purchase shares of Common Stock
(collectively, the "Options") under the Company's Amended and Restated Stock
Option Plan, 1994 Director Stock Option Plan, 1994 Employee Stock Option Plan
and new employee compensation policy (collectively, the "Stock Option Plans"),
whether or not then exercisable, will, in settlement thereof, receive for each
share of Common Stock subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Offer
Consideration and the per share exercise price of such Option to the extent such
difference is a positive number (such amount being hereinafter referred to as,
the "Option Consideration"); PROVIDED, HOWEVER, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such amount will be paid as
soon as practicable after the first date payment can be made without liability
to such person under Section 16(b) of the Exchange Act. Upon receipt of the
Option Consideration therefor, each Option will be canceled. The surrender of an
Option to the Company in exchange for the Option Consideration will be deemed a
release of any and all rights the holder had or may have had in respect of such
Option.
The Company has agreed to use its reasonable best efforts to obtain all
necessary consents or releases from holders of Options under the Stock Option
Plans and take all such other lawful action as may be necessary to give effect
to the transactions contemplated by the Merger Agreement. Except as otherwise
agreed to by the parties, (i) the Stock Option Plans will terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any subsidiary thereof will be
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canceled as of the Effective Time and (ii) the Company will use its reasonable
best efforts to assure that following the Effective Time no participant in the
Stock Option Plans or other plans, programs or arrangements will have any right
thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any subsidiary thereof and to terminate all such plans.
STOCKHOLDER MEETING. The Merger Agreement provides that the Company will,
as soon as practicable following the acceptance for payment of and payment for
the shares of Common Stock by the Offeror in the Offer, if required by
applicable law to consummate the Merger, duly call, give notice of, convene and
hold a meeting of its stockholders for the purpose of considering and voting
upon the Merger Agreement. In connection with such meeting, if required by
applicable law to consummate the Merger, the Company, in consultation with
Parent, will prepare and file with the SEC a proxy statement, together with any
supplement or amendment thereto (the "Proxy Statement"). The Company has agreed
to use its reasonable efforts to respond to all SEC comments with respect to the
Proxy Statement and, subject to compliance with the SEC's rules and regulations,
to cause such proxy statement to be mailed to the stockholders at the earliest
practicable date.
If the Offeror, or any other wholly owned subsidiary of Parent, acquires at
least 90% of the outstanding shares of Common Stock in the Offer, at the request
of the Offeror, all parties to the Merger Agreement will take all necessary
actions to cause the Merger to become effective as soon as practicable after the
expiration of the Offer, without a meeting of the stockholders, in accordance
with the provisions of Section 253 of the DGCL.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company with respect to: (i) organization, standing and
corporate power; (ii) authority and noncontravention; (iii) consents and
approvals; (iv) capital structure; (v) documents filed with the SEC; (vi)
absence of certain changes or events and undisclosed material liabilities; (vii)
certain information required by the Exchange Act and other applicable law;
(viii) real property and other assets; (ix) Year 2000 compliance; (x)
intellectual property; (xi) infringement; (xii) material contracts; (xiii)
litigation; (xiv) compliance with laws; (xv) environmental laws; (xvi) taxes;
(xvii) benefit plans; (xviii) absence of changes in benefit plans; (xix) labor
matters; (xx) brokers' fees; (xxi) opinion of one of its financial advisors; and
(xxii) voting requirements.
Parent and the Offeror have also made certain representations and warranties
with respect to: (i) organization, standing and corporate power; (ii) authority
and noncontravention; (iii) consents and approvals; (iv) certain information
required by the Exchange Act and other applicable law; (v) financing; (vi)
brokers' fees; and (vii) operations of the Offeror.
No representations and warranties made by the Company, Parent or Offeror
will survive beyond the Effective Time.
CONDUCT OF BUSINESS PENDING THE MERGER. The Company has agreed that during
the period from the date of the Merger Agreement until the Effective Time,
except as expressly provided for under the Merger Agreement or the agreement of
the Company for the sale of its fiber cement facility (the "Fiber Cement
Agreement"), the Company will, and will cause its subsidiaries to, conduct their
businesses only in the ordinary course of business consistent with past practice
and, to the extent consistent therewith, will use reasonable efforts to preserve
intact its current business organizations, keep available the services of its
current key officers and employees and preserve the goodwill of those engaged in
material business relationships with the Company. The Company has further agreed
that during this period and except as expressly set forth under the Merger
Agreement or the Fiber Cement Agreement, it will not, nor will it permit any of
its subsidiaries to: (i) (A) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, securities or other property) in
respect of, any of its outstanding capital stock (other than, with respect to a
subsidiary of the Company, to its
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corporate parent), (B) split, combine or reclassify any of its outstanding
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its outstanding capital
stock, or (C) purchase, redeem or otherwise acquire any shares of outstanding
capital stock or any rights, warrants or options to acquire any such shares,
except for the acquisition of shares of Common Stock from holders of Options in
full or partial payment of the exercise price payable by such holder upon
exercise of Options; (ii) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible or exchangeable
securities, other than upon the exercise of Options outstanding on the date of
the Merger Agreement; (iii) amend its certificate of incorporation, bylaws or
other comparable charter or organizational documents other than as required for
the performance by the Company of its obligations under the Merger Agreement;
(iv) directly or indirectly acquire, make any investment in, or make any capital
contributions to, any person other than in the ordinary course of business
consistent with past practice; (v) directly or indirectly sell, pledge or
otherwise dispose of or encumber any of its properties or assets that are
material to its business, except for sales, pledges or other dispositions or
encumbrances in the ordinary course of business consistent with past practice;
(vi) (A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, other than indebtedness owing to or guarantees
of indebtedness owing to the Company or any direct or indirect wholly owned
subsidiary of the Company or (B) make any loans or advances to any other person,
other than to the Company or to any direct or indirect wholly owned subsidiary
of the Company and other than routine advances to employees consistent with past
practice, except, in the case of clause (A), for borrowings under existing
credit facilities described in the reports or other documents filed by the
Company with the SEC in the ordinary course of business consistent with past
practice; (vii) enter into any compromise or settlement of, or take any material
action with respect to, any litigation, action, suit, claim, proceeding or
investigation other than the prosecution, defense and settlement of routine
litigation, actions, suits, claims, proceedings or investigations in the
ordinary course of business; (viii) grant or agree to grant to any officer,
employee or consultant any increase in wages or bonus, severance, profit
sharing, retirement, deferred compensation, insurance or other compensation or
benefits, or establish any new compensation or benefit plans or arrangements, or
amend or agree to amend any existing Company employee benefit plans, except as
may be required under existing agreements or by law or pursuant to the normal
severance policies or practices of the Company or its subsidiaries as in effect
on the date of the Merger Agreement, or increases in salary or wages payable or
to become payable in the ordinary course of business consistent with past
practice; (ix) accelerate the payment, right to payment or vesting of any bonus,
severance, profit sharing, retirement, deferred compensation, stock option,
insurance or other compensation or benefits; (x) enter into or amend any
employment, consulting, severance or similar agreement with any individual other
than in the ordinary course of business consistent with past practice, except
with respect to new hires of non-officer employees in the ordinary course of
business consistent with past practice; (xi) adopt or enter into a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other material reorganization or any
agreement relating to an Acquisition Proposal (as defined below); (xii) make any
tax election or settle or compromise any income tax liability of the Company or
of any of its subsidiaries involving on an individual basis more than $100,000;
(xiii) make any change in any method of accounting or accounting practice or
policy, except as required by any changes in generally accepted accounting
principles; (xiv) enter into any agreement, understanding or commitment that
restrains, limits or impedes the Company's ability to compete with or conduct
any business or line of business; (xv) plan, announce, implement or effect any
reduction in force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of employees of
the Company or its subsidiaries; or (xvi) authorize any of, or commit or agree
to take any of, the foregoing actions.
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CONSENTS, APPROVALS AND FILINGS. The Merger Agreement provides that each of
the parties to the Merger Agreement will (i) make promptly its respective
filings, and thereafter make any other required submissions, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the Exchange Act, with respect to the Offer, the Merger and the other
transactions contemplated by the Merger Agreement and (ii) use its reasonable
best efforts to take, or cause to be taken, all appropriate action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the Offer, the Merger and
the other transactions contemplated by the Merger Agreement, including without
limitation using its reasonable best efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
entities and parties to contracts with the Company and its subsidiaries as are
necessary for the consummation of the Offer, the Merger and the other
transactions contemplated by the Merger Agreement and to fulfill the conditions
to the Offer and the Merger, except that in no event will Parent or any of its
subsidiaries be required to agree or commit to divest, hold separate, offer for
sale, abandon, limit its operation of or take similar action with respect to any
assets (tangible or intangible) or any business interest of it or any of its
subsidiaries (including without limitation the Surviving Corporation after
consummation of the Merger) in connection with or as a condition to receiving
the consent or approval of any governmental entity (including without limitation
under the HSR Act). The Merger Agreement also provides that in case at any time
after the Effective Time any further action is necessary or desirable to carry
out the Merger Agreement, the proper officers and directors of each party to the
Merger Agreement will use their reasonable best efforts to take such action.
EMPLOYEE BENEFIT MATTERS. The Merger Agreement provides that, from and
after the Effective Time, Parent will, and will cause its subsidiaries
(including the Surviving Corporation) to, honor and provide for payment of all
accrued obligations and benefits, including but not limited to any bonus
payments earned in respect of fiscal 1998 but not yet paid, under all employee
benefit plans of the Company and employment or severance agreements between the
Company and any persons who are or had been employees of the Company or any of
its subsidiaries at or prior to the Effective Time (the "Covered Employees"),
all in accordance with their respective terms.
The Merger Agreement further provides that, from and after the Effective
Time, Parent will, and will cause its subsidiaries (including the Surviving
Corporation) to, provide Covered Employees who remain in the employ of Parent or
any such subsidiary employee benefits that are reasonably comparable to the
employee benefits provided to similarly situated employees of Parent or any such
subsidiary who are not Covered Employees. The Merger Agreement also provides
that, to the extent Covered Employees are included in any benefit plan of Parent
or its subsidiaries, Parent agrees that the Covered Employees will receive
credit under such plan for service prior to the Effective Time with the Company
and its subsidiaries to the same extent such service was counted under similar
employee benefit plans of the Company for purposes of eligibility, vesting,
eligibility for retirement (but not for benefit accrual) and, with respect to
vacation, disability and severance, benefit accrual. The Merger Agreement also
provides that, to the extent that Covered Employees are included in any medical,
dental or health plan other than the plan or plans they participated in at the
Effective Time, no such plans will include pre-existing condition exclusions,
except to the extent that such exclusions were applicable under the similar the
Company employee benefit plan at the Effective Time, and all such plans will
provide credit for any deductibles and co-payments applied or made with respect
to each Covered Employee in the calendar year of the change.
Notwithstanding anything in the Merger Agreement to the contrary, from and
after the Effective Time, the Surviving Corporation will have sole discretion
over the hiring, promotion, retention, firing and other terms and conditions of
the employment of employees of the Surviving Corporation. Except as otherwise
provided in the Merger Agreement, nothing in the Merger Agreement prevents
Parent or
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the Surviving Corporation from amending or terminating any Company benefit plan
in accordance with its terms.
NO SOLICITATION. The Merger Agreement provides that, during the period from
and including the date of the Merger Agreement to the Effective Time, the
Company will not, and will not authorize or permit any of its subsidiaries, or
any of its or their affiliates, officers, directors, employees, agents or
representatives (including without limitation any investment banker, financial
advisor, attorney or accountant retained by the Company or any of its
subsidiaries), to, directly or indirectly, initiate, solicit, or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any Acquisition Proposal (as defined below), or enter into
or maintain or continue discussions or negotiations with any person in
furtherance of, or approve, agree to, endorse or recommend, any Acquisition
Proposal; except that nothing in the Merger Agreement will prohibit the Board,
prior to the time at which the Merger Agreement is adopted by the stockholders
of the Company, from furnishing information to, or entering into, maintaining or
continuing discussions or negotiations with, any person that makes a bona fide
written Acquisition Proposal after the date of the Merger Agreement under
circumstances not involving any breach of the provisions of the Merger
Agreement, if, and to the extent that, (i) the Board, after consultation with
and based upon the advice of independent legal counsel, determines in good faith
that the failure to take such action would constitute a breach by the Board of
its fiduciary duties to the stockholders of the Company under applicable law,
and (ii) prior to furnishing any non-public information to such person, the
Company receives from such person an executed confidentiality agreement with
provisions no less favorable to the Company than the letter agreement relating
to the furnishing of confidential information of the Company to Parent. The
Merger Agreement further provides that the Company will promptly (and, in any
event within 24 hours) notify Parent after receipt of any Acquisition Proposal
or any request for information relating to the Company or its subsidiaries or
for access to the properties, books or records of the Company or any of its
subsidiaries by any person who has informed the Company that such person is
considering making, or has made, an Acquisition Proposal (which notice will
identify the person making, or considering making, such Acquisition Proposal and
will set forth the material terms of any Acquisition Proposal received), and
that the Company will keep Parent informed in reasonable detail of the terms,
status and other pertinent details of any such Acquisition Proposal.
The Merger Agreement further provides that during the period from and
including the date of the Merger Agreement to and including the Effective Time,
neither the Board nor any committee thereof will withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent or the Offeror,
the approval of the Merger Agreement or the transactions contemplated thereby or
the recommendation of the Board in favor of the Offer and the Merger, except
that nothing contained in the Merger Agreement will (i) prohibit the Board from
withdrawing or modifying such recommendation following the receipt by the
Company after the date of the Merger Agreement, under circumstances not
involving any breach of the provisions described in the immediately preceding
paragraph, of an Acquisition Proposal if, and to the extent that, the Board,
after consultation with and based upon the advice of independent legal counsel,
determines in good faith that the failure to take such action would result in a
breach by the Board of its fiduciary duties to the stockholders of the Company
under applicable law or (ii) prohibit the Board from, to the extent applicable,
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal. Subject to the Company's right to terminate the Merger
Agreement under certain circumstances described below, no such action taken by
the Board will permit the Company to enter into any agreement providing for any
transaction contemplated by an Acquisition Proposal for as long as the Merger
Agreement remains in effect.
For purposes of the Merger Agreement, "Acquisition Proposal" means an
inquiry, offer, proposal or indication of interest regarding any of the
following (other than the transactions contemplated by the Merger Agreement, the
Stockholder Agreement or the Fiber Cement Agreement) involving the
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Company: (i) any merger, consolidation, share exchange, recapitalization,
business combination, or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of all or
substantially all of the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of related transactions; (iii) any
tender offer or exchange offer or other acquisition of 20% or more of the
outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
FEES AND EXPENSES. The Merger Agreement provides that whether or not the
Merger is consummated, each party will pay its own expenses incident to
preparing for, entering into and carrying out the Merger Agreement and the
consummation of the transactions contemplated thereby.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. The Merger Agreement
provides that, for a period of six years after the Effective Time, the
provisions with respect to indemnification set forth in the certificate of
incorporation and bylaws of the Offeror will not be amended, repealed or
otherwise modified in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effective Time were
directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including without limitation the
transactions contemplated by the Merger Agreement), unless such modification is
required by law.
The Merger Agreement also provides that from and after the Effective Time,
Parent will, or will cause the Surviving Corporation to, indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
thereof or who becomes prior to the Effective Time, an officer or director of
the Company (the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including reasonable attorneys' fees and expenses), liabilities
or judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval will not be unreasonably withheld) incurred
in connection with any threatened or actual action, suit or proceeding based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of the Company (the "Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, the Merger Agreement or the
transactions contemplated thereby, in each case, to the full extent that a
corporation is permitted under the DGCL to indemnify its own directors or
officers, as the case may be (and will pay expenses in advance of the final
disposition of any such action, suit or proceeding to each Indemnified Party to
the full extent permitted by the DGCL, upon receipt of an undertaking by or on
behalf of such Indemnified Party to repay such amount if it will ultimately be
determined that such person is not entitled to be so indemnified). The foregoing
rights to indemnification under the Merger Agreement will continue in full force
and effect for a period of four years from the Effective Time; provided,
however, that all rights to indemnification in respect of any Indemnified
Liabilities asserted or made within such period will continue until the
disposition of such Indemnified Liabilities.
The Merger Agreement provides that, for a period commencing at the Effective
Time and expiring on the sixth anniversary of the Effective Time, Parent will
cause to be maintained in effect policies of directors' and officers' liability
insurance, for the benefit of those persons who are covered by the Company's
directors' and officers' liability insurance policies at the Effective Time,
providing coverage with respect to matters occurring prior to the Effective Time
that is at least equal to the coverage provided under the Company's current
directors' and officers' liability insurance policies, to the extent that such
liability insurance can be maintained at an annual cost to Parent not greater
than $350,000. The Merger Agreement further provides that if such insurance
cannot be so maintained at such cost, Parent will maintain as much of such
insurance as can be so maintained at a cost equal to $350,000.
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CONDITIONS TO THE OFFER. Notwithstanding any other provision of the Offer,
the Offeror will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to the Offeror's obligation to pay for or return tendered
shares promptly after expiration or termination of the Offer), to pay for any
shares of Common Stock tendered, and may postpone the acceptance for payment or,
subject to the restrictions referred to above, payment for any shares of Common
Stock tendered, and, subject to the terms of the Merger Agreement, may amend or
terminate the Offer (whether or not any shares of Common Stock have theretofore
been purchased or paid for pursuant to the Offer) if (i) there will not have
been validly tendered and not withdrawn prior to the time the Offer will
otherwise expire a number of shares of Common Stock (together with any shares of
Common Stock then owned by Parent or any of its subsidiaries) which constitutes
a majority of the shares of Common Stock outstanding on a fully-diluted basis on
the date of purchase (the "Minimum Share Condition") ("on a fully diluted basis"
having the following meaning, as of any date: the number of shares of Common
Stock outstanding (excluding shares of Common Stock held as treasury stock by
the Company or any of its subsidiaries), together with the number of shares of
Common Stock the Company is then required to issue pursuant to obligations
outstanding at that date under employee stock option or other benefit plans or
otherwise other than unvested Options), (ii) any applicable waiting periods
under the HSR Act will not have expired or been terminated prior to the
expiration of the Offer; or (iii) if at any time on or after the date of the
Merger Agreement and before acceptance for payment of, or payment for, such
Shares, any of the following events will have occurred and remain in effect:
(A) any United States or Canadian governmental entity or authority or any
United States or Canadian court of competent jurisdiction in the United
States or in Canada will have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree,
injunction or other order which is in effect and which (l) materially
restricts, prevents or prohibits consummation of the transactions
contemplated by the Merger Agreement, including the Offer or the Merger,
(2) prohibits or limits materially the ownership or operation by Parent
or any of its subsidiaries of all or any material portion of the business
or assets of the Company and its subsidiaries taken as a whole or compels
the Company, Parent, or any of their subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its subsidiaries taken as a whole, or (3) imposes material
limitations on the ability of Parent, the Offeror or any other subsidiary
of Parent to exercise effectively full rights of ownership of any shares
of Common Stock, including, without limitation, the right to vote any
shares of Common Stock acquired by the Offeror pursuant to the Offer or
otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of
the Merger Agreement and the transactions contemplated thereby;
(B) there will have been instituted or pending any action or proceeding
before any United States or Canadian court or governmental entity or
authority by any United States or Canadian governmental entity or
authority seeking any order, decree or injunction having any effect set
forth in paragraph (A) above;
(C) the representations and warranties of the Company contained in the
Merger Agreement (without giving effect to the materiality qualifications
contained therein) will not be true and correct as of the expiration date
of the Offer (as the same may be extended from time to time) as though
made on and as of such date (except for representations and warranties
made as of a specified date, which need be true and correct only as of
the specified date), except for any breach or breaches which,
individually or in the aggregate, would not reasonably be expected to
have a material adverse effect on (i) the ability of the Company to
perform its obligations under the Merger Agreement or to consummate the
transactions contemplated thereby or (ii) the assets, liabilities (actual
or contingent), financial condition, results of
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operation or business of the Company and its subsidiaries taken as a
whole, excluding any change or development resulting from (x) events
adversely affecting any principal markets served by the business of the
Company generally or affecting the hardboard siding industry generally
which do not have a disproportionate adverse effect on the Company or its
subsidiaries, (y) general economic conditions, including changes in the
economies of any of the jurisdictions in which the Company or any of its
subsidiaries conduct business, which do not have a disproportionate
effect on the Company or its subsidiaries, or (z) the Merger Agreement,
the Stockholder Agreement or any transaction contemplated thereby;
provided that this exception will not apply to the representations and
warranties of the Company relating to the capital structure of the
Company;
(D) the Company will not have performed or complied in all material respects
with its obligations under the Merger Agreement to be performed or
complied with by it and such failure continues until the later of (i)
fifteen days after actual receipt by it of written notice from the
Offeror setting forth in detail the nature of such failure or (ii) the
expiration date of the Offer;
(E) there will have occurred any material adverse change, or any development
that is reasonably likely to result in a material adverse change, in the
assets, liabilities (actual or contingent), results of operations or
business of the Company and its subsidiaries taken as a whole, excluding
any change or development resulting from (i) events adversely affecting
any principal markets served by the business of the Company generally or
affecting the hardboard siding industry generally which do not have a
disproportionate adverse effect on the Company or its subsidiaries, (ii)
general economic conditions, including changes in the economies of any of
the jurisdictions in which the Company or any of its subsidiaries conduct
business, which do not have a disproportionate adverse effect on the
Company or its subsidiaries, or (iii) the Merger Agreement, the
Stockholder Agreement or any transaction contemplated thereby;
(F) the Merger Agreement will have been terminated in accordance with its
terms;
(G) the Board or any committee thereof will have (i) withdrawn or modified
in a manner adverse to Parent or the Offeror, or publicly taken a
position materially inconsistent with, its approval or recommendation of
the Merger Agreement, the Offer, the Merger or the other transactions
contemplated thereby, (ii) approved, endorsed or recommended an
Acquisition Proposal, or (iii) resolved or publicly disclosed any
intention to do any of the foregoing; or
(H) there will have occurred (i) any general suspension of, or limitation on
prices (other than suspensions or limitations triggered by price
fluctuations on a trading day) for, trading in securities on any national
securities exchange in the United States, (ii) the declaration of a
banking moratorium or any limitation or suspension of payments in respect
of the extension of credit by banks or other lending institutions in the
United States, (iii) any commencement of war, armed hostilities or other
international or national calamity directly involving the United States
having a significant adverse effect on the functionality of financial
markets in the United States, or (iv) in the case of any of the foregoing
existing at time of the commencement of the Offer, a material
acceleration or worsening thereof.
The foregoing conditions (other than the Minimum Share Condition) are for
the sole benefit of the Offeror and its affiliates and may be asserted by the
Offeror regardless of the circumstances giving rise to any such condition or may
be waived by the Offeror, in whole or in part, from time to time in its sole
discretion, except as otherwise provided in the Merger Agreement. The failure by
the Offeror at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right and each such right will be deemed an ongoing
right and may be asserted at any time and from time to time.
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CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the obligation
of each party to effect the Merger is subject to the satisfaction or written
waiver prior to the Closing Date, of the following conditions: (i) Offeror will
have accepted for payment and paid for all shares of Common Stock validly
tendered in the Offer and not withdrawn, provided, however, that, neither Parent
nor the Offeror may invoke this condition if the Offeror has failed to purchase
Shares so tendered and not withdrawn in violation of the terms of the Merger
Agreement or the Offer; (ii) the Merger Agreement will have been adopted by the
affirmative vote of the holders of the requisite number of shares of capital
stock of the Company if such vote is required pursuant to the Company's
certificate of incorporation, the DGCL or by applicable law; (iii) no temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger will be in effect; provided, however,
that prior to invoking this condition the party so invoking this condition will
have complied with its obligations under the Merger Agreement relating to the
taking of actions necessary for the consummation of the Merger; and (iv) all
necessary waiting periods under the HSR Act applicable to the Merger will have
expired or been earlier terminated.
TERMINATION. The Merger Agreement may be terminated and the transactions
contemplated therein may be abandoned at any time prior to the Effective Time,
notwithstanding the adoption of the Merger Agreement by the stockholders of the
Company, in any one of the following circumstances: (i) by mutual written
consent duly authorized by the Boards of Parent and the Company; (ii) by Parent
or the Company if shares of Common Stock have not been purchased by the Offeror
pursuant of the Offer on or before April 30, 1999, other than as a result of any
material breach of any provision of the Merger Agreement by the party seeking to
effect such termination; (iii) by Parent or the Company if, as a result of the
failure of any of the conditions to the Offer under the Merger Agreement
(described above in "Conditions to the Offer") the Offer will have expired or
Offeror will have terminated the Offer in accordance with the terms and
conditions thereof without any shares of Common Stock being purchased by the
Offeror thereunder; provided, however, that the right to terminate the Merger
Agreement pursuant to this provision will not be available to any party whose
breach of or failure to fulfill its obligations under the Merger Agreement
resulted in the failure of any such condition; (iv) by Parent or the Company, if
any court of competent jurisdiction or other governmental entity will have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger or the acceptance for
payment of, or payment for, the shares pursuant to the Offer and such order,
decree or ruling or other action will have become final and nonappealable,
provided that the party seeking to terminate this Agreement will have used its
reasonable best efforts to remove or lift such order, decree or ruling; (v) by
Parent if the Board or any committee thereof will have (A) withdrawn or modified
in a manner adverse to Parent or the Offeror, or publicly taken a position
materially inconsistent with, its approval or recommendation of the Merger
Agreement, the Offer, the Merger or the other transactions contemplated thereby,
(B) approved, endorsed or recommended to its stockholders an Acquisition
Proposal, or (C) resolved or publicly disclosed any intention to do any of the
foregoing; (vi) by the Company, following the receipt by the Company after the
date hereof, under circumstances not involving any breach of the obligations of
the Company described under the caption "No Solicitation" above, of a bona fide
written Acquisition Proposal, if the Board, after consultation with and based
upon the advice of independent legal counsel, will have determined in good faith
that the failure to terminate the Merger Agreement would constitute a breach by
the Board of its fiduciary duties to the Company's stockholders under applicable
law; provided that (A) the Company has complied with specified provisions of the
Merger Agreement, including specified notice provisions, (B) the Company enters
into a definitive agreement providing for the transactions contemplated by such
Acquisition Proposal immediately following such termination, and (C) such
termination will not be effective until the Company will have paid to Parent the
Fee (as defined below) in accordance with provisions of the Merger Agreement; or
(vii) by the Company if the Offeror or Parent will have (A) failed to commence
the Offer within five business days after the public
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announcement by Parent and the Company of the Merger Agreement, (B) failed to
pay for the shares of Common Stock pursuant to the Offer in accordance with the
Merger Agreement, or (C) breached in any material respect any of their
respective representations, warranties, covenants or other agreements contained
in the Merger Agreement, which breach described in this clause (C) is incapable
of being cured or has not been cured within 20 days after the giving of written
notice to Parent or the Offeror, as applicable, except such breaches described
in this clause (C) as individually or in the aggregate would not reasonably be
expected to materially and adversely affect the ability of Parent or the Offeror
to complete the Offer or the Merger on the terms and subject to the conditions
of the Merger Agreement. If the Merger Agreement is terminated pursuant to
clause (v) or (vi) above, the Company will pay Parent a fee in the amount of
$5,000,000 (the "Fee"), which amount will be payable in immediately available
funds (x) promptly (and in any event within three business days) after such
termination, in the case of termination under the circumstances described in
clause (v) above or (y) prior to or concurrently with such termination, in the
case of termination under the circumstances described in clause (vi) above.
AMENDMENT. Subject to any applicable provisions of the DGCL, at any time
prior to the Effective Time, the parties to the Merger Agreement may modify or
amend the Merger Agreement by written agreement executed and delivered by duly
authorized officers of the respective parties. However, after the adoption of
the Merger Agreement at the meeting of the stockholders, no amendment will be
made which would reduce the amount or change the type of consideration into
which each share of Common Stock will be converted upon consummation of the
Merger. The Merger Agreement may not be modified or amended except by written
agreement executed and delivered by duly authorized officers of each of the
respective parties.
ASSIGNMENT. Neither the Merger Agreement nor any of the rights, interests
or obligations thereunder may be assigned or delegated, in whole or in part, by
operation of law or otherwise by any of the parties thereto without the prior
written consent of the other parties, and any such assignment without such prior
written consent will be null and void, except that Parent and/or the Offeror may
assign the Merger Agreement to any direct or indirect wholly owned subsidiary of
Parent without the prior consent of the Company, provided that the Parent and/or
the Offeror, as the case may be, will remain liable for all of its obligations
under the Merger Agreement. Subject to the immediately preceding sentence, the
Merger Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
TIMING. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Offeror pursuant to the Offer. Although the Offeror has agreed to
cause the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
THE STOCKHOLDER AGREEMENT
The following is a summary of certain material provisions of the Stockholder
Agreement. This summary is not a complete description of the terms and
conditions of the Stockholder Agreement and is qualified in its entirety by
reference to the complete text of the Stockholder Agreement, which is
incorporated by reference and a copy of which is filed with the SEC as Exhibit 2
to this Schedule 14D-9.
TENDER OF SHARES. Each Principal Stockholder has agreed to cause to be
validly tendered (and not withdrawn) pursuant to and in accordance with the
terms of the Offer, not later than the tenth business day after commencement of
the Offer, all shares of Common Stock beneficially owned by such Principal
Stockholders (such shares, together with any other shares of Common Stock the
beneficial ownership of which is acquired by such Principal Stockholders being
such Principal Stockholder's
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"Subject Shares"). If the Offer is amended in any manner set forth in the Merger
Agreement as requiring the consent of the Company, the Principal Stockholders
will not be obligated to tender their Subject Shares unless such amendment is
made with their prior approval (which is not to be unreasonably withheld).
VOTING OF SHARES. At any meeting of the stockholders of the Company called
to consider and vote upon the adoption of the Merger Agreement (and at any and
all postponements and adjournments thereof), and in connection with any action
to be taken in respect of the adoption of the Merger Agreement by written
consent of stockholders of the Company, each Principal Stockholder has agreed to
vote or cause to be voted (including by written consent, if applicable) all of
such Principal Stockholder's Subject Shares in favor of the adoption of the
Merger Agreement and in favor of any other matter necessary for the consummation
of the transactions contemplated by the Merger Agreement and considered and
voted upon at any such meeting or made the subject of any such written consent,
as applicable.
At any meeting of the stockholders of the Company called to consider and
vote upon any Adverse Proposal (as defined below) (and at any and all
postponements and adjournments thereof), and in connection with any action to be
taken in respect of any Adverse Proposal by written consent of stockholders of
the Company, each Principal Stockholder has agreed to vote or cause to be voted
(including by written consent, if applicable) all of such Principal
Stockholder's Subject Shares against such Adverse Proposal. For purposes of the
Stockholder Agreement, the term "Adverse Proposal" means any (a) Acquisition
Proposal, (b) proposal or action that would reasonably be expected to result in
a breach of any covenant, representation or warranty of the Company set forth in
the Merger Agreement, or (c) proposal or action that is intended or would
reasonably be expected to impede, interfere with, delay or materially and
adversely affect the Merger or any of the other transactions contemplated by the
Merger Agreement or the Stockholder Agreement.
IRREVOCABLE PROXY. Pursuant to the Stockholder Agreement, each Principal
Stockholder has appointed Parent and any designee of Parent, each of them
individually, such Principal Stockholder's proxy and attorney-in-fact pursuant
to the provisions of Section 212 of the DGCL, with full power of substitution
and resubstitution, to vote or act by written consent with respect to such
Principal Stockholder's Subject Shares in accordance with the Stockholder
Agreement. Each Principal Stockholder has affirmed that the proxy is coupled
with an interest and will be irrevocable. Each Principal Stockholder will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of the proxy.
GRANT OF OPTION. Each Principal Stockholder has granted to Parent an
irrevocable option (each, an "Option" and, collectively, the "Options") to
purchase such Principal Stockholder's Subject Shares on the terms and subject to
the conditions set forth in the Stockholder Agreement at a purchase price per
share equal to $15.00 or the highest per share price paid in the Offer (the
"Purchase Price"). If (i) the Offer is consummated but (whether due to improper
tender or withdrawal of tender) the Offeror has not accepted for payment and
paid for all of the Subject Shares, or (ii) the Merger Agreement is terminated
(otherwise than by mutual consent of the parties or as a result of the entry of
a final, nonappealable injunction against the Offer or the Merger under
circumstances not involving a breach by the Company of its obligation to seek
the removal thereof) in accordance with its terms for reasons other than the
failure of Parent or the Offeror to fulfill their respective obligations under
the Merger Agreement, the Options will, in any such case, become exercisable (in
whole but not in part) upon the first to occur of any such event and remain
exercisable (in whole but not in part) until the date that is 30 days after the
date of the occurrence of an event in clause (i) above, or the date that is 90
days after the date of the occurrence of the event in clause (ii) above (the
applicable period of exercisability being the "Option Period").
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EXERCISE OF OPTION. Parent may exercise all of the Options, in whole but
not in part, at any time or from time to time during the Option Period.
Notwithstanding anything in the Stockholder Agreement to the contrary, Parent
will be entitled to purchase all Subject Shares in respect of which it will have
exercised an Option in accordance with the terms of the Stockholder Agreement
prior to the expiration of the Option Period, and the expiration of the Option
Period will not affect any rights thereunder which by their terms do not
terminate or expire prior to or as of such expiration.
The Stockholder Agreement provides that if Parent wishes to exercise an
Option, it will deliver to the applicable Principal Stockholder (each a "Selling
Stockholder") a written notice (an "Exercise Notice") to that effect which
specifies a date (an "Option Closing Date") not earlier than three business days
after the date such Exercise Notice is delivered for the consummation of the
purchase and sale of such Subject Shares (an "Option Closing"). If the Option
Closing cannot be effected on the Option Closing Date specified in the Exercise
Notice by reason of any applicable judgment, decree, order, law or regulation,
or because any applicable waiting period under the HSR Act will not have expired
or been terminated, (i) the Principal Stockholders have agreed to promptly take
all such actions as may be requested by Parent, and will otherwise fully
cooperate with Parent, to cause the elimination of all such impediments to the
Option Closing and (ii) the Option Closing Date specified in the Exercise Notice
will be extended to the third business day following the elimination of all such
impediments.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the event of any change
in the capital stock of the Company by reason of a stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares,
extraordinary distribution or similar transaction, the type and number or amount
of shares, securities or other property subject to each of the Options, and the
Purchase Price payable therefor, will be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so that (a)
Parent will receive upon exercise of any Option the type and number or amount of
shares, securities or property that Parent would have retained and/or been
entitled to receive in respect of the applicable Selling Stockholder's Subject
Shares if the Option had been exercised immediately prior to such event relating
to the Company or the record date therefor, as applicable, and (b) the
applicable Selling Stockholder will receive upon exercise of any Option granted
by such Selling Stockholder the amount of cash that such Selling Stockholder
would have received as a result of the exercise of the Option if the Option had
been exercised immediately prior to such event relating to Parent or the record
date therefor, as applicable. The foregoing adjustment will apply in a like
manner to successive stock dividends, subdivisions, reclassifications,
recapitalizations, splits, combinations, exchanges of shares, extraordinary
distributions or similar transactions.
ACQUIRED SHARES. The Stockholder Agreement provides that, in the event that
Subject Shares are acquired by Parent pursuant to the exercise of the Options
(such acquired Subject Shares being "Acquired Shares") and Parent thereafter
sells, transfers or disposes of Acquired Shares within 18 months after the
acquisition of such Acquired Shares (any such sale, transfer or disposition of
Acquired Shares occurring within such 18-month period being a "Sale"), Parent
will promptly pay to the Selling Stockholders (pro rata, in proportion to the
number of Acquired Shares purchased from each Principal Stockholder) an amount
in cash equal to the positive difference (if any) between the aggregate proceeds
received by Parent in the Sale (net of selling commissions, if any) and the
aggregate Purchase Price paid by Parent for the Acquired Shares sold,
transferred or disposed of in such Sale. Parent has agreed to effect any Sale of
Acquired Shares only to an unaffiliated party in a bona fide arm's-length
transaction.
REPRESENTATIONS AND WARRANTIES. The Stockholder Agreement contains various
representations and warranties of the parties. Each Principal Stockholder has
made certain representations and warranties with respect to: (i) title to such
Principal Stockholders' Subject Shares; (ii) authority; and
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(iii) noncontravention. Parent and the Offeror have also made certain
representations and warranties with respect to: (i) authority; (ii)
noncontravention; and (iii) securities law compliance.
RESTRICTION ON TRANSFER OF SUBJECT SHARES, PROXIES AND NONINTERFERENCE. The
Stockholder Agreement provides that no Principal Stockholder will, directly or
indirectly: (A) except pursuant to the terms of the Stockholder Agreement and
for the conversion of Subject Shares at the Effective Time pursuant to the terms
of the Merger Agreement, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of such Principal Stockholder's Subject Shares; (B)
except pursuant to the terms of the Stockholder Agreement, grant any proxies or
powers of attorney, deposit any of such Principal Stockholder's Subject Shares
into a voting trust or enter into a voting agreement with respect to any of such
Principal Stockholder's Subject Shares; or (C) take any action that would
reasonably be expected to make any representation or warranty contained in the
Stockholder Agreement untrue or incorrect or have the effect of impairing the
ability of such Principal Stockholder to perform such Principal Stockholder's
obligations under the Stockholder Agreement or preventing or delaying the
consummation of any of the transactions contemplated thereby.
NO SOLICITATION. The Principal Stockholders have agreed that they will not,
and will not authorize or permit any of their respective officers, directors,
employees, agents or representatives (including without limitation any
investment bankers, financial advisors, attorneys or accountants) to, directly
or indirectly, initiate, solicit, or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
Acquisition Proposal, or enter into or maintain or continue discussions or
negotiations with any person in furtherance of, or approve, agree to, endorse or
recommend, any Acquisition Proposal.
TERMINATION. The Stockholder Agreement will terminate upon the earlier of
(i) the Effective Time and (ii) the date on which the Option Period expires (or,
if later, the date on which the last Option Closing occurs). The Stockholder
Agreement provides that Parent and the Offeror will not amend the Merger
Agreement to increase the Merger Consideration without the prior written consent
of the Principal Stockholders representing a majority of the Subject Shares
subject to the Stockholder Agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of the Company has unanimously approved the Merger Agreement and
the transactions contemplated thereby and unanimously determined that the terms
of the Offer and the Merger are fair to and in the best interests of the Company
and its stockholders. The Board unanimously recommends that the stockholders
accept the Offer and tender their shares of Common Stock to the Offeror pursuant
to the Offer.
(b) BACKGROUND OF THE OFFER
From time to time over the past several years, the Company has reviewed
strategic alternatives and has engaged in discussions with several potentially
interested entities with respect to a possible business combination or other
strategic transaction between the Company and such entities.
In this context, the Company retained Warburg Dillon Read LLC ("Warburg
Dillon Read") in July 1997 under a one-year engagement to assist the Company in
evaluating strategic alternatives, potentially including an acquisition by a
third party of the stock or substantially all of the assets of the Company or
any other form of sale of, or merger with, the Company. In connection with this
evaluation, Warburg Dillon Read and the Company contacted several entities,
including Parent, which
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<PAGE>
Warburg Dillon Read, or the Company believed might be interested in a
transaction with the Company. The entities contacted, including Parent,
displayed varying degrees of interest in pursuing discussions regarding an
acquisition of, or other business combination with, the Company. The Company
held discussions with some of the entities contacted and executed
confidentiality agreements with certain of such entities, including Parent,
pursuant to which such entities were given the opportunity to examine certain
non-public information regarding the Company and its subsidiaries. Following
preliminary discussions and meetings and a preliminary review of such non-public
information of the Company, no acceptable proposals were made from any of the
entities contacted.
On October 12, 1998, Mark A. Suwyn, Chairman and Chief Executive Officer of
Parent, contacted George T. Brophy, Chairman of the Board and Chief Executive
Officer of the Company, to inform him that Parent was interested in exploring a
possible acquisition of the Company by Parent and indicated a potential purchase
price of $11.00 per share of Common Stock. Mr. Brophy informed Mr. Suwyn that
the Company might be willing to engage in these discussions, but only if a
customary confidentiality agreement was signed. On October 19, 1998, Parent and
the Company entered into an agreement providing for the confidential treatment
of any discussions relating to a possible acquisition of the Company by Parent
and of any confidential information exchanged by the Company and Parent in
connection with such discussions.
On October 28, 1998, officers and representatives of Parent and the Company,
including Samuel P. Frieder, a representative of Kohlberg & Company, L.L.C.
("Kohlberg") and a Director of the Company, met at the headquarters of Parent to
review and discuss financial, business, operational and other information
regarding the Company, including the status of certain legal proceedings pending
against the Company.
On November 4, 1998, a representative of Parent indicated to Mr. Frieder
that Parent might be willing to pay a purchase price in the range of $12.00 to
$13.00 per share of Common Stock for all outstanding shares and reviewed with
Mr. Frieder certain financial assumptions underlying Parent's valuation of the
Company's business. Mr. Frieder indicated that he believed that the Board and
stockholders of the Company would not favor a transaction in that price range.
Further discussions were held between November 4, 1998 and November 10, 1998
among representatives of the Company and Parent regarding Parent's valuation
assumptions and indicated purchase price for the Common Stock.
On November 10, 1998, representatives of Parent indicated to representatives
of the Company that Parent might be willing to increase its indicated price
range to $14.50 per share, depending upon its review of information relating to
the Company, its level of assurance that, if announced, the transaction would be
completed and other factors. Representatives of the Company indicated to
representatives of Parent that they believed that any price less than $15.00 per
share would be unacceptable to the Company's Board and stockholders.
Thereafter, through approximately January 18, 1999 and with generally
increasing frequency, representatives of Parent had various meetings and
discussions with representatives of the Company in connection with Parent's due
diligence review of the Company.
At a meeting on December 1, 1998, the Board by a vote of its disinterested
members approved the engagement of Kohlberg to act as its advisor for purposes
of assisting the Company in the negotiations of the terms of any agreement for
the sale of, or other business combination involving, the Company for a period
of one year. At this meeting, the Board also approved the engagement of Warburg
Dillon Read to render a written opinion regarding the fairness of the
consideration to be paid to the stockholders of the Company in any potential
sale or other business combination involving the Company. The Company formally
retained Kohlberg and Warburg Dillon Read by executing an engagement letter with
each of Kohlberg and Warburg Dillon Read on December 3, 1998, and January 5,
1999, respectively.
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In mid-November 1998, one of the entities with which the Company had engaged
in discussions regarding a potential sale of the Company during the summer of
1997 contacted the Company to renew discussions for a possible business
combination with the Company. In addition, during December 1998, Kohlberg, at
the request and on behalf of the Company, contacted two of the entities with
which the Company had held discussions during the summer of 1997 and which the
Company and Kohlberg viewed, together with Parent and the entity that contacted
the Company independently, as most likely to be interested in a potential
business combination with the Company and to deliver the highest value to the
Company's shareholders. The Company held preliminary discussions with and
executed confidentiality agreements with all three potentially interested
entities in December 1998, pursuant to which the Company provided such entities
with certain material non-public information with which to evaluate the Company.
Representatives of the Company held discussions with all three entities during
the course of December 1998 and in early January 1999. By the end of December
1998, two of such entities had informed the Company that they were no longer
interested in pursuing discussions with the Company. In early January 1999, the
Company canceled discussions with the third entity because of the status of its
discussions with Parent and the Company's judgment that this entity's interest
in the Company was not strong enough to jeopardize the Company's discussions
with Parent.
On December 21, 1998, Parent proposed that, for a period of less than 30
days, the Company undertake to negotiate exclusively with Parent in pursuit of
the possible acquisition of the Company by Parent at a price ranging from $14.50
to $15.00 per share, in cash. In subsequent discussions, Parent also indicated
that any definitive agreement for an acquisition of the Company by Parent would
be conditioned upon the Principal Stockholders contractually committing
themselves to support and participate in the transaction. The Company rejected
Parent's request for exclusivity and emphasized the Company's position that the
purchase price be $15.00 per share of Common Stock. Without making any
commitment as to the specific manner in which the Principal Stockholders might
agree to support any transaction that might ultimately be negotiated, the
Company indicated that it was willing to continue discussions with Parent.
Parent subsequently reiterated its request for exclusivity on a number of
occasions. On each such occasion, the Company refused to grant Parent
exclusivity, but indicated its willingness to pursue discussions for an
acquisition of the Company by Parent. Parent also requested that the Principal
Stockholders agree to tender their shares of Common Stock into the Offer, vote
in favor of the Merger and grant Parent an option on their shares of Common
Stock in connection with the proposed transaction. The Principal Stockholders
indicated a willingness to agree to tender their shares and vote in favor of the
Merger, but resisted Parent's request for an option.
On January 8, 1999, representatives of Parent and the Company, including
Messrs. Suwyn, Brophy and Frieder, met in Chicago to discuss the possible
acquisition of the Company by Parent. At that meeting, representatives of Parent
indicated to the representatives of the Company that, subject to satisfactory
completion of Parent's financial, business and operational review of the
Company, Parent would be willing to increase its indicated price to $15.00 per
share, in cash, and representatives of the Company orally agreed not to actively
solicit any third party for a competing transaction through January 17, 1999.
During a meeting of the Board of Directors held on January 15, 1999,
representatives of Warburg Dillon Read made a financial presentation to the
Board and discussed with the Board, the financial terms of the contemplated
transaction with Parent. At this meeting, counsel to the Company made a
presentation of the terms and conditions of the Merger Agreement and the
Stockholder Agreement and discussed with the Board Parent' s request that the
Principal Stockholders enter into the Stockholder Agreement and grant Parent an
option on their shares of Common Stock and the consequent impairment of the
likelihood of a superior acquisition proposal from any third party. At the
conclusion of this meeting, in light of all the reasons detailed below under
"Reasons for the
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<PAGE>
Transactions; Factors Considered by the Board," the Board resolved to pursue
negotiations with Parent towards a final agreement.
From January 15 to January 18, 1999, representatives of the Company and
Parent and certain of their respective advisors continued to negotiate the
Merger Agreement. During this period, Parent made it clear to the Company that
it would not proceed with the transaction without an option on the Principal
Stockholders' shares of Common Stock.
On January 18, 1999, the Principal Stockholders agreed to grant such option
and to the final terms of the Stockholder Agreement. Later that day, the Board
of Directors of Parent approved the Offer, the Merger, the Merger Agreement, the
Stockholder Agreement and the consummation of the transactions contemplated
thereby. Later that day, at a meeting of the Board, Warburg Dillon Read advised
the Board orally that it was of the opinion (which opinion was subsequently
confirmed in writing in an opinion dated January 19, 1999) that as of the date
of its opinion, the $15.00 per share of Common Stock cash consideration to be
received by the holders of Common Stock pursuant to the Offer and the Merger was
fair, from a financial point of view, to such holders. At this meeting, counsel
to the Company presented to the Board the final terms of the Merger Agreement.
By unanimous vote of all the Directors, the Board determined that the Parent's
offer was fair to, and in the best interests of, the stockholders of the
Company. The Board authorized and approved the execution of the Merger Agreement
and recommended that the stockholders accept the Offer, approve the Merger and
tender their shares in the Offer. A letter to the stockholders communicating the
Board's recommendation is filed with the SEC as Exhibit 8 to this Schedule 14D-9
and is attached hereto and incorporated herein by reference in its entirety. The
Board also approved an amendment to its By-laws, the Termination of the Fee
Agreement, the Plan and the Severance Arrangement. The Merger Agreement and
Stockholder Agreement were then executed on January 19, 1999, and the
transaction was announced by press release. A copy of the press release is filed
with the SEC as Exhibit 9 to this Schedule 14D-9 and is incorporated herein by
reference in its entirety.
(c) REASONS FOR THE TRANSACTION; FACTORS CONSIDERED BY THE BOARD
In approving the Merger Agreement and the transactions contemplated thereby
and recommending that the stockholders of the Company tender their shares of
Common Stock pursuant to the Offer, the Board considered a number of factors,
including:
1. The Board considered the Company's business, prospects, financial
condition, results of operations and current business strategy as well as the
nature of, and recent trends and developments in the industry in which the
Company operates, including recent increased competition for its main product
lines. In addition, the Board considered the exposure of the Company to certain
legal proceedings pending against the Company, the status of settlement
discussions in respect thereof and the implications of a potential settlement of
such legal proceedings on the value of the Company. The Board also reviewed
possible alternatives to the Offer and the Merger, including, without
limitation, continuing to operate the Company as an independent entity, and the
risks associated therewith, including the ongoing need for financing of the
Company to make significant acquisitions, which the Board believed would be
necessary because of the continuing consolidation in the industry.
2. The Board considered Parent's business reputation, the potential
synergies between Parent and the Company's businesses and Parent's ability to
finance the transaction. It is the Board's belief that it obtained the highest
immediate value for its stockholders by entering into a transaction with Parent,
which, because of the synergies that could be created by a combination of the
Company with Parent, could offer the best price for the Company's Common Stock.
3. The Board considered the oral opinion of Warburg Dillon Read rendered to
the Board at its January 18, 1999 meeting (which opinion was subsequently
confirmed by delivery of a written opinion dated January 19, 1999) to the effect
that, as of the date of such opinion and based upon and subject
20
<PAGE>
to certain matters stated in such opinion, the $15.00 per share cash
consideration to be received by holders of shares of Common Stock in the Offer
and the Merger was fair, from a financial point of view, to such holders. The
full text of Warburg Dillon Read's written opinion dated January 19, 1999, which
sets forth the assumptions made, matters considered and limitations on the
review undertaken by Warburg Dillon Read, is filed with the SEC as Exhibit 10 to
this Schedule 14D-9 and attached hereto and is incorporated herein by reference.
Warburg Dillon Read's opinion is directed only to the fairness, from a financial
point of view, of the cash consideration to be received in the Offer and the
Merger by holders of shares of Common Stock (other than Parent and its
affiliates) and is not intended to constitute, and does not constitute, a
recommendation as to whether any stockholder should tender shares of Common
Stock pursuant to the Offer. Warburg Dillon Read's opinion does not address the
Company's underlying decision to approve the Merger Agreement and the
transactions contemplated thereby. In addition, Warburg Dillon Read has not been
asked to, and did not, offer any opinion as to the material terms of the Merger
Agreement or the form of the transaction contemplated thereby. Warburg Dillon
Read has not been requested to, and did not, solicit other third party
indications of interest in acquiring the Company. In rendering its opinion,
Warburg Dillon Read has assumed with the Company's consent, that the Company and
Parent will comply with all the material terms of the Merger Agreement. HOLDERS
OF COMMON STOCK ARE URGED TO READ SUCH OPINION CAREFULLY IN ITS ENTIRETY.
4. The Board considered the terms and conditions of the Merger Agreement, in
particular the fact that after lengthy discussions and negotiations between
representatives of the Company and representatives of Parent, Parent was
unwilling to enter into the Merger Agreement unless Parent was able to
simultaneously therewith enter into the Stockholder Agreement. The Board was
aware of the fact that the provisions of the Stockholder Agreement impair the
likelihood of a superior acquisition proposal from any third party. The Board
considered at length whether Parent might agree to proceed with the proposed
transaction without such provisions and concluded that Parent would not. The
Board also concluded that, in light of its knowledge of the industry and the
efforts previously made by the Company to solicit the interest of potential
buyers for the Company, it was unlikely that a superior acquisition proposal
would be made by a third party.
5. The Board considered the historical market prices of, and recent trading
activity in, the shares of Common Stock, and the fact that the Offer and the
Merger will enable the stockholders of the Company to realize a premium over the
prices at which the Common Stock traded prior to the execution of the Merger
Agreement.
6. The Board considered the fact that, while the provisions of the
Stockholder Agreement substantially impair the likelihood that a superior
acquisition proposal would be made by a third party, the terms of the Merger
Agreement do not preclude other parties from making bona fide superior proposals
subsequent to signing the Merger Agreement and, if any such proposal were made,
the Company, in the exercise of its fiduciary duties, could determine to provide
information to, engage in negotiations with, and, subject to payment of a
break-up fee to Parent, terminate the Merger Agreement and enter into a
transaction with, another party.
7. The Board considered the likelihood that the Merger would be consummated,
including the fact that the Offer was not conditioned on financing and the
Board's reasonable satisfaction that the other conditions to the closing of the
transactions under the Merger Agreement could reasonably be expected to be met.
The Board did not assign relative weights to these factors or determine that
any factor was of particular importance. Rather, the Board viewed its position
and recommendation as being based on the totality of the information presented
to and considered by it.
21
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained Kohlberg to act as its financial advisor in
connection with the Offer and the Merger. Pursuant to the terms of Kohlberg's
engagement, the Company has agreed to pay Kohlberg for its services a fee
payable in cash equal to 2/3 of 1% of the total consideration (including net
debt assumed) to be received by the Company and/or its stockholders in
connection with the Offer and the Merger. The fee payable to Kohlberg is
currently estimated to be approximately $1.5 million. The Company also has
agreed to reimburse Kohlberg for reasonable expenses, including reasonable fees
and disbursements of Kohlberg's counsel, and to indemnify Kohlberg and certain
related parties against certain liabilities arising out of Kohlberg's
engagement. Kohlberg is an affiliate of the Company and an affiliate of Kohlberg
has performed and continues to perform services for the Company for which it
receives a fee under a fee agreement which will be terminated upon consummation
of the Offer. The fees and expenses paid by the Company to the Kohlberg
affiliate under this fee agreement aggregated $118,000 in 1997 and $125,000 in
1998.
In addition, the Company retained Warburg Dillon Read on January 5, 1999,
for a one year period to consult with the Board regarding the financial aspects
of the proposed transaction and provide the Board with its opinion relating to
the fairness, from a financial point of view, of the consideration to be
received by the stockholders of the Company pursuant to the Offer and the
Merger. Pursuant to the terms of Warburg Dillon Read's engagement, the Company
agreed to pay Warburg Dillon Read for its services a fee equal to $100,000,
payable in cash upon execution of the engagement letter with Warburg Dillon
Read, and an additional fee of $700,000 payable in cash on the date upon which
Warburg Dillon Read issued its opinion with respect to the fairness of the
consideration in the proposed transaction. In addition, if at any time during
the term of the engagement the Company contemplates another business combination
involving, or sale of, the Company, the Company has agreed to pay Warburg Dillon
Read an additional $100,000, payable upon the date on which Warburg Dillon Read
issues any additional opinion or informs the Board that it is unable to render
such additional opinion in connection with the proposed new business combination
involving, or sale of, the Company. The Company has also agreed to reimburse
Warburg Dillon Read for its reasonable expenses in performing its services under
its engagement with the Company, and to indemnify Warburg Dillon Read and
certain related parties against certain liabilities arising out of its
engagement. Warburg Dillon Read has performed investment banking services for
the Company, affiliates of Kohlberg and Parent for which it has received
customary fees. In addition, in the ordinary course of its business, Warburg
Dillon Read may trade the securities of the Company and Parent for its own
account and for the accounts of customers and may at any time hold a long or
short position in such securities.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to stockholders in connection with the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) There have been no transactions in the shares of Common Stock during the
past 60 days by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, each of its executive officers,
directors, affiliates or subsidiaries currently intends to tender, pursuant to
the Offer, any shares of Common Stock beneficially owned individually by such
persons. The Principal Stockholders have agreed under the Stockholder Agreement
to, among other things, validly tender (and not withdraw) all of their shares of
Common Stock (representing approximately 46.4% of the outstanding shares of
Common Stock) pursuant to the offer made by Parent and the Offeror.
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ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9 and other than as
contemplated by the Asset Purchase Agreement, dated December 21, 1998, between
the Company and CertainTeed Corporation, pursuant to which the Company has
agreed to sell its fiber cement manufacturing facility located in Roaring River,
North Carolina, to CertainTeed, the Company is not currently engaged in any
negotiation in response to the Offer, which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company; (iii)
a tender offer for or other acquisition of securities by or of the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company.
(b) Except as described in Item 3(B) and Item 4 above (the provisions of
which are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer, which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached as Annex A hereto is being furnished in
connection with the possible designation by Offeror, pursuant to the Merger
Agreement, of certain persons to be appointed to the Company's Board other than
at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of January 19, 1999, among Louisiana-Pacific Corporation,
Striper Acquisition, Inc. and ABT Building Products Corporation.*
Exhibit 2 Stockholder Agreement, dated as of January 19, 1999, among Louisiana-Pacific Corporation, Striper
Acquisition, Inc. and the several stockholders named therein.*
Exhibit 3 Pages 3 through 9 of the Proxy Statement of the Company filed with the Securities and Exchange
Commission on March 30, 1998.*
Exhibit 4 Amendment to the By-laws of ABT Building Products Corporation.*
Exhibit 5 Termination of Fee Agreement, dated as of January 19, 1999, among ABT Building Products Corporation,
Kohlberg & Co., L.P. and Louisiana-Pacific Corporation.*
Exhibit 6 Executive Severance Pay Plan of ABT Building Products Corporation.*
Exhibit 7 Severance Arrangement, dated January 18, 1999, between the Company and George T. Brophy.*
Exhibit 8 Letter to Shareholders of ABT Building Products Corporation, dated January 25, 1999.
Exhibit 9 Form of Press Release issued by ABT Building Products Corporation on January 19, 1999.*
Exhibit 10 Opinion of Warburg Dillon Read LLC dated January 19, 1999.
</TABLE>
- ------------------------
* Not included in copies mailed to stockholders.
23
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C> <C>
By: /s/ GEORGE T. BROPHY
----------------------------------------
Name: George T. Brophy
Title: CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
</TABLE>
Dated: January 25, 1999
24
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ANNEX A
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
GENERAL
This Information Statement is being mailed on or about January 25, 1999 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of ABT Building Products Corporation (the "Company") with
respect to the tender offer by Striper Acquisition, Inc. (the "Offeror") to the
holders of record of the common stock of the Company, par value $.01 per share
(the "Common Stock"). Capitalized terms used and not otherwise defined herein
shall have the meaning set forth in the Schedule 14D-9.
On January 19, 1999, the Company, Louisiana-Pacific Corporation, a Delaware
corporation ("Parent"), and the Offeror entered into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which (i) the Offeror will commence
a tender offer (the "Offer") for all outstanding shares of Common Stock at a
purchase price per share of $15.00, net to the seller in cash, without interest
and (ii) following the consummation of the Offer, the Offeror will be merged
with and into the Company (the "Merger"). As a result of the Offer and the
Merger, the Company will become a wholly owned subsidiary of Parent.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
purchase by the Offeror pursuant to the Offer of such number of shares of Common
Stock (together with any shares of Common Stock then owned by Parent or any of
its subsidiaries) which represents a majority of the outstanding shares of
Common Stock (on a fully diluted basis) on the date of purchase, and from time
to time thereafter, (i) Parent shall be entitled to designate such number of
directors, rounded up to the next whole number as will give Parent
representation on the Board of Directors of the Company (the "Board of
Directors") equal to the product of (x) the number of directors on the Board of
Directors (giving effect to any increase in the number of directors pursuant to
the Merger Agreement) and (y) the percentage that such number of shares of
Common Stock so purchased in the Offer (together with any shares of Common Stock
then owned by Parent or any of its subsidiaries), bears to the aggregate number
of shares of Common Stock outstanding on the date of purchase (such number being
the "Board Percentage"), and (ii) the Company will, upon request by Parent,
promptly cause Parent's designees constituting the Board Percentage to be
elected to the Board of Directors by (x) increasing the size of the Board of
Directors or (y) using reasonable efforts to secure the resignations of such
number of directors as is necessary to enable Parent's designees to be elected
to the Board of Directors and shall use its best efforts to cause Parent's
designees promptly to be so elected, subject in all instance to compliance with
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and Rule 14f-1 promulgated thereunder. Following the election or
appointment of Parent's designees pursuant to the Merger Agreement and prior to
the Effective Time, any amendment or termination of the Merger Agreement, waiver
of the obligations or other acts of Parent or the Offeror or waiver of the
Company's rights thereunder shall require the concurrence of a majority of the
directors of the Company then in office who are directors on the date of the
Merger Agreement and who voted to approve the Merger Agreement and such
additional directors of the Company who are not affiliated with Parent, the
Offeror or any of their affiliates and were designated as continuing directors
for purposes of the Merger Agreement by a majority of the directors that are
continuing directors for purposes of the Merger Agreement, in office at the time
of such designation. This Information Statement is provided to you pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and other information concerning
the Offer and the Merger are
<PAGE>
contained in the Offer to Purchase, the related Letter of Transmittal, and the
Solicitation/ Recommendations Statement on Schedule 14D-9 of the Company, as
amended from time to time (the "Schedule 14D-9"), with respect to the Offer,
copies of which are being delivered to stockholders of the Company
contemporaneously herewith. Certain other documents (including the Merger
Agreement) were filed with the Securities and Exchange Commission (the "SEC") as
exhibits to the Tender Offer Statement on Schedule 14D-1, as amended from time
to time (the "Schedule 14D-1"), of the Offeror and as exhibits to the Schedule
14D-9. The exhibits to the Schedule 14D-1 and the Schedule 14D-9 may be examined
at and copies thereof may be obtained from the SEC (except that the exhibits
thereto cannot be obtained from the regional offices of the SEC). The discussion
of any such document included herein is qualified in its entirety by reference
to the text of such document.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE NOT,
HOWEVER, REQUIRED TO TAKE ANY ACTION.
The Offer commenced on January 25, 1999 and is scheduled to expire at 12:00
midnight, New York City time, on Tuesday, February 23, 1999, at which time, if
all conditions to the Offer have been satisfied or waived, the Offeror will
purchase all of the shares of Common Stock validly tendered pursuant to the
Offer and not properly withdrawn.
The information contained in this Information Statement concerning the
Offeror and Parent has been furnished to the Company by Parent and the Company
assumes no responsibility for the accuracy, completeness or fairness of any such
information.
At the close of business on January 22, 1999, there were 10,674,160 shares
of Common Stock of the Company issued and outstanding, which are the only class
of securities outstanding having the right to vote for the election of directors
of the Company, each of which entitles its record holder to one vote.
2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
PARENT DESIGNEES TO THE COMPANY'S BOARD OF DIRECTORS
The following table sets forth the name, age, business address, present
principal occupation or employment and five-year employment history for certain
of Parent's designees to the Company's Board of Directors, together with the
names, principal businesses and addresses of any corporations or other
organizations in which such principal occupations are conducted. The business
address of each director is 111 S.W. Fifth Avenue, Portland, Oregon 97204 unless
otherwise stated below. Except as otherwise stated below, all designees listed
below are citizens of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
AGE AT EMPLOYMENT AND PERIOD
NAME 12/31/98 FIVE-YEAR EMPLOYMENT HISTORY SERVED
- -------------------------- ------------- ---------------------------------------------------------- ------------
<S> <C> <C> <C>
Mark A. Suwyn 56 Chairman of the Board, Chief Executive Officer and Since 1996
Director of Parent
Executive Vice President of International Paper Company (2 1992-1995
Manhattanville Road, Purchase, NY 10577).
J. Ray Barbee 51 Vice President, Sales and Marketing of Parent Since 1998
Director of Market Pulp Operations of Parent 1997
Vice President and General Sales Manager of Boise Cascade 1989-1997
Corporation (1111 W. Jefferson Street, Boise, ID 83728).
Warren C. Easley 56 Vice President, Technology and Quality of Parent Since 1996
Technical Manager, North American Nylon, E.I. du Pont de 1992-1996
Nemours (1007 Market Street, Wilmington, DE 19898).
Richard W. Frost 46 Vice President, Timberlands and Fiber Procurement of Since 1996
Parent
Vice President of S.D. Warren Company (225 Franklin 1992-1996
Street, Boston, MA 02110).
J. Keith Matheney 49 Vice President, Core Businesses of Parent Since 1998
Vice President, Sales and Marketing of Parent 1997-1998
General Manager--Sales and Marketing of Parent 1996
General Manager--Western Division of Parent 1996
General Manager--Weather-Seal Division of Parent 1994-1996
Director of Sales and Marketing--Northern Division of 1986-1994
Parent.
Curtis M. Stevens 46 Vice President, Chief Financial Officer and Treasurer of Since 1997
Parent
Executive Vice President of Planar Systems (1400 N.W. 1983-1997
Compton Drive, Beaverton, OR 97006).
Michael J. Tull 53 Vice President, Human Resources of Parent Since 1996
Corporate Vice President, Employee Quality and Development 1991-1996
of Sharp Healthcare (3556 Ruffin Road, Bldg. B, San Diego,
CA 92123).
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
AGE AT EMPLOYMENT AND PERIOD
NAME 12/31/98 FIVE-YEAR EMPLOYMENT HISTORY SERVED
- -------------------------- ------------- ---------------------------------------------------------- ------------
<S> <C> <C> <C>
Gary C. Wilkerson 52 Vice President and General Counsel of Parent Since 1997
Acting Senior Vice President, General Counsel and 1997
Secretary of the Consumer Operations Division of Ivax
Pharmaceuticals (4400 Biscayne Blvd., Miami, FL 33137)
Vice President, General Counsel and Secretary of 1990-1996
Maybelline, Inc. (3030 Jackson Avenue, Memphis, TN 38112).
</TABLE>
Parent has advised the Company that each of the executive officers listed
above has consented to act as a director of the Company. Parent has also advised
the Company that none of the persons listed above (i) has during the last five
years been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was, or is, subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding of any violation of such laws, (ii) is currently a director of,
or holds any position with, the Company, (iii) beneficially owns any securities
(or rights to acquire any securities) of the Company, or (iv) has been involved
in any transaction with the Company or any of its directors, executive officers
or affiliates which is required to be disclosed pursuant to the rules and
regulations of the SEC, except as may be disclosed herein or in the Schedule
14D-9.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age and certain biographical
information concerning each of the Company's current directors and executive
officers as of December 31, 1998:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- -------------------------- --------- ----------------------------------------------------------------------------
<S> <C> <C>
George T. Brophy 64 Chairman of the Board of Directors and Chief Executive Officer
Richard E. Parker 57 President and Chief Operating Officer
William J. Adams 57 Executive Vice President--Sales and Marketing
Donald B. Grimm 48 Vice President--Manufacturing/Panel Products, Chief Environmental Compliance
Officer
Joseph P. O'Neill 40 Vice President and Chief Financial Officer
Dale H. Von Behren 42 Vice President--Corporate Administration and Secretary
Warner C. Frazier 66 Director
Samuel P. Frieder 34 Director
John R. Garrett 42 Director
James A. Kohlberg 41 Director
George W. Peck IV 67 Director
Nelson J. Rohrbach 58 Director
</TABLE>
GEORGE T. BROPHY has been Chairman of the Board of Directors and Chief
Executive Officer of the Company since October 1992 and President of the Company
from October 1992 until August 1998. From 1983 to 1988, Mr. Brophy was
President, Chief Executive Officer and a director of Morgan Products Ltd., a
building products company, and was a private business consultant from 1988 to
1992.
4
<PAGE>
From 1966 to 1980, Mr. Brophy served in various positions at Masonite
Corporation, including Executive Vice President and Chief Operating Officer. Mr.
Brophy is also a director of Banta Corporation, a printing company, of
Simplicity Manufacturing, Inc., a manufacturer of outdoor power equipment, and
of Color Spot, a wholesale nursery. Mr. Brophy has served as a Director since
October 1992.
RICHARD E. PARKER has been the Company's President and Chief Operating
Officer since August 1998. From December 1995 until August 1998, Mr. Parker
served as Executive Vice President of the Interior Products Group. From October
1992 through December 1995, Mr. Parker was the Executive Vice President of the
Hardboard/Plastics Division. From 1990 to October 1992, Mr. Parker served as
Vice President and General Manager of the Bend Door & Millwork Company. From
1986 to 1990, Mr. Parker was Executive Vice President of the Manufacturing
Division of Morgan. Earlier in his career, Mr. Parker held sales, distribution,
marketing and general management positions at Masonite for a period of 13 years.
WILLIAM J. ADAMS has been the Company's Executive Vice President of Sales
and Marketing since August 1998. From December 1995 until August 1998, Mr. Adams
was the Executive Vice President of the Company's Exterior Products Group. From
September 1994 to December 1995, Mr. Adams was the Executive Vice President of
the Siding Division. Mr. Adams was the Hardboard/Plastics Division's Vice
President of Marketing and Sales since October of 1992. From 1990 to 1992, Mr.
Adams was President and Chief Executive Officer of Vanderpool Electric Company.
From 1987 to 1990, Mr. Adams was President and Chief Executive Officer of
Harris-Tarkett, Inc., a manufacturer of hardwood flooring.
DONALD B. GRIMM has been the Company's Vice President of Manufacturing/Panel
Products since August 1998 and the Company's Chief Environmental Compliance
Officer since October 1997. From October 1997 until August 1998, Mr. Grimm was
the Vice President and General Manager of Industrial Products North America.
From October of 1992 through October 1997, Mr. Grimm was Vice President of
Manufacturing.
JOSEPH P. O'NEILL has been Vice President and Chief Financial Officer of the
Company since January of 1998. From 1996 to 1997, Mr. O'Neill was Vice President
Finance-Controller. From 1992, Mr. O'Neill was the Controller.
DALE H. VON BEHREN has been the Vice President of Administration of the
Company since January of 1998. From 1996 to 1997 Mr. Von Behren was Vice
President Finance-Treasurer. From May 1994 to 1996 Mr. Von Behren was Treasurer.
From 1990 to 1994, Mr. Von Behren was Controller and Treasurer of Morgan.
WARNER C. FRAZIER has been Chairman of the Board of Directors and Chief
Executive Officer of Simplicity since March 1988. Mr. Frazier is also director
of Northwestern Steel and Wire Co. ("Northwestern"), a manufacturer of steel and
wire products, and of Rexworks, Inc., a manufacturer of landfill compactors. Mr.
Frazier has served as a Director since October 1993.
SAMUEL P. FRIEDER joined Kohlberg & Company, L.L.C. ("Kohlberg & Co."), a
merchant banking firm, in 1989 and was named a principal in 1995. Mr. Frieder
has served as a Director since April 1993.
JOHN R. GARRETT has been a practicing attorney for seventeen years. Since
May 1995, Mr. Garrett has been shareholder of the firm, Brownstein, Hyatt,
Farber & Strickland, P.C. Prior to May 1995, Mr. Garrett was a partner in the
firm of Kirkland & Ellis. Mr. Garrett has served as a Director since May 1998.
JAMES A. KOHLBERG has been a principal of Kohlberg & Co. since 1987. Mr.
Kohlberg is also a director of Northwestern. Mr. Kohlberg has served as a
Director since October 1992.
GEORGE W. PECK IV was a principal of Kohlberg & Co. from 1987 to 1997 and is
currently a special limited partner of Kohlberg & Co. Mr. Peck is also a
director of ABC Rail Products Corporation, a
5
<PAGE>
manufacturer of specialty trackwork and other rail products, The Lion Brewery,
Inc., a producer and bottler of brewed beverages, including specialty beers and
specialty soft drinks, and Northwestern. Mr. Peck has served as a Director since
October 1992.
NELSON J. ROHRBACH has been Chairman and CEO of Coating Excellence
International, a paper converting and coating company, since April 1997. From
January 1996 to March 1997, Mr. Rohrbach was a private consultant. From March
1994 to December 1995, Mr. Rohrbach was President and Chief Executive Officer of
Cleo, Inc., a manufacturer of gift wrap and accessories. From 1989 to 1994, Mr.
Rohrbach was President and Chief Executive Officer of The Paper Factory
Wisconsin, Inc., a chain of retail party stores. Mr. Rohrbach has served as a
Director since October 1993.
There are no family relationships among any of the directors or executive
officers of the Company.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors held four meetings during the year ended December 31,
1998. Each of the Company's current directors participated in all of the
meetings of the Board of Directors and of each committee of the Board of
Directors on which such person served during such year.
The Board of Directors has established an Executive Committee, an Audit
Committee, a Compensation Committee and an Environmental Committee. The
Executive Committee, which consists of Messrs. Brophy, Frieder and Kohlberg,
generally exercises the powers of the Board of Directors when the Board of
Directors is not in session, subject to the limitations of Delaware law, and has
the ability to approve expenditures of up to $1.0 million. The Audit Committee,
which currently consists of Messrs. Rohrbach, Garrett, Frieder and Frazier,
oversees actions taken by the Company's independent auditors and recommends the
engagement of auditors. The Compensation Committee, which currently consists of
Messrs. Peck, Rohrbach and Frieder, approves the compensation levels and
administers the Company's incentive plans. The Environmental Committee, which
currently consists of Messrs. Frazier, Garrett and Rohrbach, oversees actions
taken by the Company to ensure compliance with Federal, state and local
environmental regulations. During 1998, the Executive Committee held four
meetings, the Audit Committee held two meetings, the Compensation Committee held
two meetings and the Environmental Committee held two meetings.
Warner C. Frazier, John R. Garrett and Nelson J. Rohrbach receive a retainer
of $12,000 per annum plus $1,000 for each day on which a Board of Directors
and/or Committee meeting is attended. All directors are reimbursed for expenses
incurred in connection with attendance at meetings. Independent directors of the
Company may be granted options to purchase up to 100,000 shares in the aggregate
of Common Stock of the Company under the Company's 1994 Director Stock Option
Plan (the "Directors' Option Plan"). The Directors' Option Plan is administered
by the non-independent directors of the Compensation Committee. Options under
the Directors' Option Plan are granted at fair market value at the time of grant
and become exercisable within six months of the grant. On October 6, 1998,
options to purchase 5,000 shares were granted to each of Messrs. Rohrbach,
Garrett and Frazier, with an exercise price of $8.50 per share.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following summary compensation table reflects individual compensation
information for the Company's Chief Executive Officer and the four other most
highly compensated executives of the Company (collectively, the "named executive
officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ---------------
------------------------------------------------- SECURITIES ALL
OTHER ANNUAL UNDERLYING OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS COMPENSATION
- -------------------------------------------- --------- --------- --------- ---------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
George T. Brophy............................ 1998 $ 420,024 $ -- $ 114,189 20,000 $ --
(Chairman and CEO) 1997 420,024 -- 121,425 20,000 -- --
1996 379,186 379,196 124,122 --
Richard E. Parker........................... 1998 220,420 165,315 12,486 35,000 25,867(2)
(President and COO) 1997 185,016 50,000 10,197 5,286 20,000 --
1996 185,016 185,016 -- --
William J. Adams............................ 1998 205,008 -- 7,123 15,000 191,250(3)
(Executive Vice-President) 1997 180,024 -- 15,972 20,000 14,396(2)
1996 180,024 180,024 1,734 -- --
Donald B. Grimm............................. 1998 142,008 74,554 5,189 15,000 265,000(3)
(Vice President) 1997 126,816 44,386 4,742 7,500 --
1996 127,322 88,771 4,915 -- --
Joseph P. O'Neill........................... 1998 130,008 -- 5,039 15,000 --
(Vice President and CFO) 1997 115,008 -- 2,408 7,500 --
1996 115,008 80,506 391 -- --
</TABLE>
- ------------------------------
(1) Includes personal use of auto, tax gross-ups on amounts included in taxable
compensation (other than salary or bonuses) and $100,000 annual payment to
Mr. Brophy.
(2) Represents moving expense reimbursement paid to Messrs. Parker and Adams.
(3) Represents proceeds realized from the exercise of options.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement (as amended) with Mr.
Brophy providing for his employment as the Company's Chairman of the Board of
Directors, President and Chief Executive Officer until the earlier of (i) the
termination by the Company's Board of Directors, (ii) Mr. Brophy's death or
disability, (iii) January 1, 2000, or (iv) 180 days after notice from Mr. Brophy
of his resignation. Mr. Brophy's agreement provides for an annual salary of not
less than $250,000 (currently $420,000) plus an annual payment of $100,000 to be
made on January 1 of each year through January 1, 2000. During his employment,
Mr. Brophy is entitled to participate in the Company's medical and dental
insurance plans and all other benefit plans generally available to the Company's
executive officers as in effect from time to time. In the event that Mr.
Brophy's employment is terminated by the Board of Directors without cause (as
defined) or by reason of death or disability, Mr. Brophy is entitled to receive
a lump sum payment equal to the greater of $250,000 or the amount payable under
the Company's executive severance plan described below payable within 90 days of
such termination plus, in each case, $100,000 in cash, payable on each January 1
following such termination through January 1, 2000. The agreement also provides
a two-year non-competition agreement following Mr. Brophy's termination of
employment for any reason.
The Company also entered into a consulting agreement with Mr. Brophy. This
agreement will become effective upon Mr. Brophy's retirement at age 65 from his
position with the Company and will continue for a term of five years thereafter.
Under this agreement, Mr. Brophy will provide up to 32 hours per month of
consulting services to the Board of Directors and senior management of the
Company and will not own, manage, control, participate in, consult with, render
services for or in any manner engage in hardboard siding, hardboard paneling,
fiber cement siding or vinyl siding. In
7
<PAGE>
compensation for his services and his covenant not to compete, Mr. Brophy (or
his estate) will be entitled to receive an annual fee of $150,000 until the
termination of his agreement notwithstanding his death or disability. In the
event of Mr. Brophy's death at or prior to age 65, his spouse will be entitled
to medical coverage until she reaches age 65.
The Company entered into a severance arrangement with Mr. Brophy on January
18, 1999, pursuant to which Mr. Brophy will be entitled to certain benefits,
including receiving a lump sum severance payment of $1,777,368 in full
satisfaction of all rights to severance or other post termination payments (but
excluding his rights with respect to any stock or stock options that he holds)
to which he would be entitled upon a termination of his employment with the
Company without cause or due to a voluntary termination within the period
beginning 60 days and ending 90 days after a change of control. In addition, Mr.
Brophy's unvested stock options will immediately vest and become exercisable
upon a change of control. This severance arrangement replaced and superseded any
prior severance arrangement or program sponsored by the Company for the benefit
of Mr. Brophy.
BONUS PLAN
Each of the named executive officers and other key personnel participate in
an executive/ management bonus plan (the "Bonus Plan") providing for annual
bonus awards contingent upon achievement of certain performance targets based on
earnings before interest and taxes on both a Company-wide basis and on a
separate basis for the Company's various operations. Participants are divided
into five tiers of participation designed to reflect each participant's sphere
of responsibility within the Company. An individual participant's bonus is
determined as a percentage of base salary (not to exceed 100% effective as of
1994) based upon (i) the relevant performance target(s) achieved, (ii) the
employee's participation tier and (iii) the weighting given to the relevant
performance targets. Bonus amounts are prorated for new participants who are
added during the course of a given year. Bonus payments are subject to
modification at the discretion of the Company's Board of Directors.
SEVERANCE PLAN
The Company adopted an executive severance policy in 1996 for the benefit of
the Company's executive officers, providing for certain payments to be made to
such officers upon their termination. On January 18, 1999, the Company adopted
an Executive Severance Pay Plan (the "Plan"), which replaced and superseded any
prior severance arrangement or program sponsored by the Company for the benefit
of the executive officers named in such Plan. The Plan covers certain executive
officers of the Company (including Messrs. Parker, Adams, Grimm and O'Neill)
having one or more full years of service and who are involuntarily terminated
due to (i) a job elimination, (ii) a reduction in force, (iii) any reason other
than for cause within one year following a change of control (as defined below)
or (iv) voluntary termination of their employment with the Company within the
period beginning 60 days and ending 90 days after the occurrence of a change of
control. A "Change of Control" under the Plan occurs when (i) any person or
group (as such term is used in Rule 13d-5 under the Exchange Act), other than
affiliates of Kohlberg & Co., is or becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company then-outstanding securities, and (ii)
during any period of 24 consecutive months, commencing before or after the event
described in clause (i) above, individuals who at the beginning of such 24-month
period were directors of the Company, or persons whose election to the Board was
approved by such individuals, cease for any reason to constitute at least a
majority of the Board. Pursuant to the Plan, upon any such termination, such
officers' options will not be forfeited and will immediately vest upon such
terminations. Such officers also will be entitled to receive their monthly
salary for 18 months commencing on the date of their termination, a pro-rata
bonus payment (through the date of their termination) of their bonus entitlement
for the year of termination payable in the following January, another bonus
payment equaling the average of the prior 3 years' bonuses payable at the end of
the 18 months following their termination, and various other benefits.
8
<PAGE>
STOCK OPTION PLANS
The Company maintains various stock option plans (including the 1994
Employee Stock Option Plan and the Directors' Option Plan) providing for the
issuance of options to purchase up to an aggregate of 3,100,000 shares of Common
Stock (collectively, the "Stock Option Plans"). As of January 14, 1999, options
to purchase 2,522,434 shares of Common Stock were outstanding under the Stock
Option Plans at exercise prices ranging from $2.50 to $29.50 per share. The
Stock Option Plans are administered by the Compensation Committee of the Board
of Directors. The Compensation Committee determines the terms of the options
granted under the Stock Option Plans (which in certain cases, may be incentive
or nonqualified options), including the exercise price, term (not to exceed ten
years), number of shares and exercisability. The exercise price of options
issued under the Stock Option Plans must equal or exceed the fair market value
of the Common Stock on the date of grant. Payment of the option exercise price
may be made in cash or by a note (at the discretion of the Committee), by a
surrender of shares of Common Stock or a combination of the foregoing. One of
the Stock Option Plans authorizes grants of alternative cash settlement rights
that would entitle participants to receive on exercise of an option a payment in
cash equal to the excess of the then-current fair market value of the shares
with respect to which the option is exercised over the applicable exercise
price. Upon a change in control (as defined in Severance Plan), all options in
the Stock Option Plans will become fully vested.
The following tables disclose information regarding stock options granted,
exercised during, or held at the end of 1998 for the named executive officers
pursuant to the Stock Option Plans. The Company has not granted any stock
appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE
- ------------------------------------------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
George T. Brophy................................. 20,000 5.8% 8.50 10/6/08
Richard E. Parker................................ 35,000 10.2% 8.50 10/6/08
William J. Adams................................. 15,000 4.4% 8.50 10/6/08
Donald B. Grimm.................................. 15,000 4.4% 8.50 10/6/08
Joseph P. O'Neill................................ 15,000 4.4% 8.50 10/6/08
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN
OPTIONS AT THE MONEY
FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END
SHARES ACQUIRED ON VALUE (#) EXERCISABLE/ ($) EXERCISABLE/
EXERCISE(#) REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(2)
------------------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C>
George T. Brophy......................... -- -- 670,000/40,000 7,105,000/125,000
Richard E. Parker........................ -- -- 175,000/55,000 1,225,000/218,750
William J. Adams......................... 15,000 191,250 120,000/35,000 673,750/93,750
Donald B. Grimm.......................... 20,000 265,000 60,000/22,500 490,000/93,750
Joseph P. O'Neill........................ -- -- 48,000/22,500 367,500/93,750
</TABLE>
- ------------------------
(1) Assumes appreciation of exercise prices at the specified annual rates from
the date of grant until the end of the option term.
(2) Value equals closing market price as of January 22, 1999 ($14.75 per share)
less the exercise price.
9
<PAGE>
RETIREMENT BENEFITS
All salaried employees, including executive officers and certain hourly
employees of the Company, participate in a defined benefit pension plan funded
on an actuarial basis entirely by the Company. Although benefits for certain
hourly groups are based on a flat dollar rate multiplied by years of service,
most employees earn an annual pension benefit at age 65 equal to one percent of
their highest five-year average compensation plus three-tenths of one percent of
the amount of such compensation which exceeds "covered compensation" (as defined
in the Internal Revenue Code), all multiplied by years of service not to exceed
35 years. This plan provides for a minimum benefit of one percent of the
employee's average compensation multiplied by the employee's total years of
service. Alternative minimum benefits may be payable to some employees based on
their accruals under prior benefit formulas or predecessor plans.
Certain employees whose benefits under the plan have been reduced as the
result of recent formula changes, or who are otherwise designated by the
Compensation Committee, may accrue additional benefits under supplemental
nonqualified plans which the Company has established.
The following table shows the projected annual pension benefits payable
under the pension plan at the normal retirement age of 65:
<TABLE>
<CAPTION>
ANNUAL NORMAL PENSION BENEFITS
FOR YEARS OF SERVICE SHOWN(2)
----------------------------------------------------------------
AVERAGE ANNUAL
PENSION EARNINGS(1)(3) 5 10 20 30 40 50
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
50,000....................................... 2,810 5,621 11,242 16,863 20,000 25,000
100,000...................................... 6,060 12,121 24,242 36,363 42,423 50,000
150,000...................................... 9,310 18,621 37,242 55,863 65,173 75,000
200,000...................................... 9,960 19,921 39,842 59,763 69,723 80,000
250,000...................................... 9,960 19,921 39,842 59,763 69,723 80,000
300,000...................................... 9,960 19,921 39,842 59,763 69,723 80,000
350,000...................................... 9,960 19,921 39,842 59,763 69,723 80,000
400,000...................................... 9,960 19,921 39,842 59,763 69,723 80,000
</TABLE>
- ------------------------
(1) Section 401(a)(17) of the Internal Revenue Code limits the annual
compensation which can be recognized in a qualified pension plan. Executives
who participate in the Company's nonqualified supplemental retirement plans
will receive pension benefits calculated on their entire annual
compensation.
(2) Section 415 of the Internal Revenue Code currently limits the annual
benefits for retirement under the Plan after December 31, 1998. Executives
who participate in the Company's nonqualified supplemental retirement plans
may receive pension benefits in excess of such limits.
(3) Bonus compensation paid to certain executive and management employees
pursuant to the Bonus Plan is included in the employees' compensation base
for purposes of determining Average Annual Pension Earnings.
CONSULTING AGREEMENTS
The Company entered into a consulting agreement with Mr. J. Philippe
Latreille, former executive vice-president of the Company, for a term of two
years pursuant to which Mr. Latreille will provide consulting services to the
Company in return for an annual compensation of $100,000. Mr. Latreille's
consulting agreement will terminate in January 2000. In addition, Mr.
Latreille's group life insurance coverage ($495,000), medical and dental
coverage will be continued by the Company through the terms of the agreement.
Mr. Latreille's options will continue to vest through the end of the agreement
and will terminate in their entirety on January 1, 2001.
10
<PAGE>
The Company entered into a consulting agreement with Mr. Michael A. Lupo,
former executive vice-president of the Company, for a term of one year,
renewable annually by the Chairman of the Board of Directors pursuant to which
Mr. Lupo will provide consulting services to the Company in return for an annual
compensation of $50,000. Mr. Lupo's consulting agreement is due to expire in
February 1999 and the Company currently has no plan to renew such agreement. In
addition, Mr. Lupo is entitled to a life insurance coverage of $2,500 and the
Company will continue to pay all expenses with respect to the leasing of a
vehicle for Mr. Lupo. Mr. Lupo's options will continue to vest and will
terminate on January 1, 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Company's fiscal year ended December 31, 1998, Messrs. George W.
Peck IV and Samuel P. Frieder served as members of the Compensation Committee of
the Board of Directors. Messrs. Peck and Frieder both are currently limited
partners of Kohlberg & Co. Currently, affiliates of Kohlberg & Co. hold
approximately 46.0% of the outstanding shares of Common Stock of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information regarding beneficial
ownership of shares of Common Stock as of January 22, 1999, by (i) each person
or entity who owns of record or beneficially five percent or more of the shares
of Common Stock, (ii) each director or nominee for director of the Company and
each of the named executive officers, and (iii) all officers, directors and
director nominees of the Company as a group. To the knowledge of the Company,
each of such stockholders has sole voting and investment power as to the shares
shown unless otherwise noted. In certain cases, such information has been
obtained from filings with the SEC.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
NAME OF COMMON STOCK COMMON STOCK
- ------------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Kohlberg Associates, L.P.(1)................................................... 4,907,596 39.2%
Samuel P. Frieder(3)........................................................... -- --
James A. Kohlberg(1)(2)(3)..................................................... -- --
George W. Peck IV(3)........................................................... -- --
John R. Garrett(3)............................................................. -- --
Warner C. Frazier(3)........................................................... 7,500(7) 0.1%
Nelson J. Rohrbach(3).......................................................... 7,500(8) 0.1%
George T. Brophy(3)(4)(5)...................................................... 714,958(9) 5.7%
William J. Adams(5)............................................................ 133,163(10) 1.1%
Donald B. Grimm(5)............................................................. 62,000(11) 0.5%
Richard E. Parker(5)........................................................... 195,000(12) 1.6%
Joseph P. O'Neill(5)........................................................... 49,929(13) 0.4%
All directors and named executive officers as a group (11 persons)............. 6,077,646(14) 48.5%
</TABLE>
- ------------------------
(1) KABT Acquisition Company, L.P. ("KABT") owns directly 4,899,776 shares of
Common Stock. Kohlberg Associates, L.P., a Delaware limited partnership
("Associates"), directly owns 7,820 shares of Common Stock and is the
general partner of KABT. Kohlberg & Kohlberg LLC is the general partner of
Associates. Kohlberg & Kohlberg LLC, as general partner of Associates, may
be deemed to have beneficial ownership of the shares shown as beneficially
owned by Associates but disclaims beneficial ownership of such shares except
to the extent of its proportionate interest in Associates. The business
address of KABT is c/o Kohlberg & Co., 111 Radio Circle, Mt. Kisco, NY
10549.
11
<PAGE>
(2) James A. Kohlberg is the managing member of Kohlberg & Kohlberg LLC and as
such may be deemed to have beneficial ownership of the shares deemed to be
beneficially owned by Kohlberg & Kohlberg LLC. Mr. Kohlberg has disclaimed
beneficial ownership of such shares except to the extent of his
proportionate interest in Kohlberg & Kohlberg LLC. The business address of
Mr. Kohlberg is c/o Kohlberg & Co., 111 Radio Circle, Mt. Kisco, NY 10549.
(3) Director of the Company.
(4) Personal address is 1100 Beach Road, Apartment 3J, Vero Beach, Florida
32963.
(5) Executive Officer of the Company.
(6) Business address is 1999 Harrison Street, Suite 700, Oakland, CA 94612.
(7) Includes 7,000 shares of Common Stock covered by presently exercisable stock
options held by such person.
(8) Includes 7,000 shares of Common Stock covered by presently exercisable stock
options held by such person.
(9) Includes 670,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(10) Includes 120,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(11) Includes 60,000 shares of Common Stock covered by presently exercisable
stock options held by such persons.
(12) Includes 175,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(13) Includes 48,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(14) Includes 1,087,000 shares of Common Stock covered by presently exercisable
stock options held by such persons.
CERTAIN RELATIONSHIPS
Pursuant to a Fee Agreement (the "Fee Agreement"), dated as of October 20,
1992, between an affiliate of Kohlberg & Co. and the Company, Kohlberg & Co.
receives an annual management fee of $95,000 from the Company and will continue
to receive such fee through the earlier of (i) October 20, 2002 or (ii) the end
of the fiscal year in which the aggregate percentage ownership of the Common
Stock by affiliates of Kohlberg & Co. falls below 20%. Currently, affiliates of
Kohlberg & Co. own approximately 46.0% of the outstanding Common Stock of the
Company. On January 19, 1999 the Company entered into a Termination of Fee
Agreement with Kohlberg & Co. for the termination of the Fee Agreement,
effective upon the consummation of the Offer and payment to Kohlberg & Co. of
all fees to which it would otherwise be entitled for 1999, prorated on the basis
of the number of days elapsed and remaining, respectively, in such year at the
time of termination.
The Company also retained Kohlberg & Co. to act as its financial advisor in
connection with the Offer and the Merger. Pursuant to the terms of Kohlberg &
Co.'s engagement, the Company has agreed to pay Kohlberg & Co. for its services
a fee payable in cash equal to 2/3 of 1% of the total consideration (including
net debt assumed) to be received by the Company and/or its stockholders in
connection with the Offer and the Merger. The fee payable to Kohlberg & Co. is
currently estimated to be approximately $1.5 million. The Company also has
agreed to reimburse Kohlberg & Co. for reasonable expenses, including reasonable
fees and disbursements of Kohlberg & Co.'s counsel, and to indemnify Kohlberg &
Co. and certain related parties against certain liabilities arising out of
Kohlberg & Co.'s engagement.
Warner C. Frazier, a director since October 1993, is Chairman and Chief
Executive Officer of Simplicity Manufacturing, Inc., a majority interest in
which is held by an affiliate of Kohlberg & Co.
12
<PAGE>
George Brophy is also a director of Simplicity. In addition, Mr. Brophy is a
director of Color Spot, a majority interest in which is held by an affiliate of
Kohlberg & Co.
John R. Garrett, a director since May 1998, is a shareholder of Brownstein,
Hyatt, Farber & Strickland, P.C., one of the Company's outside legal counsel.
From time to time, Mr. Garrett also provides legal advice to affiliates of
Kohlberg & Co.
The Company, KABT Acquisition Company, L.P., KABT II Acquisition Company,
L.P. (together with KABT Acquisition Company, L.P., "KABT"), George Brophy,
Richard Parker, William Adams, Donald Grimm and Joseph O'Neill are parties to a
Stockholders' Agreement, dated as of October 20, 1992 (the "Stockholders'
Agreement") which provides, among other things, that upon the termination of
employment of any manager who is a party to this agreement, the Company may
elect to repurchase (i) the shares of Common Stock held by such manager at fair
market value and the vested options held by such manager at the excess of fair
market value on the date of termination over the exercise price of such options,
if the termination is without "cause"; or (ii) the shares of Common Stock held
by such manager at the lesser of fair market value on the date of termination or
original cost, if the termination is with "cause." Options held by the manager
that are not vested in the case of (i) and all options in the case of (ii) will
be canceled. "Cause" for purposes of the Stockholders' Agreement means a
manager's willful and repeated failure to comply with the lawful directives of
the Board of Directors or such manager's supervisory personnel or any criminal
act or act of dishonesty, disloyalty, misconduct or moral turpitude by a manager
that is injurious to the property, operations, business or reputation of the
Company or its subsidiaries. The Stockholders' Agreement also provides KABT with
rights of first refusal upon any transfer of Common Stock by the managers party
the agreement other than transfers to such managers' family group and other than
transfers by will or pursuant to applicable laws of descent and distribution.
Holders of a majority of the Common Stock held by managers who are party to the
agreement also have participation rights in the event of a transfer of Common
Stock by KABT. The Stockholders' Agreement provides that if holders of a
majority of the Common Stock approve the sale or other transfer of the Company
to an independent third party, the managers who are party to the agreement will
consent and raise no objections (including exercising any rights or appraisal)
to the sale or transfer of the Company and will take all necessary and desirable
actions in connection with the consummation of such transaction (including
selling their stock if the transfer is structured as a stock transaction),
provided that all holders of Common Stock receive the same consideration per
share in connection with the transaction. The Stockholders' Agreement also
provides demand and piggy-back registration rights to the manager and KABT.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC and the New York Stock Exchange.
Officers, directors and greater than ten percent owners are required to furnish
the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for a specified fiscal year, except as
otherwise set forth herein, the Company believes that all its officers,
directors and greater than ten percent beneficial owners complied with all
filing requirements applicable to them with respect to transactions during 1998.
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- --------------------------------------------------------------------------------
<S> <C>
1. Agreement and Plan of Merger, dated as of January 19, 1999, among
Louisiana-Pacific Corporation, Striper Acquisition, Inc. and ABT Building
Products Corporation.
2. Stockholder Agreement, dated as of January 19, 1999, among Louisiana-Pacific
Corporation, Striper Acquisition, Inc. and the several stockholders named
therein.
3. Pages 3 through 9 of the Proxy Statement of the Company filed with the
Securities and Exchange Commission on March 30, 1998.
4. Amendment to the By-laws of ABT Building Products Corporation.
5. Termination of Fee Agreement, dated as of January 19, 1999, among ABT Building
Products Corporation, Kohlberg & Co., L.P. and Louisiana-Pacific Corporation.
6. Executive Severance Pay Plan of ABT Building Products Corporation.
7. Severance Arrangement, dated January 18, 1999, between the Company and George T.
Brophy.
8. Letter to Shareholders of ABT Building Products Corporation, dated January 25,
1999.
9. Form of Press Release issued by ABT Building Products Corporation on January 19,
1999.
10. Opinion of Warburg Dillon Read LLC dated January 19, 1999.
</TABLE>
<PAGE>
EXHIBIT 1
EXECUTION COPY
------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
among
LOUISIANA-PACIFIC CORPORATION
STRIPER ACQUISITION, INC.
and
ABT BUILDING PRODUCTS CORPORATION
dated as of January 19, 1999
------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I THE OFFER..............................................................................1
Section 1.1 The Offer..............................................................................1
Section 1.2 Offer Documents........................................................................2
Section 1.3 Company Actions........................................................................3
Section 1.4 Directors..............................................................................4
ARTICLE II THE MERGER.............................................................................5
Section 2.1 The Merger.............................................................................5
Section 2.2 Closing................................................................................5
Section 2.3 Effective Time.........................................................................5
Section 2.4 Effects of the Merger..................................................................5
Section 2.5 Certificate of Incorporation; Bylaws...................................................5
Section 2.6 Directors; Officers....................................................................6
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES...........................................................................6
Section 3.1 Effect on Capital Stock................................................................6
Section 3.2 Stock Options..........................................................................7
Section 3.3 Payment for Shares.....................................................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES.........................................................9
Section 4.1 Representations and Warranties of Company..............................................9
Section 4.2 Representations and Warranties of Parent and Merger Sub...............................21
ARTICLE V CONDUCT OF BUSINESS OF COMPANY........................................................23
Section 5.1 Conduct of Business of Company........................................................23
ARTICLE VI ADDITIONAL COVENANTS..................................................................26
Section 6.1 Company Stockholders Meeting; Preparation of the Proxy
Statement; Short-Form Merger..........................................................26
Section 6.2 Access to Information; Confidentiality................................................26
Section 6.3 Reasonable Best Efforts...............................................................27
Section 6.4 Public Announcements..................................................................27
Section 6.5 No Solicitation; Acquisition Proposals................................................27
Section 6.6 Consents, Approvals and Filings.......................................................29
Section 6.7 Employee Benefit Matters..............................................................29
Section 6.8 Indemnification; Directors' and Officers' Insurance...................................30
ARTICLE VII CONDITIONS PRECEDENT...........................................................................31
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger............................31
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............................................................32
Section 8.1 Termination...........................................................................32
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
Section 8.2 Effect of Termination.................................................................33
Section 8.3 Amendment.............................................................................33
Section 8.4 Extension; Waiver.....................................................................34
Section 8.5 Procedure for Termination, Amendment, Extension or Waiver.............................34
ARTICLE IX GENERAL PROVISIONS....................................................................34
Section 9.1 Nonsurvival of Representations and Warranties.........................................34
Section 9.2 Fees and Expenses.....................................................................34
Section 9.3 Definitions...........................................................................34
Section 9.4 Notices...............................................................................36
Section 9.5 Interpretation........................................................................37
Section 9.6 Entire Agreement; Third-Party Beneficiaries...........................................37
Section 9.7 Governing Law.........................................................................37
Section 9.8 Assignment............................................................................37
Section 9.9 Enforcement...........................................................................37
Section 9.10 Severability..........................................................................38
Section 9.11 Counterparts..........................................................................38
EXHIBIT A - Conditions to the Offer
</TABLE>
(ii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of January 19, 1999 (this
"Agreement"), is made and entered into among Louisiana-Pacific Corporation, a
Delaware corporation ("Parent"), Striper Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of Parent ("Merger Sub"), and ABT
Building Products Corporation, a Delaware corporation ("Company").
RECITALS:
A. The respective Boards of Directors of Parent, Merger Sub and Company
have determined that it would be advisable and in the best interests of their
respective stockholders for Parent to acquire Company, by means of a merger of
Merger Sub with and into Company (the "Merger"), on the terms and subject to the
conditions set forth in this Agreement.
B. To effectuate the acquisition, Parent and Company each desire that
Parent cause Merger Sub to commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $0.01 per share (the "Company
Common Stock"), of Company (the "Shares") on the terms and subject to the
conditions set forth in this Agreement and the Board of Directors of Company has
approved such tender offer and is recommending (subject to the limitations
contained herein) that Company's stockholders accept the tender offer and tender
their Shares pursuant thereto.
C. Concurrently with the execution and delivery of this Agreement and
as a condition to Parent's and Merger Sub's willingness to enter into this
Agreement, Parent has entered into a Stockholder Agreement, dated as of the date
hereof (the "Stockholder Agreement"), with each of the Principal Stockholders
(as defined in Section 9.3), pursuant to which each Principal Stockholder has
(i) agreed, among other things, to tender all Shares owned by such Principal
Stockholder pursuant to the Offer (as defined in Section 1.1) and (ii) granted
to Parent an option to purchase all Shares owned by such Principal Stockholder.
D. Parent, Merger Sub and Company desire to make certain
representations and warranties and to enter into certain covenants in connection
with the Offer and the Merger and also to prescribe various conditions to the
consummation thereof;
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained in this Agreement, the parties hereto hereby agree as
follows:
ARTICLE I
THE OFFER
Section 1.1 THE OFFER. (a) Provided that none of the events set forth
in Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the public
announcement of the execution and delivery of this Agreement), Parent shall
cause Merger Sub to commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
<PAGE>
promulgated thereunder (the "Exchange Act")), an offer to purchase (the "Offer")
all outstanding shares of Company Common Stock at a price of $15.00 per share,
net to the seller in cash (such price or any higher price as paid pursuant to
the Offer, the "Offer Consideration"). Notwithstanding the foregoing, if between
the date of this Agreement and the Effective Time the outstanding Shares shall
have been changed into a different number of shares or a different class, by
reason of any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the Offer Consideration shall be
correspondingly adjusted on a per-share basis to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares. The obligation of Parent and Merger Sub to commence the Offer, to
consummate the Offer and to accept for payment and to pay for Shares validly
tendered in the Offer and not withdrawn shall be subject only to those
conditions set forth in Exhibit A hereto. The Offer shall initially expire 20
business days after the date of its commencement.
(b) Without the prior written consent of Company, Merger Sub
shall not (and Parent shall cause Merger Sub not to) (i) decrease or change the
form of the Offer Consideration or decrease the number of Shares sought pursuant
to the Offer, (ii) amend any term of the Offer in any manner adverse to holders
of Shares, (iii) change the conditions to the Offer, (iv) impose additional
conditions to the Offer, (v) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires a number of
Shares (together with any Shares then owned by Parent or any of its
Subsidiaries) which constitutes a majority of the Shares outstanding on a
fully-diluted basis on the date of purchase ("on a fully-diluted basis" meaning,
as of any date, the number of Shares outstanding (excluding any Shares held as
treasury stock by Company or any of its Subsidiaries), together with the Shares
which Company may be required to issue pursuant to obligations outstanding at
that date under employee stock or similar benefit plans or otherwise (other than
unvested Options), or (vi) extend the expiration date of the Offer beyond the
initial expiration date of the Offer (except that Merger Sub may, without the
consent of Company, (A) extend the Offer, if at the then scheduled expiration
date of the Offer any of the conditions to Merger Sub's obligation to purchase
Shares is not satisfied, until such time as such condition is satisfied or
waived, and (B) extend the Offer for any period required by any rule,
regulation, interpretation or position of the United States Securities and
Exchange Commission (the "SEC") or the staff thereof); provided, however, that,
except as set forth above and subject to applicable legal requirements, Merger
Sub may amend the Offer or waive any condition to the Offer in its sole
discretion. Assuming the prior satisfaction or waiver of the conditions to the
Offer set forth in Exhibit A hereto, Merger Sub shall, and Parent shall cause
Merger Sub to, accept for payment, and pay for all Shares validly tendered and
not withdrawn pursuant to the Offer as soon as practicable after the expiration
date thereof.
(c) Parent shall provide or cause to be provided to Merger Sub
on a timely basis the funds necessary to purchase any Shares that Merger Sub
becomes obligated to purchase pursuant to the Offer and shall be liable on a
direct and primary basis for the performance by Merger Sub of its obligations
under this Agreement.
Section 1.2 OFFER DOCUMENTS. (a) As soon as practicable on the date of
commencement of the Offer, Parent and Merger Sub shall file or cause to be filed
with the SEC a Tender Offer Statement on Schedule 14D-1 (together with any
supplements or amendments thereto, the "Schedule 14D-1") with respect to the
Offer which shall comply as to form in all material respects with the provisions
of applicable federal securities laws, shall contain the offer to purchase and
related letter of transmittal and other ancillary Offer documents and
instruments
2
<PAGE>
pursuant to which the Offer will be made (collectively with the Schedule 14D-1,
and with any supplements or amendments thereto, the "Offer Documents") and shall
be mailed to the holders of Shares. Company will promptly supply to Parent and
Merger Sub in writing, for inclusion in the Offer Documents, all information
concerning Company required under the Exchange Act to be included in the Offer
Documents.
(b) Each of Parent, Merger Sub and Company shall promptly
correct any information provided by them for use in the Offer Documents if and
to the extent that such information shall be or have become false or misleading
in any material respect, and Parent and Merger Sub shall take all lawful action
necessary to cause the Offer Documents as so corrected to be filed promptly with
the SEC and to be disseminated to holders of Shares as and to the extent
required by applicable law. In conducting the Offer, Parent and Merger Sub shall
comply in all material respects with the provisions of the Exchange Act and any
other applicable law. Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC.
Section 1.3 COMPANY ACTIONS. (a) Company hereby consents to the Offer
and represents and warrants that (i) its Board of Directors (at a meeting duly
called and held) has (A) determined that each of this Agreement, the Offer and
the Merger are fair to and in the best interests of Company and its
stockholders, (B) approved and declared the advisability of this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, and
(C) resolved (subject to the limitations herein contained) to recommend
acceptance of the Offer and adoption of this Agreement by the holders of Shares,
and (ii) Warburg Dillon Read LLC ("WDR") has delivered to the Board of Directors
of Company its opinion that the Offer Consideration to be received by the
holders of Shares in the Offer is fair, from a financial point of view, to such
holders. Subject to the provisions of Section 6.5(b), Company hereby consents to
the inclusion in the Offer Documents of the recommendations of the Board of
Directors of Company in favor of the Offer and the adoption of this Agreement.
(b) Company shall file with the SEC, simultaneously with the
filing by Parent and Merger Sub of the Schedule 14D-1, a Solicitation
Recommendation Statement on Schedule 14D-9 (together with any supplements or
amendments thereto, the "Schedule 14D-9") containing, subject to the provisions
of Section 6.5(b), the recommendations of the Board of Directors of Company in
favor of the Offer and the adoption of this Agreement. Each of Parent and Merger
Sub will promptly supply to Company in writing, for inclusion in the Schedule
14D-9, all information concerning Parent's Designees (as such term is defined in
Section 1.4 hereof), as required by Section 14(f) of the Exchange Act and Rule
14f-1 thereunder, and Company shall include such information in the Schedule
14D-9. Each of Company, Parent and Merger Sub shall promptly correct any
information provided by them for use in the Schedule 14D-9 if and to the extent
that such information shall be or have become false or misleading in any
material respect and Company shall take all lawful action necessary to cause the
Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Shares as and to the extent required by
applicable law. Parent, Merger Sub and their counsel shall be given a reasonable
opportunity to review the Schedule 14D-9 and any amendments thereto prior to the
filing thereof with the SEC.
(c) In connection with the Offer, Company shall promptly
furnish Parent with (or cause Parent to be furnished with) mailing labels,
security position listings and all available
3
<PAGE>
listings or computer files containing the names and addresses of the record
holders of Shares as of the latest practicable date and shall furnish Parent
with (or cause Parent to be furnished with) such information and assistance
(including updated lists of stockholders, mailing labels and lists of security
positions) as Parent or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of Shares. Subject to the
requirements of applicable law, and except for such actions as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer and the Merger, Parent and Merger Sub and each of their affiliates,
associates, partners, employees, agents and advisors shall hold in confidence
the information contained in such labels, lists and files, shall use such
information only in connection with the Offer and the Merger and, if this
Agreement is terminated in accordance with its terms, shall deliver promptly to
Company (or destroy and certify to Company the destruction of) all copies of
such information (and any copies, compilations or extracts thereof or based
thereon) then in their possession or under their control.
Section 1.4 DIRECTORS. (a) Promptly upon the purchase by Merger Sub
pursuant to the Offer of such number of shares of Company Common Stock (together
with any Shares then owned by Parent or any of its Subsidiaries) as represents a
majority of the outstanding shares of Company Common Stock (on a fully diluted
basis) on the date of purchase, and from time to time thereafter, (i) Parent
shall be entitled to designate such number of directors ("Parent's Designees"),
rounded up to the next whole number that will give Parent, subject to compliance
with Section 14(f) of the Exchange Act, representation on the Board of Directors
of Company equal to the product of (x) the number of directors on the Board of
Directors of Company (giving effect to any increase in the number of directors
pursuant to this Section 1.4) and (y) the percentage that such number of shares
of Company Common Stock so purchased in the Offer (together with any Shares then
owned by Parent or any of its Subsidiaries) bears to the aggregate number of
shares of Company Common Stock outstanding on the date of purchase (such number
being, the "Board Percentage"), and (ii) Company shall, upon request by Parent,
promptly cause Parent's Designees constituting the Board Percentage to be
elected to Company's Board of Directors by (x) increasing the size of the Board
of Directors of Company or (y) using reasonable efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
Designees to be elected to the Board of Directors of Company and shall use best
efforts to cause Parent's Designees promptly to be so elected, subject in all
instances to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. At the request of Parent, Company shall take, at
Parent's expense, all lawful action necessary to effect any such election.
Parent will supply to Company in writing and be solely responsible for any
information with respect to itself, Parent's Designees and Parent's officers,
directors and affiliates required by the Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder to be included in the Schedule 14D-9.
Notwithstanding the foregoing, at all times prior to the Effective Time (as
defined in Section 2.3) Company's Board of Directors shall include at least two
Continuing Directors (as defined in Section 1.4(b)).
(b) Following the election or appointment of Parent's
Designees pursuant to this Section 1.4 and prior to the Effective Time of the
Merger, any amendment or termination of this Agreement, waiver of the
obligations or other acts of Parent or Merger Sub or waiver of Company's rights
hereunder shall require the concurrence of a majority of the Continuing
Directors then in office. For purposes of this Agreement, the term "Continuing
Directors" means at any time (i) those directors of Company who are directors on
the date hereof and who voted to approve this Agreement, and (ii) such
additional directors of Company who are not affiliated
4
<PAGE>
with Parent, Merger Sub or any of their affiliates and who were designated as
"Continuing Directors" for purposes of this Agreement by a majority of the
Continuing Directors in office at the time of such designation.
ARTICLE II
THE MERGER
Section 2.1 THE MERGER. On the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"), the Merger shall be effected and Merger Sub shall be merged
with and into Company at the Effective Time. At the Effective Time, the separate
existence of Merger Sub shall cease and Company shall continue as the surviving
corporation (as such, the "Surviving Corporation").
Section 2.2 CLOSING. Unless this Agreement shall have been terminated
and the transactions contemplated hereby shall have been abandoned pursuant to
Article VIII, and subject to the satisfaction or waiver of all of the conditions
set forth in Article VII, the closing of the Merger (the "Closing") will take
place as soon as practicable, but in no event later than 10:00 a.m. on the
second business day (the "Closing Date") following satisfaction or waiver of all
of the conditions set forth in Article VII, other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions, at the offices of Jones, Day, Reavis & Pogue, 599
Lexington Avenue, New York, New York, unless another date, time or place is
agreed to in writing by the parties hereto.
Section 2.3 EFFECTIVE TIME. On the Closing Date (or on such other date
as Parent and Company may agree), the parties hereto shall file with the
Secretary of State of the State of Delaware (the "Delaware State Secretary") a
certificate of merger and any other appropriate documents, executed in
accordance with the relevant provisions of the DGCL, and shall make all other
filings or recordings required under the DGCL in connection with the Merger. The
Merger shall become effective upon the filing of the certificate of merger with
the Delaware State Secretary, or at such later time as is specified in the
certificate of merger (the "Effective Time").
Section 2.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
property of Company and Merger Sub shall vest in the Surviving Corporation, and
all liabilities and obligations of Company and Merger Sub shall become
liabilities and obligations of the Surviving Corporation.
Section 2.5 CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective
Time, (a) the certificate of incorporation of Merger Sub as in effect at the
Effective Time shall, from and after the Effective Time, be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
in accordance with the provisions thereof and applicable law and (b) the bylaws
of Merger Sub as in effect at the Effective Time shall, from and after the
Effective Time, be the bylaws of the Surviving Corporation until thereafter
changed or amended in accordance with the provisions thereof and applicable law.
5
<PAGE>
Section 2.6 DIRECTORS; OFFICERS. From and after the Effective Time, (a)
the directors of Merger Sub shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be, and (b) the
officers of Merger Sub shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of any holder of Shares or any
other shares of capital stock of Company or Merger Sub:
(a) COMMON STOCK OF MERGER SUB. Each share of common stock,
par value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY SHARES AND PARENT-OWNED SHARES.
Each Share issued and outstanding immediately prior to the Effective Time that
is owned by Company or any Subsidiary (as defined in Section 9.3) of Company or
by Parent, Merger Sub or any other Subsidiary of Parent (other than shares in
trust accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall automatically be canceled and retired
and shall cease to exist, and no cash or other consideration shall be delivered
or deliverable in exchange therefor.
(c) CONVERSION OF SHARES. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
Shares to be canceled and retired in accordance with Section 3.1(b) and any
Dissenting Shares (as defined in Section 3.1(d)) shall be converted into the
right to receive the Offer Consideration, payable in cash to the holder thereof,
without any interest thereon (the "Merger Consideration"), in accordance with
Section 3.3. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding Shares shall have been changed
into a different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Merger Consideration shall be correspondingly adjusted
on a per-share basis to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(d) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Shares issued and outstanding immediately prior to
the Effective Time held by any person who has the right to demand, and who
properly demands, an appraisal of such Shares ("Dissenting Shares") in
accordance with Section 262 of the DGCL (or any successor provision) shall not
be converted into a right to receive the Merger Consideration unless such holder
fails
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to perfect or otherwise loses such holder's right to such appraisal, if any. If,
after the Effective Time, such holder fails to perfect or loses any such right
to appraisal, each such Share of such holder shall be treated as a Share that
had been converted as of the Effective Time into the right to receive the Merger
Consideration in accordance with Section 3.1(c). At the Effective Time, any
holder of Dissenting Shares shall cease to have any rights with respect thereto,
except the rights provided in Section 262 of the DGCL (or any successor
provision) and as provided in the immediately preceding sentence. Company shall
give prompt notice to Parent of any demands received by Company for appraisal of
Shares, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
Section 3.2 STOCK OPTIONS.
(a) At the Effective Time, each holder of a then-outstanding
option to purchase Shares under Company's Amended and Restated Stock Option
Plan, 1994 Director Stock Option Plan, 1994 Employee Stock Option Plan and new
employee compensation policy (collectively, the "Stock Option Plans") (true and
correct copies of which have been delivered or made available by Company to
Parent), whether or not then exercisable (the "Options"), shall, in settlement
thereof, receive for each Share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Merger
Consideration and the per Share exercise price of such Option to the extent such
difference is a positive number (such amount being hereinafter referred to as,
the "Option Consideration"); provided, however, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such amount shall be paid as
soon as practicable after the first date payment can be made without liability
to such person under Section 16(b) of the Exchange Act. Upon receipt of the
Option Consideration therefor, each Option shall be canceled. The surrender of
an Option to Company in exchange for the Option Consideration shall be deemed a
release of any and all rights the holder had or may have had in respect of such
Option.
(b) Prior to the Effective Time, Company shall use its
reasonable best efforts to obtain all necessary consents or releases from
holders of Options under the Stock Option Plans and take all such other lawful
action as may be necessary to give effect to the transactions contemplated by
this Section 3.2. Except as otherwise agreed to by the parties, (i) the Stock
Option Plans shall terminate as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of Company or any Subsidiary
thereof shall be canceled as of the Effective Time and (ii) Company shall use
its reasonable best efforts to assure that following the Effective Time no
participant in the Stock Option Plans or other plans, programs or arrangements
shall have any right thereunder to acquire any equity securities of Company, the
Surviving Corporation or any Subsidiary thereof and to terminate all such plans.
Section 3.3 PAYMENT FOR SHARES.
(a) PAYMENT FUND. Concurrently with the Effective Time, Parent
shall deposit, or shall cause to be deposited, with or for the account of a bank
or trust company designated by Parent, which shall be reasonably satisfactory to
Company (the "Paying Agent"), for the benefit of the holders of Shares, cash in
an amount sufficient to pay the aggregate Merger
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Consideration payable upon the conversion of Shares pursuant to Section 3.1(c)
(the "Payment Fund").
(b) LETTERS OF TRANSMITTAL; SURRENDER OF CERTIFICATES. As soon
as reasonably practicable after the Effective Time, Parent shall instruct the
Paying Agent to mail to each holder of record (other than Company or any of its
Subsidiaries or Parent, Merger Sub or any other Subsidiary of Parent) of a
certificate or certificates that, immediately prior to the Effective Time,
evidenced outstanding Shares (the "Certificates"), (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent, and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the holder
of such Certificate shall be entitled to receive in exchange therefor cash in an
amount equal to the product of (i) the number of Shares theretofore represented
by such Certificate and (ii) the Merger Consideration, and the Certificate so
surrendered shall forthwith be canceled. No interest shall be paid or accrued on
any cash payable upon the surrender of any Certificate. If payment is to be made
to a person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the surrendered Certificate or established to the satisfaction of
Parent and the Surviving Corporation that such taxes have been paid or are not
applicable.
(c) CANCELLATION AND RETIREMENT OF SHARES; NO FURTHER RIGHTS.
As of the Effective Time, all Shares (other than Shares to be canceled in
accordance with Section 3.1(b)) issued and outstanding immediately prior to the
Effective Time shall cease to be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of any such Shares shall
cease to have any rights with respect thereto or arising therefrom (including
without limitation the right to vote), except the right to receive the Merger
Consideration, without interest, upon surrender of such Certificate in
accordance with Section 3.3(b), and until so surrendered, each such Certificate
shall represent for all purposes only the right to receive the Merger
Consideration, without interest. The Merger Consideration paid upon the
surrender for exchange of Certificates in accordance with the terms of this
Section 3.3 shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates.
(d) INVESTMENT OF PAYMENT FUND. The Paying Agent shall invest
the Payment Fund, as directed by Parent, in (i) direct obligations of the United
States of America, (ii) obligations for which the full faith and credit of the
United States of America is pledged to provide for the payment of principal and
interest, (iii) commercial paper rated the highest quality by either Moody's
Investors Services, Inc. or Standard & Poor's Corporation, or (iv) certificates
of deposit, bank repurchase agreements or bankers' acceptances of commercial
banks with capital exceeding $500 million. Any net earnings with respect to the
Payment Fund shall be the property of and paid over to Parent as and when
requested by Parent.
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(e) TERMINATION OF PAYMENT FUND. Any portion of the Payment
Fund which remains undistributed to the holders of Certificates for 180 days
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of Certificates that have not theretofore complied with this Section 3.3
shall thereafter look only to Parent, and only as general creditors thereof, for
payment of their claim for any Merger Consideration.
(f) NO LIABILITY. None of Parent, Merger Sub, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of any
payments or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to five years after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Entity (as defined in Section
4.1(c)), any amounts payable in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(g) WITHHOLDING RIGHTS. Parent shall be entitled to deduct and
withhold, or cause to be deducted or withheld, from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares, Options or
Certificates such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or any provision of applicable state, local or foreign
tax law. To the extent that amounts are so deducted and withheld, such deducted
and withheld amounts shall be treated for all purposes of this Agreement as
having been paid to such holders in respect of which such deduction and
withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES OF COMPANY. Company
represents and warrants to Parent and Merger Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of
Company and each Subsidiary of Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of Company and each Subsidiary of Company
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (as defined in Section 9.3) on Company. Company has delivered or
made available to Parent true, complete and correct copies of the certificate of
incorporation and bylaws or comparable governing documents of Company and each
Subsidiary of Company, in each case as amended to the date of this Agreement. A
true, correct and complete list of all Subsidiaries of Company, together with
the jurisdiction of incorporation of each such Subsidiary and the percentage of
each such Subsidiary's capital stock
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owned by Company or another Subsidiary, is set forth in Section 4.1(a) of the
Disclosure Schedule (as defined in Section 9.3).
(b) AUTHORITY; NONCONTRAVENTION. Company has the requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Company and the consummation by Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Company, subject, in the case of the Merger, to the adoption of this
Agreement by its stockholders as contemplated by Section 6.1(a). This Agreement
has been duly executed and delivered by Company and, assuming that this
Agreement constitutes a valid and binding obligation of Parent and Merger Sub,
constitutes a valid and binding obligation of Company, enforceable against
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and to general principles of
equity. Except as specified in Section 4.1(b) of the Disclosure Schedule, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, (i) conflict with any of the provisions of the certificate of incorporation
or bylaws of Company or the comparable governing documents of any Subsidiary of
Company, in each case as amended to the date of this Agreement, (ii) subject to
the governmental filings and other matters referred to in Section 4.1(c),
conflict with, result in a breach of or default (with or without notice or lapse
of time, or both) under, or give rise to a material obligation, a right of
termination, cancellation or acceleration of any obligation or a loss of a
material benefit under, or require the consent of any person under, any
indenture or other agreement, permit, concession, franchise, license or similar
instrument or undertaking to which Company or any of its Subsidiaries is a party
or by which Company or any of its Subsidiaries or any of their respective assets
is bound or affected, or (iii) subject to the governmental filings and other
matters referred to in Section 4.1(c), contravene any domestic or foreign law,
rule or regulation or any order, writ, judgment, injunction, decree,
determination or award currently in effect, which, in the case of clauses (ii)
and (iii) above would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company.
(c) CONSENTS AND APPROVALS. No consent, approval or
authorization of, or declaration or filing with, or notice to, any domestic or
foreign governmental agency or regulatory authority (a "Governmental Entity")
which has not been received or made is required by or with respect to Company or
any of its Subsidiaries in connection with the execution and delivery of this
Agreement by Company or the consummation by Company of the transactions
contemplated hereby, except for (i) the filing of premerger notification and
report forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) the filing with the SEC of (A) the Schedule 14D-9,
the information statement required under Rule 14f-1 of the Exchange Act and, if
required by applicable law, the Proxy Statement (as defined in Section 6.1(b)),
(B) such reports under the Exchange Act as may be required in connection with
this Agreement or the Stockholder Agreement and the transactions contemplated
hereby and thereby, (iii) the filing of the certificate of merger or, if
permitted, a certificate of ownership and merger with the Delaware State
Secretary and appropriate documents with the relevant authorities of other
states in which Company is qualified to do
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business, (iv) such other consents, approvals, authorizations, filings or
notices as are specified in Section 4.1(c) of the Disclosure Schedule, (v)
applicable environmental statutes, and (vi) any other consents, approvals,
authorizations, filings or notices the failure to make or obtain which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company.
(d) CAPITAL STRUCTURE. The authorized capital stock of Company
consists solely of (i) 40,000,000 shares of Company Common Stock and (ii)
1,000,000 shares of Preferred Stock, par value $0.01 per share, of Company
("Company Preferred Stock"). At the close of business on January 14, 1999
("Capital Structure Date"): (i) 10,674,160 shares of Company Common Stock were
issued and outstanding, (ii) no shares of Company Preferred Stock were issued
and outstanding, (iii) 2,522,425 shares of Company Common Stock were reserved
for issuance pursuant to outstanding Options granted under the Stock Option
Plans, and (iv) 1,537,000 shares of Company Common Stock were held by Company in
its treasury. Except as set forth in the immediately preceding sentence or on
Section 4.1(d) of the Disclosure Schedule, at the close of business on the
Capital Structure Date, no shares of capital stock or other equity securities of
Company were issued, reserved for issuance or outstanding. Since the close of
business on the Capital Structure Date, no shares of capital stock or other
equity securities of Company have been issued or reserved for issuance or become
outstanding (other than any Shares described in clause (iii) of the first
sentence of this Section 4.1(d) that have been issued upon the exercise of
outstanding Options granted under the Stock Option Plans). All outstanding
shares of capital stock of Company are duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. Except as specified
above or in Section 4.1(d) of the Disclosure Schedule, neither Company nor any
Subsidiary of Company has or is subject to or bound by or, at or after the
Effective Time will have or be subject to or bound by, any outstanding option,
warrant, call, subscription or other right (including any preemptive right),
agreement or commitment which (i) obligates Company or any Subsidiary of Company
to issue, sell or transfer, or repurchase, redeem or otherwise acquire, any
shares of the capital stock of Company or any Subsidiary of Company, (ii)
restricts the transfer of any shares of capital stock of Company or any of its
Subsidiaries, or (iii) relates to the voting of any shares of capital stock of
Company or any of its Subsidiaries. No bonds, debentures, notes or other
indebtedness of Company or any Subsidiary of Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which the stockholders of Company or any Subsidiary of Company
may vote are issued or outstanding. Except as specified in Section 4.1(d) of the
Disclosure Schedule, all of the outstanding shares of capital stock of each
Subsidiary of Company have been duly authorized, validly issued, fully paid and
nonassessable and are owned by Company, by one or more Subsidiaries of Company
or by Company and one or more such Subsidiaries, free and clear of Liens (as
defined in Section 9.3).
(e) SEC DOCUMENTS. Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since December 31,
1996 (such reports, schedules, forms, statements and other documents being
hereinafter referred to as the "SEC Documents"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents as of
such dates contained any untrue statements 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
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circumstances under which they were made, not misleading. As of their respective
dates, the consolidated financial statements of Company included in the SEC
Documents complied as to form in all material respects with the published rules
and regulations of the SEC with respect thereto, had been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may otherwise be
indicated in the notes thereto) and fairly presented in all material respects
the consolidated financial position of Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
quarterly statements, to normal year-end audit adjustments).
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS; NO UNDISCLOSED
MATERIAL LIABILITIES.
(i) Except as disclosed in the SEC Documents filed
and publicly available prior to the date of this Agreement (the "Filed SEC
Documents") or specified in Section 4.1(f) of the Disclosure Schedule, since the
date of the most recent audited financial statements included in the Filed SEC
Documents, Company and its Subsidiaries have conducted their businesses only in
the ordinary course, and there has not been: (A) any change, event or occurrence
which has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company; (B) any declaration, setting
aside or payment of any dividend or other distribution in respect of shares of
Company's capital stock, or any redemption or other acquisition by Company of
any shares of its capital stock; (C) any increase in the rate or terms of
compensation payable or to become payable by Company or its Subsidiaries to
their directors, officers or key employees, except increases occurring in the
ordinary course of business consistent with past practice; (D) any entry into,
or increase in the rate or terms of, any bonus, insurance, severance, pension or
other employee or retiree benefit plan, payment or arrangement made to, for or
with any such directors, officers or key employees, except increases occurring
in the ordinary course of business consistent with past practices or as required
by applicable law; (E) any entry into any agreement, commitment or transaction
by Company or any of its Subsidiaries which is material to Company and its
Subsidiaries taken as a whole, except for agreements, commitments or
transactions entered into in the ordinary course of business consistent with
past practice; (F) any change by Company in accounting methods, principles or
practices, except as required or permitted by generally accepted accounting
principles; (G) except to the extent specifically reserved for in the financial
statements included in the Filed SEC Documents, any write-off or write-down of,
or any determination to write-off or write-down, any asset of Company or any of
its Subsidiaries or any portion thereof which write-off, write-down or
determination exceeds $500,000 individually or $1,000,000 in the aggregate; (H)
any announcement or implementation of any reduction in force, lay-off, early
retirement program, severance program or other program or effort concerning the
termination of employment of employees of Company or its Subsidiaries; or (I)
any announcement of or entry into any agreement, commitment or transaction by
Company or any of its Subsidiaries to do any of the things described in the
preceding clauses (A) through (H) otherwise than as expressly provided for
herein.
(ii) As of the date hereof, except as disclosed in
the Filed SEC Documents or specified in Section 4.1(f) of the Disclosure
Schedule and liabilities incurred in the ordinary course of business consistent
with past practice since the date of the most recent
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financial statements included in the Filed SEC Documents, there are no
liabilities of Company or its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, due, to become due, determined, determinable or
otherwise, having or which would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Company.
(g) CERTAIN INFORMATION. Subject to Parent's and Merger Sub's
fulfillment of their respective obligations hereunder with respect thereto, the
Schedule 14D-9 and the Proxy Statement will contain (or will be amended in a
timely manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law and will conform in all material
respects with the requirements of the Exchange Act and any other applicable law,
and neither the Schedule 14D-9 nor the Proxy Statement will, at the respective
times they are filed with the SEC or published, sent or given to Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading; provided, however, that no representation or warranty is hereby
made by Company with respect to any information supplied or to be supplied by
Parent or Merger Sub in writing for inclusion in, or with respect to Parent or
Merger Sub information derived from Parent's public SEC filings which is
included or incorporated by reference in, the Schedule 14D-9 or the Proxy
Statement. None of the information supplied or to be supplied by Company in
writing for inclusion or incorporation by reference in, or which may be deemed
to be incorporated by reference in, any of the Offer Documents will, at the
respective times the Offer Documents are filed with the SEC or published, sent
or given to Company's stockholders, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading. If at any time prior to the Effective Time
any event with respect to Company, or with respect to any information supplied
by Company for inclusion in any of the Offer Documents, shall occur which is
required to be described in an amendment of, or a supplement to, any of the
Offer Documents, Company shall so describe the event to Parent.
(h) REAL PROPERTY; OTHER ASSETS. (i) Section
4.1(h)(i) of the Disclosure Schedule sets forth all of the real property owned
in fee by Company and its Subsidiaries (the "Owned Real Property").
(ii) Company or one of its Subsidiaries has good and
valid title to each parcel of Owned Real Property and to each other asset
reflected in the latest balance sheet of Company included in the Filed SEC
Documents (other than as disclosed in the Filed SEC Documents, or any such other
asset disposed of or consumed in the ordinary course of business or as specified
in Section 4.1(h)(ii) of the Disclosure Schedule) free and clear of all Liens
except (A) those specified in Section 4.1(h)(ii) of the Disclosure Schedule or
reflected or reserved against in the latest balance sheet of Company included in
the Filed SEC Documents, (B) taxes and general and special assessments not in
default and payable without penalty and interest, and (C) other Liens that
individually or in the aggregate would not have a Material Adverse Effect on
Company (collectively, "Permitted Liens").
(iii) Company has heretofore made available to
Parent true, correct and complete copies of all leases, subleases and other
agreements (the "Real Property Leases") under which Company or any of its
Subsidiaries uses or occupies or has the right to use or occupy, now
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or in the future, any real property or facility (the "Leased Real Property"),
including all modifications, amendments and supplements thereto. Except in each
case where the failure would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Company: (A) Company or one of
its Subsidiaries has a valid leasehold interest in each parcel of Leased Real
Property free and clear of all Liens except Permitted Liens and each Real
Property Lease is in full force and effect, (B) all rent and other sums and
charges due and payable by Company or its Subsidiaries as tenants thereunder are
current in all material respects, (C) no termination event or condition or
uncured default of a material nature on the part of Company or any such
Subsidiary or, to Company's knowledge, the landlord, exists under any Real
Property Lease, and (D) Company or one of its Subsidiaries is in actual
possession of each leased Real Property and is entitled to quiet enjoyment
thereof in accordance with the terms of the applicable Real Property Lease.
(i) YEAR 2000 COMPLIANCE.
(i) Company presently expects that all
reprogramming, remediation and testing of Information Systems and Equipment (as
defined below) that is required to make it in all material respects Year 2000
Compliant will be completed no later than December 31, 1999. Except as otherwise
disclosed in the Filed SEC Documents, the cost of all such reprogramming,
remediation and testing, together with the reasonably foreseeable consequences
of any reasonably foreseeable failure of such Information Systems and Equipment
to be or timely become Year 2000 Compliant will not have, individually or in the
aggregate, a Material Adverse Effect on Company.
(ii) (A) As used in respect of Information Systems
and Equipment, "Year 2000 Compliant" means that such Information Systems and
Equipment will not cease to properly function, produce erroneous results or
otherwise experience diminished performance or functionality when presented with
or when calculating, comparing, sequencing or otherwise processing date data
before, during and after the year 2000 and (B) "Information Systems and
Equipment" means all computer hardware, firmware, software and information
processing systems and all equipment containing embedded microchips that is used
by Company or any of its Subsidiaries in the conduct of their respective
business.
(j) INTELLECTUAL PROPERTY.
(i) Section 4.1(j)(i) of the Disclosure Schedule
sets forth a true, correct and complete list (including, to the extent
applicable, registration, application or file numbers) of all patents,
registered trademarks and service marks, trade names, domain names and
registered copyrights owned by Company or any Subsidiary of Company, and all
applications for registration of any of the foregoing, including any additions
thereto or extensions, continuations, renewals or divisions thereof (setting
forth the registration, issue or serial number and a description of the same)
(collectively, together with all trade dress, trade secrets, processes,
formulae, designs, know-how and other intellectual property rights that are so
owned, the "Intellectual Property"). Company has heretofore provided or made
available to Parent true, correct and complete copies of each registration or
application for registration covering any of the Intellectual Property which is
registered with, or in respect of which any application for registration has
been filed with, any Governmental Entity.
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(ii) The Intellectual Property and that intellectual
property licensed to Company and its Subsidiaries under the license agreements
listed in Section 4.1(j)(ii) of the Disclosure Schedule includes all of the
material intellectual property rights that are reasonably necessary to conduct
Company's business as it is now conducted. Except as specified in Section
4.1(j)(ii) of the Disclosure Schedule, (A) Company, directly or through its
Subsidiaries, has good, marketable and exclusive title to, and the valid and
enforceable power and right to use, the Intellectual Property free and clear of
all Liens (other than Permitted Liens and except where the failure to have such
title, power and rights has not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company)
and (B) neither Company nor any of its Subsidiaries has granted any license to a
third party with respect to the Intellectual Property or any portion thereof or
any rights to use, market or exploit the Intellectual Property or any portion
thereof.
(k) NO INFRINGEMENT. Except as specified in Section 4.1(k) of
the Disclosure Schedule, neither the existence nor the sale, license, lease,
transfer, use, reproduction, distribution, modification or other exploitation by
Company or any Subsidiary of Company of any Intellectual Property, as such
Intellectual Property is sold, licensed, leased, transferred, used or otherwise
exploited by such persons, (i) infringes on any patent, trademark, copyright or
other right of any other person or (ii) constitutes a misuse or misappropriation
of any trade secret, know-how, process, proprietary information or other right
of any other person (except in each of clauses (i) and (ii) where any such
infringement, misuse or misappropriation has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company). Except as specified in Section 4.1(k) of the Disclosure Schedule, as
of the date hereof, neither Company nor any of its Subsidiaries has received any
written complaint, assertion, threat or allegation or otherwise has notice of
any lawsuit, claim, demand, proceeding or investigation involving matters of the
type contemplated by the immediately preceding sentence. Except as specified in
Section 4.1(k) of the Disclosure Schedule, there are no restrictions on the
ability of Company, any Subsidiary of Company or any of their respective
successors or assigns to sell, license, lease, transfer, use, reproduce,
distribute, modify or otherwise exploit any Intellectual Property.
(l) MATERIAL CONTRACTS. There have been made available to
Parent and its representatives true, correct and complete copies of all of the
following contracts to which Company or any of its Subsidiaries is a party or by
which any of them is bound (collectively, the "Material Contracts"): (i)
contracts with any current officer or director of Company or any of its
Subsidiaries; (ii) contracts (A) for the sale of any of the assets of Company or
any of its Subsidiaries, other than contracts entered into in the ordinary
course of business or (B) for the grant to any person of any preferential rights
to purchase any of its assets; (iii) contracts which restrict Company or any of
its Subsidiaries from competing in any line of business or with any person in
any geographical area or which restrict any other person from competing with
Company or any of its Subsidiaries in any line of business or in any
geographical area; (iv) indentures, credit agreements, security agreements,
mortgages, guarantees, promissory notes and other contracts relating to the
borrowing of money; and (v) all other agreements, contracts or instruments that
are material to Company and its Subsidiaries taken as a whole. Except as
specified in Section 4.1(l) of the Disclosure Schedule, all of the Material
Contracts are in full force and effect and are the legal, valid and binding
obligation of Company and/or its Subsidiaries, enforceable against them in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
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creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), except where the failure of such Material
Contracts to be in full force and effect or to be legal, valid, binding or
enforceable against Company and/or its Subsidiaries has not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. Except as specified in Section 4.1(l) of the
Disclosure Schedule, neither Company nor any of its Subsidiaries is in breach or
default in any material respect under any Material Contract nor, to the
knowledge of Company, is any other party to any Material Contract in breach or
default thereunder in any material respect, except where such breaches or
defaults have not had and would not reasonably be expected to have a Material
Adverse Effect on Company.
(m) LITIGATION, ETC. As of the date hereof, except as
disclosed in the Filed SEC Documents or specified in Section 4.1(m) of the
Disclosure Schedule, (i) there is no suit, claim, action, proceeding (at law or
in equity) or investigation pending or, to the knowledge of Company, threatened
against Company or any of its Subsidiaries before any court or other
Governmental Entity, and (ii) neither Company nor any of its Subsidiaries is
subject to any outstanding order, writ, judgement, injunction, decree or
arbitration order or award that, in any such case described in clauses (i) and
(ii), has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company. As of the date hereof, there
are no suits, claims, actions, proceedings or investigations pending or, to the
knowledge of Company, threatened, seeking to prevent, hinder, modify or
challenge the transactions contemplated by this Agreement.
(n) COMPLIANCE WITH APPLICABLE LAWS. All federal, state, local
and foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for each
of Company and its Subsidiaries to own, lease or operate its properties and
assets and to carry on its business as now conducted have been obtained or made,
and there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which lack or default would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. Except as disclosed in the Filed SEC Documents or
specified in Section 4.1(n) of the Disclosure Schedule, Company and its
Subsidiaries are in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, except for
non-compliance which would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Company.
(o) ENVIRONMENTAL LAWS. Except as disclosed in the Filed SEC
Documents or as specified in Section 4.1(o) of the Disclosure Schedule or as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Company: (A) neither Company nor any of its
Subsidiaries has violated or is in violation of any Environmental Law (as
defined in Section 9.3); (B) none of the Owned Real Property or Leased Real
Property (including without limitation soils and surface and ground waters) are
contaminated with any Hazardous Substance (as defined in Section 9.3) in
quantities which require investigation or remediation under Environmental Laws;
(C) neither Company nor any of its Subsidiaries is liable for any off-site
contamination; (D) neither Company nor any of its Subsidiaries has any liability
or remediation obligation under any Environmental Law; (E) no assets of Company
or any of its Subsidiaries are subject to pending or, to Company's knowledge,
threatened Liens under any Environmental Law; (F) Company and its Subsidiaries
have all
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Permits required under any Environmental Law ("Environmental Permits"); and (G)
Company and its Subsidiaries are in compliance with their respective
Environmental Permits.
(p) TAXES. Except as specified in Section 4.1(p) of the
Disclosure Schedule:
(i) Except where the failure to do so would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company, each of Company and each Subsidiary of Company (and
any affiliated or unitary group of which any such person was a member) has (A)
timely filed all federal, state, local and foreign returns, declarations,
reports, estimates, information returns and statements ("Returns") required to
be filed by or for it in respect of any Taxes (as hereinafter defined) and has
caused such Returns as so filed to be true, correct and complete, (B)
established reserves that are reflected in Company's most recent financial
statements included in the Filed SEC Documents and that as so reflected are
adequate for the payment of all Taxes not yet due and payable with respect to
the results of operations of Company and its Subsidiaries through the date
hereof, and (C) timely withheld and paid over to the proper taxing authorities
all Taxes and other amounts required to be so withheld and paid over. Each of
Company and each Subsidiary of Company (and any affiliated or unitary group of
which any such person was a member) has timely paid all Taxes that are shown as
being due on the Returns referred to in the immediately preceding sentence.
There have been made available to Parent and its representatives true, correct
and complete copies of all Returns filed by or for Company and each Subsidiary
of Company (and any affiliated or unitary group of which any such person was a
member) in respect of any Taxes.
(ii) As of the date hereof, (A) there has been no
taxable period since 1992 for which a Return of Company or any of its
Subsidiaries has been or is being examined by the Internal Revenue Service (the
"IRS") or any other federal, state, local or foreign taxing authority, and (B)
except for alleged deficiencies which have been finally and irrevocably
resolved, Company has not received formal or informal notification that any
deficiency for any Taxes, the amount of which could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company,
has been or will be proposed, asserted or assessed against Company or any of its
Subsidiaries by any federal, state, local or foreign taxing authority or court
with respect to any period.
(iii) Neither Company nor any of its Subsidiaries is
a party to, is bound by or has any obligation under any tax sharing agreement or
similar agreement or arrangement with any person other than Company or any of
its Subsidiaries.
For purposes of this Agreement, "Taxes" shall mean all
federal, state, local, foreign income, property, sales, excise, employment,
payroll, franchise, withholding and other taxes, tariffs, charges, fees, levies,
imposts, duties, licenses or other assessments of every kind and description,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any federal, state, local or foreign taxing authority.
(q) BENEFIT PLANS. Section 4.1(q) of the Disclosure Schedule
sets forth a true, correct and complete list of all the employee benefit plans
(as that phrase is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) maintained or contributed to (or to
which Company has any obligation to contribute) for the benefit of any current
or former employee, officer or director of Company or any of its
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Subsidiaries ("Company ERISA Plans") and any other benefit or compensation plan,
program or arrangement maintained or contributed to (or to which Company has any
obligation to contribute) for the benefit of any current or former employee,
officer or director of Company or any of its Subsidiaries (Company ERISA Plans
and such other plans being referred to as "Company Plans"). Company has no
liability with respect to any plan, program or arrangement of the type described
in the preceding sentence other than the Company Plans.
Company has furnished or made available to Parent and its
representatives a true, correct and complete copy of every document pursuant to
which each Company Plan is established or operated (including any summary plan
descriptions), a written description of any Company Plan for which there is no
written document, all determination letters from the IRS with respect to any
Company Plan, all trust agreements, insurance contracts, and other documents
relating to the funding or payment of benefits under any Company Plan and the
six most recent annual reports, financial statements and actuarial valuations
with respect to each Company Plan, where applicable. Except as specified in
Section 4.1(q) of the Disclosure Schedule:
(i) none of the Company ERISA Plans is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA or a "multiple
employer plan" within the meaning of Section 210(a) of ERISA or Section 413(c)
of the Code;
(ii) no Company ERISA Plan has incurred an
accumulated funding deficiency within the meaning of Section 302 of ERISA or
Section 412 of the Code, nor has any waiver of the minimum funding standards of
Section 302 of ERISA and Section 412 of the Code been requested of or granted by
the Internal Revenue Service with respect to any Employee Plan, nor has any lien
in favor of any Employee Plan arisen under Section 412 of the Code or Section
302(f) of ERISA;
(iii) the Company has not been required to provide
security to any defined benefit plan pursuant to Section 401(a)(29) of the Code;
(iv) (A) the Pension Benefit Guaranty Corporation
("PBGC") has not instituted proceedings to terminate any Company ERISA Plan that
is a "defined benefit plan" within the meaning of Section 3(35) of ERISA of
Company or its Subsidiaries or members of their "controlled group" or to appoint
a trustee or administrator of such defined benefit plan, (B) no circumstances
exist that constitute grounds under Section 404 of ERISA entitling the PBGC to
institute any such proceedings, (C) no liability to the PBGC or under Title IV
of ERISA has been incurred or is expected with respect to any such defined
benefit plan that could result in liability to any member of the "controlled
group" or Parent other than for premiums pursuant to Section 4007 which are not
yet due and payable, and (D) no such defined benefit plan has been terminated by
Company, its Subsidiaries or members of their "controlled group";
(v) there has been no "reportable event" within the
meaning of Section 4043 and the regulations and interpretations thereunder which
has not been fully and accurately reported in a timely fashion, as required, or
which, whether or not reported, would constitute grounds for the PBGC to
institute termination proceedings with respect to any Company ERISA Plan;
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(vi) as of the last valuation date for which a
report has been completed, the fair market value of the assets of each Company
ERISA Plan that is a defined benefit plan exceeds the accumulated benefit
obligation thereunder (all determined in accordance with Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 87).
(vii) none of the Company Plans promises or provides
retiree health benefits or retiree life insurance benefits to any person except
as required by Section 4980B of the Code;
(viii) none of the Company Plans provides for
payment of a benefit, the increase of a benefit amount, the payment of a
contingent benefit or the acceleration of the payment or vesting of a benefit by
reason of the execution of this Agreement or the consummation of the
transactions contemplated by this Agreement;
(ix) neither Company nor any of its Subsidiaries has
an obligation to adopt, or is considering the adoption of, any new benefit or
compensation plan, program or arrangement or, except as required by law, the
amendment of an existing Company Plan;
(x) each Company ERISA Plan intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the IRS that it is so qualified and each trust created thereunder has
heretofore been determined by the IRS to be exempt from tax under the provisions
of Section 501(a) of the Code, and nothing has occurred since the date of any
such determination that could reasonably be expected to affect the qualified
status of such Company ERISA Plan or the tax-exempt status of any such trust;
(xi) each Company Plan has been operated in
accordance with its terms and the requirements of all applicable law, and no
prohibited transaction (for which an exemption does not apply) described in
Section 406 of ERISA or Section 4975 of the Code has occurred with respect to
any Company ERISA Plan;
(xii) neither Company nor any of its Subsidiaries or
members of their "controlled group" has incurred any direct or indirect
liability under ERISA or the Code in connection with the termination of,
withdrawal from or failure to fund, any Company ERISA Plan or other retirement
plan or arrangement, and no fact or event exists that could reasonably be
expected to give rise to any such liability;
(xiii) Company is not aware of any claims relating
to the Company Plans, other than routine claims for benefits;
(xiv) none of the Company Plans provides for
benefits or other participation therein, and Company has received no written
claims or demands for participation in or benefits under any Company Plan, by
any individual who is not a current or former employee of Company or a dependent
or other beneficiary of any such current or former employee;
(xv) with respect to each group health plan
benefitting any current or former employee of Company, its Subsidiaries or
members of their "controlled group," that is subject to Section 4980B of the
Code, or was subject to Section 162(k) of the Code, Company,
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its Subsidiaries and members of their "controlled group" have complied with (x)
the continuation coverage requirements of Section 4980B of the Code and Section
162(k) of the Code, as applicable, and Part 6 of Subtitle B of Title I of ERISA
and (y) the Health Insurance Portability and Accountability Act of 1996;
(xvi) with respect to each group health plan that is
subject to Section 1862(b)(1) of the Social Security Act, Company has complied
with the secondary payer requirements of Section 1862(b)(1) of such Act;
(xvii) no Company Plan is or at any time was funded
through a "welfare benefit fund" as defined in Section 419(e) of the Code, and
no benefits under any Company Plan are or at any time have been funded through a
voluntary employees' beneficiary association (within the meaning of Section
501(c)(9) of the Code) or a supplemental unemployment benefit plan (within the
meaning of Section 501(c)(17) of the Code);
(xviii) with respect to any insurance policy
providing funding for benefits under any Company Plan, (x) there is no liability
of Company in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability, nor would there be any such
liability if such insurance policy was terminated on the date hereof, and (y) no
insurance company issuing any such policy is in receivership, conservatorship,
liquidation or similar proceeding and, to the knowledge of Company, no such
proceedings with respect to any insurer are imminent;
provided, however, that the failure of the representations set forth in clauses
(iv), (x), (xi), (xii) and (xiii) to be true and correct shall not be deemed to
be a breach of any such representation unless such failures would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company;
(r) ABSENCE OF CHANGES IN BENEFIT PLANS. Except as disclosed
in the Filed SEC Documents or in Section 4.1(r) of the Disclosure Schedule,
since the date of the most recent audited financial statements included in the
Filed SEC Documents, neither Company nor any of its Subsidiaries has adopted or
agreed to adopt any collective bargaining agreement or any Company Plan.
(s) LABOR MATTERS.
(i) Except as specified in Section 4.1(s)(i) of the
Disclosure Schedule, neither Company nor any of its Subsidiaries is a party to
any employment, labor or collective bargaining agreement, and there are no
employment, labor or collective bargaining agreements which pertain to employees
of Company or any of its Subsidiaries. Company has heretofore made available to
Parent true, complete and correct copies of the agreements set forth in Section
4.1(s)(i) of the Disclosure Schedule, together with all amendments,
modifications, supplements or side letters affecting the duties, rights and
obligations of any party thereunder.
(ii) Except as specified in Section 4.1(s)(ii) of
the Disclosure Schedule, as of the date hereof, there are no (A) unfair labor
practice charges, grievances or complaints pending or threatened in writing by
or on behalf of any employee or group of employees of Company or any of its
Subsidiaries, or (B) complaints, charges or claims against
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Company or any of its Subsidiaries pending, or threatened in writing to be
brought or filed, with any Governmental Entity or arbitrator based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by Company or any of its
Subsidiaries.
(t) BROKERS. No broker, investment banker, financial advisor
or other person, other than WDR and Kohlberg & Company, L.L.C., the fees and
expenses of which will be paid by Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of Company.
(u) WRITTEN OPINION OF FINANCIAL ADVISOR. Company has received
the opinion of WDR on January 18, 1999 (a true, correct and complete copy of
which will be delivered to Parent by Company), to the effect that, based upon
and subject to the matters set forth therein and as of the date thereof, the
Offer Consideration and the Merger Consideration to be received by the holders
of Shares in the Offer and the Merger, respectively, is fair, from a financial
point of view, to such holders and such opinion has not been withdrawn or
modified.
(v) VOTING REQUIREMENTS. In the event that Section 253 of the
DGCL is inapplicable and unavailable to effectuate the Merger, the affirmative
vote of the holders of a majority of the outstanding Shares entitled to vote at
the Stockholders Meeting (as defined in Section 6.1(a)) with respect to the
adoption of this Agreement is the only vote of the holders of any class or
series of Company's capital stock or other securities required in connection
with the consummation by Company of the Merger and the other transactions
contemplated hereby to be consummated by Company. The restrictions contained in
Section 203 of the DGCL are not applicable to the transactions contemplated
hereby or the transactions contemplated by the Stockholder Agreement.
Section 4.2 REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB. Parent and Merger Sub jointly and severally represent and
warrant to Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Merger Sub has delivered to Company true,
complete and correct copies of its certificate of incorporation and bylaws, in
each case, as amended to the date of this Agreement.
(b) AUTHORITY; NONCONTRAVENTION. Parent and Merger Sub have
the requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly authorized by
the Executive Committee of the Board of Directors of Parent and the Board of
Directors of Merger Sub and have been duly approved by Parent as sole
stockholder of Merger Sub, and no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, assuming this Agreement
constitutes a valid and binding obligation of Company, constitutes a
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valid and binding obligation of each of Parent and Merger Sub, enforceable
against each such party in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby and compliance with the
provisions of this Agreement will not (i) conflict with any of the provisions of
the certificate of incorporation or bylaws of Parent or Merger Sub, in each case
as amended to the date of this Agreement, (ii) subject to the governmental
filings and other matters referred to in Section 4.2(c), conflict with, result
in a breach of or default (with or without notice or lapse of time, or both)
under, or give rise to a material obligation, a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture, or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which Parent or Merger Sub is a party or by which Parent or
Merger Sub or any of their respective assets is bound or affected, or (iii)
subject to the governmental filings and other matters referred to in Section
4.2(c), contravene any domestic or foreign law, rule or regulation, or any
order, writ, judgment, injunction, decree, determination or award currently in
effect, which, in the case of clauses (ii) and (iii) above, could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent.
(c) CONSENTS AND APPROVALS. No consent, approval or
authorization of, or declaration or filing with, or notice to, any Governmental
Entity which has not been received or made is required by or with respect to
Parent or Merger Sub in connection with the execution and delivery of this
Agreement by Parent or Merger Sub or the consummation by Parent or Merger Sub,
as the case may be, of any of the transactions contemplated hereby, except for
(i) the filing of premerger notification and report forms under the HSR Act,
(ii) the filing with the SEC of (A) the Schedule 14D-1, the information
statement required under Rule 14f-1 of the Exchange Act and (B) such reports
under the Exchange Act as may be required in connection with this Agreement or
the Stockholder Agreement and the transactions contemplated hereby and thereby,
(iii) the filing of the certificate of merger or, if permitted, a certificate of
ownership and merger with the Delaware State Secretary and appropriate documents
with the relevant authorities of other states in which Company is qualified to
do business, (iv) applicable environmental statutes, and (v) any other consents,
approvals, authorizations, filings or notices the failure to make or obtain
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
(d) CERTAIN INFORMATION. Subject to Company's fulfillment of
its obligations hereunder with respect thereto, the Offer Documents will contain
(or will be amended in a timely manner so as to contain) all information which
is required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law and will conform
in all material respects with the requirements of the Exchange Act and any other
applicable law, and the Offer Documents will not, at the respective times they
are filed with the SEC or published, sent or given to Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided, however, that no representation or warranty is hereby made
by Parent or Merger Sub with respect to any information supplied or to be
supplied by Company in writing for inclusion in, or with respect to Company
information derived from Company's public SEC filings which is included or
incorporated by reference in the Offer Documents. None of the
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information supplied or to be supplied by Parent or Merger Sub in writing for
inclusion or incorporation by reference in, or which may be deemed to be
incorporated by reference in, the Schedule 14D-9, the information statement
required under Rule 14f-1 of the Exchange Act or the Proxy Statement will, at
the respective times the Schedule 14D-9, the information statement required
under Rule 14f-1 of the Exchange Act and the Proxy Statement are filed with the
SEC or published, sent or given to Company's stockholders, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event with respect to Parent or Merger Sub, or with
respect to any information supplied by Parent or Merger Sub for inclusion in the
Schedule 14D-9, the information statement required under Rule 14f-1 of the
Exchange Act or the Proxy Statement, shall occur which is required to be
described in an amendment of, or a supplement to, such document, Parent or
Merger Sub shall so describe the event to Company.
(e) FINANCING. Parent and Merger Sub collectively have cash on
hand or credit facilities with financially responsible third parties, or a
combination thereof, in an aggregate amount sufficient to enable Parent and
Merger Sub to timely perform their obligations hereunder, including to (i) pay
in full (A) the aggregate Offer Consideration, (B) the aggregate Merger
Consideration and the aggregate Option Consideration, and (C) all fees and
expenses payable by Parent and Merger Sub in connection with this Agreement and
the transactions contemplated thereby and (ii) satisfy and discharge such of
Company's existing indebtedness as, pursuant to its terms, will become due and
payable prior to its stated maturity as a result of the consummation of the
transactions contemplated hereby.
(f) BROKERS. No broker, investment banker, financial advisor
or other person, other than Goldman, Sachs & Co., the fees and expenses of which
will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangement made by or on behalf of Parent or
Merger Sub.
(g) OPERATIONS OF MERGER SUB. Merger Sub (or any other
wholly-owned Subsidiary of Parent which may be used to effect the Offer and the
Merger contemplated by the Agreement) was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
ARTICLE V
CONDUCT OF BUSINESS OF COMPANY
Section 5.1 CONDUCT OF BUSINESS OF COMPANY. Except as expressly
provided for herein or in the Fiber Cement Agreement, during the period from the
date of this Agreement to the Effective Time, Company shall, and shall cause
each of its Subsidiaries to, act and carry on its business only in the ordinary
course of business consistent with past practice and, to the extent consistent
therewith, use reasonable efforts to preserve intact its current business
organizations, keep available the services of its current key officers and
employees and preserve the goodwill of those engaged in material business
relationships with Company. To that end,
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without limiting the generality of the foregoing, except as expressly provided
for in this Agreement or the Fiber Cement Agreement, Company shall not, and
shall not permit any of its Subsidiaries to, without the prior consent of
Parent:
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions (whether in cash, securities or other property)
in respect of, any of its outstanding capital stock (other than, with respect to
a Subsidiary of Company, to its corporate parent), (B) split, combine or
reclassify any of its outstanding capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its outstanding capital stock, or (C) purchase, redeem or
otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares, except, in the case of this
clause (C), for the acquisition of Shares from holders of Options in full or
partial payment of the exercise price payable by such holder upon exercise of
Options;
(ii) issue, sell, grant, pledge or otherwise
encumber any shares of its capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible or
exchangeable securities, other than upon the exercise of Options outstanding on
the date of this Agreement;
(iii) amend its certificate of incorporation, bylaws
or other comparable charter or organizational documents, except for any
amendment required in connection with the performance by Company of its
obligations under this Agreement, including but not limited to its obligations
under Section 1.4;
(iv) directly or indirectly acquire, make any
investment in, or make any capital contributions to, any person other than in
the ordinary course of business consistent with past practice;
(v) directly or indirectly sell, pledge or otherwise
dispose of or encumber any of its properties or assets that are material to its
business, except for sales, pledges or other dispositions or encumbrances in the
ordinary course of business consistent with past practice;
(vi) (A) incur any indebtedness for borrowed money
or guarantee any such indebtedness of another person, other than indebtedness
owing to or guarantees of indebtedness owing to Company or any direct or
indirect wholly owned Subsidiary of Company or (B) make any loans or advances to
any other person, other than to Company or to any direct or indirect wholly
owned Subsidiary of Company and other than routine advances to employees
consistent with past practice, except, in the case of clause (A), for borrowings
under existing credit facilities described in the Filed SEC Documents in the
ordinary course of business consistent with past practice;
(vii) enter into any compromise or settlement of, or
take any material action with respect to, any litigation, action, suit, claim,
proceeding or investigation other than the prosecution, defense and settlement
of routine litigation, actions, suits, claims, proceedings or investigations in
the ordinary course of business;
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(viii) grant or agree to grant to any officer,
employee or consultant any increase in wages or bonus, severance, profit
sharing, retirement, deferred compensation, insurance or other compensation or
benefits, or establish any new compensation or benefit plans or arrangements, or
amend or agree to amend any existing Company Plans, except as may be required
under existing agreements or by law or pursuant to the normal severance policies
or practices of Company or its Subsidiaries as in effect on the date of this
Agreement, or increases in salary or wages payable or to become payable in the
ordinary course of business consistent with past practice;
(ix) accelerate the payment, right to payment or
vesting of any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or benefits;
(x) enter into or amend any employment, consulting,
severance or similar agreement with any individual other than in the ordinary
course of business consistent with past practice, except with respect to new
hires of non-officer employees in the ordinary course of business consistent
with past practice;
(xi) adopt or enter into a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization or any agreement relating to
an Acquisition Proposal (as defined in Section 6.5(d));
(xii) make any tax election or settle or compromise
any income tax liability of Company or of any of its Subsidiaries involving on
an individual basis more than $100,000;
(xiii) make any change in any method of accounting
or accounting practice or policy, except as required by any changes in generally
accepted accounting principles;
(xiv) enter into any agreement, understanding or
commitment that restrains, limits or impedes Company's ability to compete with
or conduct any business or line of business;
(xv) plan, announce, implement or effect any
reduction in force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of employees of
Company or its Subsidiaries; or
(xvi) authorize any of, or commit or agree to take
any of, the foregoing actions in respect of which it is restricted by the
provisions of this Section 5.1.
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ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1 COMPANY STOCKHOLDERS MEETING; PREPARATION OF THE
PROXY STATEMENT; SHORT-FORM MERGER.
(a) As soon as practicable following the acceptance for
payment of and payment for Shares by Merger Sub in the Offer, if required by law
to consummate the Merger, Company shall take all action necessary, in accordance
with the DGCL, the Exchange Act and other applicable law and its certificate of
incorporation and bylaws to convene and hold a special meeting of the
stockholders of Company (the "Stockholders Meeting") for the purpose of
considering and voting upon this Agreement and to solicit proxies pursuant to
the Proxy Statement in connection therewith. Subject to the provisions of
Section 6.5(b), the Board of Directors of Company shall recommend that the
holders of Shares vote in favor of the adoption of this Agreement at the
Stockholders Meeting and shall cause such recommendation to be included in the
Proxy Statement. At the Stockholders Meeting, Parent and Merger Sub shall cause
all of the Shares owned by them to be voted in favor of the adoption of this
Agreement.
(b) As soon as practicable following the acceptance for
payment of and payment for Shares by Merger Sub in the Offer, if required by
applicable law in order to consummate the Merger, Company, in consultation with
Parent, shall prepare and file with the SEC a proxy statement or information
statement (together with any supplement or amendment thereto, the "Proxy
Statement") relating to the Stockholders Meeting in accordance with the Exchange
Act and the rules and regulations thereunder. Parent, Merger Sub and Company
will cooperate with each other in the preparation of the Proxy Statement.
Without limiting the generality or effect of the foregoing, Company shall use
its reasonable efforts to respond to all SEC comments with respect to the Proxy
Statement and, subject to compliance with SEC rules and regulations, to cause
the Proxy Statement to be mailed to Company's stockholders at the earliest
practicable date. Each of Parent and Merger Sub shall promptly supply to Company
in writing, for inclusion in the Proxy Statement, all information concerning
Parent and Merger Sub required under the Exchange Act and the rules and
regulations thereunder to be included in the Proxy Statement.
(c) Notwithstanding the foregoing clauses (a) and (b), in the
event that Merger Sub or any other wholly-owned Subsidiary of Parent shall
acquire at least 90% of the outstanding shares of Company Common Stock in the
Offer, the parties hereto shall, at the request of Merger Sub, take all
necessary actions to cause the Merger to become effective, as soon as
practicable after the expiration of the Offer, without a meeting of stockholders
of Company, in accordance with Section 253 of the DGCL.
(d) Parent shall: (i) cause Merger Sub promptly to submit this
Agreement for adoption by its sole stockholder; (ii) cause the outstanding
shares of capital stock of Merger Sub to be voted in favor of the adoption of
this Agreement; and (iii) cause to be taken all additional actions necessary for
Merger Sub to adopt this Agreement.
Section 6.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
Company shall, and shall cause each of its Subsidiaries to, afford to Parent and
its officers, employees, counsel, financial
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advisors and other representatives reasonable access (subject, however, to
existing confidentiality and similar non-disclosure obligations) during normal
business hours and upon reasonable notice during the period prior to the
Effective Time to all of Company's and its Subsidiaries' properties, books,
contracts, commitments, Returns, personnel and records and, during such period,
Company shall, and shall cause each of its Subsidiaries to, furnish as promptly
as practicable to Parent such information concerning Company's and its
Subsidiaries' businesses, properties, financial condition, operations and
personnel as Parent may from time to time reasonably request. Any such
investigation by Parent shall not affect the representations or warranties of
Company contained in this Agreement. Except as required by law, Parent and
Company will hold, and will cause its directors, officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any non-public information obtained from the other in
confidence to the extent required by, and in accordance with the provisions of,
the letter agreement, dated October 19, 1998, between Parent and Company with
respect to confidentiality and other matters.
Section 6.3 REASONABLE BEST EFFORTS. On the terms and subject to the
conditions set forth in this Agreement, each of the parties shall use its
reasonable best efforts to take, or cause to be taken, all actions, and do, or
cause to be done, and assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated hereby, including the satisfaction of the respective
conditions set forth in Article VII.
Section 6.4 PUBLIC ANNOUNCEMENTS. Parent and Merger Sub, on the one
hand, and Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release, SEC filing (including without limitation the Offer Documents, the
Schedule 14D-9 and the Proxy Statement) or other public statements with respect
to the transactions contemplated hereby, including the Offer and Merger, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, by court
process or by obligations pursuant to any listing agreement with any national
securities exchange.
Section 6.5 NO SOLICITATION; ACQUISITION PROPOSALS.
(a) During the period from and including the date of this
Agreement to and including the Effective Time, Company shall not, and shall not
authorize or permit any of its Subsidiaries, or any of its or their affiliates,
officers, directors, employees, agents or representatives (including without
limitation any investment banker, financial advisor, attorney or accountant
retained by Company or any of its Subsidiaries), to, directly or indirectly,
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any Acquisition Proposal
(as defined in Section 6.5(d)), or enter into or maintain or continue
discussions or negotiations with any person in furtherance of, or approve, agree
to, endorse or recommend, any Acquisition Proposal; provided, however, that
nothing in this Agreement shall prohibit the Board of Directors of Company,
prior to the time at which this Agreement shall have been adopted by Company's
stockholders, from furnishing information to, or entering into, maintaining or
continuing discussions or negotiations with, any person that makes a bona fide
written Acquisition Proposal after the date hereof under circumstances not
involving any breach of the provisions of this Section 6.5(a) if, and to the
extent that, (i) the
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Board of Directors of Company, after consultation with and based upon the advice
of independent legal counsel, determines in good faith that the failure to take
such action would constitute a breach by the Board of Directors of Company of
its fiduciary duties to Company's stockholders under applicable law and (ii)
prior to furnishing any non-public information to such person, Company receives
from such person an executed confidentiality agreement with provisions no less
favorable to Company than the letter agreement relating to the furnishing of
confidential information of Company to Parent referred to in the last sentence
of Section 6.2. Company shall promptly (and, in any event within 24 hours)
notify Parent after receipt of any Acquisition Proposal or any request for
information relating to Company or any of its Subsidiaries or for access to the
properties, books or records of Company or any of its Subsidiaries by any person
who has informed Company that such person is considering making, or has made, an
Acquisition Proposal (which notice shall identify the person making, or
considering making, such Acquisition Proposal and shall set forth the material
terms of any Acquisition Proposal received), and Company shall keep Parent
informed in reasonable detail of the terms, status and other pertinent details
of any such Acquisition Proposal.
(b) During the period from and including the date of this
Agreement to and including the Effective Time, neither the Board of Directors of
Company nor any committee thereof shall withdraw or modify, or propose publicly
to withdraw or modify, in a manner adverse to Parent or Merger Sub, the approval
of this Agreement or the transactions contemplated hereby or the recommendations
referred to in Section 1.3 or the penultimate sentence of Section 6.1(a);
provided, however, that nothing contained in this Agreement will prohibit the
Board of Directors of Company from withdrawing or modifying the recommendations
referred to in Section 1.3 or the penultimate sentence of Section 6.1(a)
following the receipt by Company after the date hereof, under circumstances not
involving any breach of the provisions of Section 6.5(a), of an Acquisition
Proposal if, and to the extent that, the Board of Directors of Company, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that the failure to take such action would constitute a
breach by the Board of Directors of Company of its fiduciary duties to Company's
stockholders under applicable law; and provided further that nothing contained
in this Agreement will prohibit the Board of Directors of Company from, to the
extent applicable, complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Acquisition Proposal.
(c) Subject to Company's right to terminate this Agreement
pursuant to Section 8.1(a)(vi), nothing in this Section 6.5, and no action taken
by the Board of Directors of Company pursuant to this Section 6.5, will permit
Company to enter into any agreement providing for any transaction contemplated
by an Acquisition Proposal for as long as this Agreement remains in effect.
(d) For purposes of this Agreement, "Acquisition Proposal"
means an inquiry, offer, proposal or other indication of interest regarding any
of the following (other than the transactions provided for in this Agreement,
the Stockholder Agreement or the Fiber Cement Agreement involving Company: (i)
any merger, consolidation, share exchange, recapitalization, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of all or substantially all the
assets of Company and its Subsidiaries, taken as a whole, in a single
transaction or series of related transactions; (iii) any tender offer or
exchange offer for or other acquisition of 20% percent or more of the
outstanding
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shares of capital stock of Company or the filing of a registration statement
under the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
Section 6.6 CONSENTS, APPROVALS AND FILINGS. Upon the terms and subject
to the conditions hereof, each of the parties hereto shall (a) make promptly its
respective filings, and thereafter make any other required submissions, under
the HSR Act and the Exchange Act, with respect to the Offer, the Merger and the
other transactions contemplated hereby and (b) use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Offer, the Merger and the other
transactions contemplated hereby, including without limitation using its
reasonable best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts with Company and its Subsidiaries as are necessary for the
consummation of the Offer, the Merger and the other transactions contemplated
hereby and to fulfill the conditions to the Offer and the Merger; provided,
however, that in no event shall Parent or any of its Subsidiaries be required to
agree or commit to divest, hold separate, offer for sale, abandon, limit its
operation of or take similar action with respect to any assets (tangible or
intangible) or any business interest of it or any of its Subsidiaries (including
without limitation the Surviving Corporation after consummation of the Offer or
the Merger) in connection with or as a condition to receiving the consent or
approval of any Governmental Entity (including without limitation under the HSR
Act). In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such action.
Section 6.7 EMPLOYEE BENEFIT MATTERS.
(a) From and after the Effective Time, Parent shall, and shall
cause its Subsidiaries (including the Surviving Corporation) to, honor and
provide for payment of all accrued obligations and benefits, including but not
limited to any bonus payments earned in respect of fiscal 1998 but not yet paid,
under all Company Plans and employment or severance agreements between Company
and persons who are or had been employees of Company or any of its Subsidiaries
at or prior to the Effective Time ("Covered Employees"), all in accordance with
their respective terms.
(b) From and after the Effective Time, Parent shall, and shall
cause its Subsidiaries (including the Surviving Corporation) to, provide Covered
Employees who remain in the employ of Parent or any such Subsidiary employee
benefits that are reasonably comparable to the employee benefits provided to
similarly situated employees of Parent or any such Subsidiary who are not
Covered Employees. To the extent that Covered Employees are included in any
benefit plan of Parent or its Subsidiaries, Parent agrees that the Covered
Employees shall receive credit under such plan for service prior to the
Effective Time with Company and its Subsidiaries to the same extent such service
was counted under similar Company Plans for purposes of eligibility, vesting,
eligibility for retirement (but not for benefit accrual) and, with respect to
vacation, disability and severance, benefit accrual. To the extent that Covered
Employees are included in any medical, dental or health plan other than the plan
or plans they participated in at the Effective Time, no such plans shall include
pre-existing
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condition exclusions, except to the extent such exclusions were applicable under
the similar Company Plan at the Effective Time, and all such plans shall provide
credit for any deductibles and co-payments applied or made with respect to each
Covered Employee in the calendar year of the change.
(c) Notwithstanding anything in this Agreement to the
contrary, from and after the Effective Time, the Surviving Corporation will have
sole discretion over the hiring, promotion, retention, firing and other terms
and conditions of the employment of employees of the Surviving Corporation.
Except as otherwise provided in this Section 6.7, nothing herein shall prevent
Parent or the Surviving Corporation from amending or terminating any Company
Plan in accordance with its terms.
Section 6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) The provisions with respect to indemnification set forth
in the certificate of incorporation and bylaws of Merger Sub as in effect on the
date of this Agreement (true, correct and complete copies of which have been
provided to Company) shall be substantially identical to the corresponding
indemnification provisions, if any, contained in the certificate of
incorporation and by-laws of Company and, for a period of six years after the
Effective Time, shall not be amended, repealed or otherwise modified in any
manner that would adversely affect the rights thereunder of individuals who at
any time prior to the Effective Time were directors or officers of Company in
respect of actions or omissions occurring at or prior to the Effective Time
(including without limitation the transactions contemplated by this Agreement),
unless such modification is required by law.
(b) From and after the Effective Time, Parent shall, or shall
cause the Surviving Corporation to, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer or director of Company (the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including reasonable attorneys' fees and expenses), liabilities or judgments or
amounts that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) incurred in connection with
any threatened or actual action, suit or proceeding based in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director or officer of Company ("Indemnified Liabilities"), including all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, this Agreement or the transactions contemplated hereby, in each
case, to the full extent that a corporation is permitted under the DGCL to
indemnify its own directors or officers, as the case may be (and shall pay
expenses in advance of the final disposition of any such action, suit or
proceeding to each Indemnified Party to the full extent permitted by the DGCL,
upon receipt of an undertaking by or on behalf of such Indemnified Party to
repay such amount if it shall ultimately be determined that such person is not
entitled to be so indemnified). In the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Party, the
indemnifying party shall have a right to assume and direct all aspects of the
defense thereof, including settlement, and the Indemnified Party shall cooperate
in the vigorous defense of any such matter. The Indemnified Party shall have a
right to participate in (but not control) the defense of any such matter with
its own counsel and at its own expense. The indemnifying party shall not settle
any such matter unless (i) the Indemnified Party gives prior written consent,
which shall not be unreasonably withheld, or (ii) the terms of the settlement
provide that the
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Indemnified Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the Indemnified
Party and the settlement provides the Indemnified Parties with a full release
and discharges all rights against the Indemnified Party with respect to such
matter. In no event shall the indemnifying party be liable for any settlement
effected without its prior written consent. Any Indemnified Party wishing to
claim indemnification under this Section 6.8(b), upon learning of any such
claim, action, suit, proceeding or investigation, shall notify Parent and the
Surviving Corporation (but the failure so to notify shall not relieve the
indemnifying party from any liability which it may have under this Section
6.8(b) except to the extent such failure prejudices such indemnifying party),
and shall deliver to Parent and the Surviving Corporation the undertaking
contemplated by Section 145(e) of the DGCL. The Indemnified Parties as a group
will be represented by a single law firm with respect to each such matter unless
there is, under applicable standards of professional conduct (as determined in
good faith by counsel to the Indemnified Parties), a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The rights
to indemnification under this Section 6.8(b) shall continue in full force and
effect for a period of four years from the Effective Time; provided, however,
that all rights to indemnification in respect of any Indemnified Liabilities
asserted or made within such period shall continue until the disposition of such
Indemnified Liabilities.
(c) For a period commencing at the Effective Time and expiring
on the sixth anniversary of the Effective Time, Parent shall cause to be
maintained in effect policies of directors' and officers' liability insurance,
for the benefit of those persons who are covered by Company's directors' and
officers' liability insurance policies at the Effective Time, providing coverage
with respect to matters occurring prior to the Effective Time that is at least
equal to the coverage provided under Company's current directors' and officers'
liability insurance policies, to the extent that such liability insurance can be
maintained at an annual cost to Parent not greater than $350,000; provided that
if such insurance cannot be so maintained at such cost, Parent shall maintain as
much of such insurance as can be so maintained at a cost equal to $350,000.
(d) The provisions of this Section 6.8 (i) are intended to be
for the benefit of, and will be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives and (ii) are in addition (without
duplication) to any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction or written waiver on or prior to the Closing Date of the
following conditions:
(a) COMPLETION OF THE OFFER. Merger Sub shall have accepted
for payment and paid for all Shares validly tendered in the Offer and not
withdrawn; provided, however, that neither Parent nor Merger Sub may invoke this
condition if Merger Sub shall have failed to purchase Shares so tendered and not
withdrawn in violation of the terms of this Agreement or the Offer.
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(b) STOCKHOLDER APPROVAL. This Agreement shall have been
adopted by the affirmative vote of the holders of the requisite number of shares
of capital stock of Company if such vote is required pursuant to Company's
certificate of incorporation, the DGCL or other applicable law.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
invoking this condition, the party so invoking this condition shall have
complied with its obligations under Section 6.6.
(d) HSR ACT. All necessary waiting periods under the HSR Act
applicable to the Merger shall have expired or been earlier terminated.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION.
(a) This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding adoption thereof by the stockholders of Company, in any one of
the following circumstances:
(i) By mutual written consent duly authorized by the
Boards of Directors of Parent and Company, subject to Section 1.4(b).
(ii) By Parent or Company, if Shares have not been
purchased by Merger Sub pursuant to the Offer on or before April 30, 1999,
otherwise than as a result of any material breach of any provision of this
Agreement by the party seeking to effect such termination.
(iii) By Parent or Company if, as the result of the
failure of any of the conditions set forth in Exhibit A to this Agreement, the
Offer shall have expired or Merger Sub shall have terminated the Offer in
accordance with its terms without Merger Sub having purchased any Shares
pursuant to the Offer; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.1(a)(iii) shall not be available to any
party whose breach of or failure to fulfill its obligations under this Agreement
resulted in the failure of any such condition;
(iv) By Parent or Company, if any court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger or the acceptance for payment of, or payment for, the
Shares pursuant to the Offer and such order, decree or ruling or other action
shall have become final and nonappealable, provided that the party seeking to
terminate this Agreement shall have used its reasonable best efforts to remove
or lift such order, decree or ruling;
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(v) By Parent, if the Board of Directors of Company
or any committee thereof shall have (A) withdrawn or modified in a manner
adverse to Parent or Merger Sub, or publicly taken a position materially
inconsistent with, its approval or recommendation of this Agreement, the Offer,
the Merger or the other transactions contemplated hereby, (B) approved, endorsed
or recommended an Acquisition Proposal, or (C) resolved or publicly disclosed
any intention to do any of the foregoing;
(vi) By Company, following the receipt by Company
after the date hereof, under circumstances not involving any breach of the
provisions of Section 6.5(a), of a bona fide written Acquisition Proposal, if
the Board of Directors of Company, after consultation with and based upon the
advice of independent legal counsel, shall have determined in good faith that
the failure to terminate this Agreement would constitute a breach by the Board
of Directors of Company of its fiduciary duties to Company's stockholders under
applicable law; provided that (A) Company has complied with all provisions of
Section 6.5, including the notice provisions therein, (B) Company enters into a
definitive agreement providing for the transactions contemplated by such
Acquisition Proposal immediately following such termination, and (C) such
termination shall not be effective until Company shall have paid to Parent the
Fee (as defined below) in accordance with provisions of Section 8.1(b); or
(vii) by Company if Merger Sub or Parent shall have
(A) failed to commence the Offer within five business days after the public
announcement by Parent and Company of this Agreement, (B) failed to pay for the
Shares pursuant to the Offer in accordance with this Agreement, or (C) breached
in any material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach
described in this clause (C) is incapable of being cured or has not been cured
within 20 days after the giving of written notice to Parent or Merger Sub, as
applicable, except such breaches described in this clause (C) as individually or
in the aggregate would not reasonably be expected to materially and adversely
affect the ability of Parent or Merger Sub to complete the Offer or the Merger
on the terms and subject to the conditions of this Agreement.
(b) If this Agreement is terminated pursuant to
Section 8.1(a)(v) or (vi), then, in such event, Company shall pay to Parent a
fee in the amount of $5,000,000 (the "Fee"), which amount shall be payable in
immediately available funds (i) promptly (and in any event within three business
days) after such termination, in the case of termination pursuant to Section
8.1(a)(v) or (ii) prior to or concurrently with such termination, in the case of
termination pursuant to Section 8.1(a)(vi).
Section 8.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1(a) hereof, this Agreement
(except for the provisions of Section 4.1(t), Section 4.2(f), Section 6.2,
Section 6.4, paragraph (b) of Section 8.1, this Section 8.2 and Article IX)
shall forthwith become void and cease to have any force or effect, without any
liability on the part of any party hereto or any of its affiliates; provided,
however, that nothing in this Section 8.2 shall relieve any party to this
Agreement of liability for any willful or intentional breach of this Agreement.
Section 8.3 AMENDMENT. Subject to any applicable provisions of the DGCL
and Section 1.4(b), at any time prior to the Effective Time, the parties hereto
may modify or amend this Agreement by written agreement executed and delivered
by duly authorized officers of the
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respective parties; provided, however, that after adoption of this Agreement at
the Stockholders Meeting, no amendment shall be made which would reduce the
amount or change the type of consideration into which each Share shall be
converted upon consummation of the Merger. This Agreement may not be modified or
amended except by written agreement executed and delivered by duly authorized
officers of each of the respective parties.
Section 8.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement, or (c)
subject to Section 8.3, waive compliance with any of the agreements or
conditions of the other parties contained in this Agreement, in each case
subject to Section 1.4(b). Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in a written instrument
executed and delivered by a duly authorized officer on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
Section 8.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER.
A termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section
8.4 shall, in order to be effective, require in the case of Parent, Merger Sub
or Company, action by its Board of Directors or the duly authorized designee of
its Board of Directors.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 9.2 FEES AND EXPENSES. Whether or not the Merger shall be
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
Section 9.3 DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "business day" means any day other than Saturday, Sunday
or any other day on which banks in the City of New York are required or
permitted to close;
(c) "Disclosure Schedule" means the disclosure schedule
delivered by Company to Parent simultaneously with the execution of this
Agreement;
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(d) "Environmental Laws" means any federal, state or local law
relating to: (i) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (ii) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (iii) otherwise relating to
pollution of the environment or the protection of human health;
(e) "Fiber Cement Agreement" means the Asset Purchase
Agreement, dated December 21, 1998, among Company, ABTco, Inc. and CertainTeed
Corporation, including all its schedules and exhibits, as the same may be
amended from time to time with Parent's prior written consent;
(f) "Hazardous Substances" means: (i) those materials,
pollutants and/or substances defined in or regulated under the following federal
statutes and their state counterparts, as each may be amended from time to time,
and all regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking
Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and
Rodenticide Act and the Clean Air Act; (ii) petroleum and petroleum products
including crude oil and any fractions thereof; (iii) natural gas, synthetic gas
and any mixtures thereof; (iv) radon; (v) any other contaminant; and (vi) any
materials, pollutants and/or substance with respect to which any Governmental
Entity requires environmental investigation, monitoring, reporting or
remediation;
(g) "knowledge" means the actual knowledge of any executive
officer of Company or Parent, as the case may be;
(h) "Liens" means, collectively, all pledges, claims, liens,
charges, mortgages, conditional sale or title retention agreements,
hypothecations, collateral assignments, security interests, easements and other
encumbrances of any kind or nature whatsoever;
(i) a "Material Adverse Effect" with respect to any person
means a material adverse effect on (i) the ability of such person to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby or (ii) the assets, liabilities (actual or contingent), financial
condition, results of operations or business of such person and its Subsidiaries
taken as a whole, excluding any change or development resulting from (x) events
adversely affecting any principal markets served by the business of Company
generally or affecting the hardboard siding industry generally which do not have
a disproportionate adverse effect on Company or its Subsidiaries, (y) general
economic conditions, including changes in the economies of any of the
jurisdictions in which Company or any of its Subsidiaries conduct business which
do not have a disproportionate adverse effect on Company or its Subsidiaries, or
(z) this Agreement, the Stockholder Agreement or any transaction contemplated
hereby or thereby;
(j) a "Permitted Lien" has the meaning set forth in
Section 4.1(h)(ii) hereof;
(k) a "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity;
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(l) "Principal Stockholders" means Kohlberg
Associates, L.P., KABT Acquisition Company, L.P. and George T. Brophy;
(m) a "Subsidiary" of any person means any other person of
which (i) the first mentioned person or any Subsidiary thereof is a general
partner, (ii) voting power to elect a majority of the board of directors or
others performing similar functions with respect to such other person is held by
the first mentioned person and/or by any one or more of its Subsidiaries, or
(iii) at least 50% of the equity interests of such other person is, directly or
indirectly, owned or controlled by such first mentioned person and/or by any one
or more of its Subsidiaries.
Section 9.4 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to Parent or to Merger Sub, to
Louisiana-Pacific Corporation
111 SW Fifth Avenue, #-4200
Portland, Oregon 97204
Attention: Mr. Mark Suwyn
Chairman and Chief Executive Officer
Telecopy: (503) 821-5322
with a copy (which shall not constitute notice) to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
32nd Floor
New York, New York, 10022
Attention: Robert A. Profusek, Esq.
Mark E. Betzen, Esq.
Telecopy: (212) 755-7306
(ii) if to Company, to
ABT Building Products Corporation
One Neenah Center, Suite 600
Neenah, Wisconsin 54956
Attention: Mr. George T. Brophy
Chairman and Chief Executive Officer
Telecopy: (920) 791-0370
36
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with a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Bruce A. Gutenplan, Esq.
Telecopy: (212) 757-3990
Section 9.5 INTERPRETATION. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
Section 9.6 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement
constitutes the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (except for the letter agreement referenced in
the last sentence of Section 6.2). Except to the extent set forth in Section
6.8, this Agreement is not intended to confer upon any person (including without
limitation any employees or former employees of Company), other than the parties
hereto, any rights or remedies.
Section 9.7 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment without
such prior written consent shall be null and void, except that Parent and/or
Merger Sub may assign this Agreement to any direct or indirect wholly owned
Subsidiary of Parent without the prior consent of Company; provided that Parent
and/or Merger Sub, as the case may be, shall remain liable for all of its
obligations under this Agreement. 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.
Section 9.9 ENFORCEMENT. Irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware), this being in
addition to any other remedy to which they are entitled at law or in equity.
Each of the parties hereto (i) shall submit itself to the personal jurisdiction
of the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware) in the event any
dispute arises out of this Agreement or
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any of the transactions contemplated hereby, (ii) shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, and (iii) shall not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than the Court of
Chancery in and for New Castle County in the State of Delaware (or, if such
court lacks subject matter jurisdiction, any appropriate state or federal court
in New Castle County in the State of Delaware).
Section 9.10 SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 9.11 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same instrument
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
[signature page follows]
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IN WITNESS WHEREOF, Parent, Merger Sub and Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
LOUISIANA-PACIFIC CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
STRIPER ACQUISITION, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
ABT BUILDING PRODUCTS CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
39
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EXHIBIT A
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to them in the Agreement and Plan of Merger among the
Parent, Merger Sub and Company to which this Exhibit A is attached (the
"Agreement").
CONDITIONS TO THE OFFER. Notwithstanding any other provision of the
Offer, Merger Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Merger Sub's obligation to pay for or return tendered
Shares promptly after expiration or termination of the Offer), to pay for any
Shares tendered, and may postpone the acceptance for payment or, subject to the
restrictions referred to above, payment for any Shares tendered, and, subject to
the terms of the Agreement, may amend or terminate the Offer (whether or not any
Shares have theretofore been purchased or paid for pursuant to the Offer) if (i)
there shall not have been validly tendered and not withdrawn prior to the time
the Offer shall otherwise expire a number of Shares (together with any Shares
then owned by Parent or any of its Subsidiaries) which constitutes a majority of
the Shares outstanding on a fully-diluted basis on the date of purchase (the
"Minimum Share Condition") ("on a fully-diluted basis" having the following
meaning, as of any date: the number of Shares outstanding (excluding Shares held
as treasury stock by Company or any of its Subsidiaries), together with the
number of Shares Company is then required to issue pursuant to obligations
outstanding at that date under employee stock option or other benefit plans or
otherwise other than unvested Options), (ii) any applicable waiting periods
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, or (iii) if at any time on or after the date of the
Agreement and before acceptance for payment of, or payment for, the Shares, any
of the following events shall have occurred and remain in effect:
(a) any United States or Canadian governmental entity or
authority or any United States or Canadian court of competent
jurisdiction in the United States or in Canada shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order which is in effect
and which (1) materially restricts, prevents or prohibits consummation
of the transactions contemplated by the Agreement, including the Offer
or the Merger, (2) prohibits or limits materially the ownership or
operation by Parent or any of its Subsidiaries of all or any material
portion of the business or assets of Company and its Subsidiaries taken
as a whole or compels Company, Parent, or any of their Subsidiaries to
dispose of or hold separate all or any material portion of the business
or assets of Company and its Subsidiaries taken as a whole, or (3)
imposes material limitations on the ability of Parent, Merger Sub or
any other Subsidiary of Parent to exercise effectively full rights of
ownership of any Shares, including without limitation the right to vote
any Shares acquired by Merger Sub pursuant to the Offer or otherwise on
all matters properly presented to Company's stockholders, including
without limitation the approval and adoption of the Agreement and the
transactions contemplated thereby;
(b) there shall have been instituted or pending any action or
proceeding before any United States or Canadian court or governmental
entity or authority by any United
A-1
<PAGE>
States or Canadian governmental entity or authority seeking any order,
decree or injunction having any effect set forth in (a) above;
(c) the representations and warranties of Company contained in
the Agreement (without giving effect to the materiality qualifications
contained therein) shall not be true and correct as of the expiration
date of the Offer (as the same may be extended from time to time) as
though made on and as of such date (except for representations and
warranties made as of a specified date, which need be true and correct
only as of the specified date), except for any breach or breaches which
,individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Company (provided that this exception
shall not apply to the representations and warranties of Company
relating to the capital structure of Company);
(d) Company shall not have performed or complied in all
material respects with its obligations under the Agreement to be
performed or complied with by it and such failure continues until the
later of (A) fifteen days after actual receipt by it of written notice
from Merger Sub setting forth in detail the nature of such failure or
(B) the expiration date of the Offer;
(e) there shall have occurred any material adverse change, or
any development that is reasonably likely to result in a material
adverse change in the assets, liabilities (actual or contingent),
results of operations or business of Company and its Subsidiaries taken
as a whole, excluding any change or development resulting from (A)
events adversely affecting any principal markets served by the business
of Company generally or affecting the hardboard siding industry
generally which do not have a disproportionate adverse effect on
Company or its Subsidiaries, (B) general economic conditions, including
changes in the economies of any of the jurisdictions in which Company
or any of its Subsidiaries conduct business which do not have a
disproportionate adverse effect on Company or its Subsidiaries, or (C)
this Agreement, the Stockholder Agreement or any transaction
contemplated hereby or thereby;
(f) the Merger Agreement shall have been terminated in
accordance with its terms;
(g) the Board of Directors of Company or any committee thereof
shall have (A) withdrawn or modified in a manner adverse to Parent or
Merger Sub, or publicly taken a position materially inconsistent with,
its approval or recommendation of this Agreement, the Offer, the Merger
or the other transactions contemplated hereby, (B) approved, endorsed
or recommended an Acquisition Proposal, or (C) resolved or publicly
disclosed any intention to do any of the foregoing; or
(h) there shall have occurred (i) any general suspension of,
or limitation on prices (other than suspensions or limitations
triggered by price fluctuations on a trading day) for, trading in
securities on any national securities exchange in the United States,
(ii) the declaration of a banking moratorium or any limitation or
suspension of payments in respect of the extension of credit by banks
or other lending institutions in the United States, (iii) any
commencement of war, armed hostilities or other international or
national calamity directly involving the United States having a
significant adverse effect on the
A-2
<PAGE>
functionality of financial markets in the United States, or (iv) in the
case of any of the foregoing, existing at time of the commencement of
the Offer, a material acceleration or worsening thereof.
The foregoing conditions (other than the Minimum Share Condition) are
for the sole benefit of Merger Sub and its affiliates and may be asserted by
Merger Sub regardless of the circumstances giving rise to any such condition or
may be waived by Merger Sub, in whole or in part, from time to time in its sole
discretion, except as otherwise provided in the Agreement. The failure by Merger
Sub at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
and may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered Shares not theretofore accepted for payment shall forthwith be
returned to the tendering stockholders.
A-3
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EXHIBIT 2
EXECUTION COPY
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of January 19, 1999 (this
"Agreement"), is made and entered into among Louisiana-Pacific Corporation, a
Delaware corporation ("Parent"), Striper Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of Parent ("Merger Sub"), and Kohlberg
Associates, L.P., KABT Acquisition Company, L.P. and George T. Brophy (each, a
"Stockholder" and, collectively, the "Stockholders").
RECITALS:
A. Parent, Merger Sub and ABT Building Products Corporation, a Delaware
corporation ("Company"), propose to enter into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), pursuant to which Merger
Sub will merge with and into Company (the "Merger") on the terms and subject to
the conditions set forth in the Merger Agreement. Except as otherwise defined
herein, terms used herein with initial capital letters have the respective
meanings ascribed thereto in the Merger Agreement.
B. As of the date hereof, each Stockholder beneficially owns and is
entitled to dispose of (or to direct the disposition of) and to vote (or to
direct the voting of) the number of Shares set forth opposite such Stockholder's
name on Schedule A hereto (such Shares, together with any other Shares the
beneficial ownership of which is acquired by such Stockholder during the period
from and including the date hereof through and including the date on which this
Agreement is terminated pursuant to Section 6.2 hereof, are collectively
referred to herein as such Stockholder's "Subject Shares").
C. As a condition and inducement to their willingness to enter into the
Merger Agreement, Parent and Merger Sub have requested that each Stockholder
agree, and each Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
TENDER OF SHARES
Section 1.1 AGREEMENT TO TENDER SHARES. Each Stockholder shall cause to
be validly tendered (and not withdrawn) pursuant to and in accordance with the
terms of the Offer (provided that if the Offer is amended in any manner set
forth in Section 1.1(b) of the Merger Agreement as requiring the consent of
Company, the Stockholders shall not be obligated to tender hereunder unless the
amendment is made with their prior written approval which shall not be
unreasonably withheld), not later than the tenth business day after commencement
of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2
under the Exchange Act, all of such Stockholder's Subject Shares. Each
Stockholder hereby acknowledges that Merger Sub's obligation to accept for
payment and pay for Shares (including such Stockholder's Subject
<PAGE>
Shares) pursuant to the Offer is subject to the terms and conditions of the
Offer set forth in the Merger Agreement. For all of the Subject Shares validly
tendered in the Offer and not withdrawn, the Stockholders will be entitled to
receive the highest price paid by Merger Sub in the Offer.
ARTICLE II
VOTING OF SHARES
Section 2.1 AGREEMENT TO VOTE SHARES. At any meeting of the
stockholders of Company called to consider and vote upon the adoption of the
Merger Agreement (and at any and all postponements and adjournments thereof),
and in connection with any action to be taken in respect of the adoption of the
Merger Agreement by written consent of stockholders of Company, each Stockholder
shall vote or cause to be voted (including by written consent, if applicable)
all of such Stockholder's Subject Shares in favor of the adoption of the Merger
Agreement and in favor of any other matter necessary for the consummation of the
transactions contemplated by the Merger Agreement and considered and voted upon
at any such meeting or made the subject of any such written consent, as
applicable. At any meeting of the stockholders of Company called to consider and
vote upon any Adverse Proposal (as hereinafter defined) (and at any and all
postponements and adjournments thereof), and in connection with any action to be
taken in respect of any Adverse Proposal by written consent of stockholders of
Company, each Stockholder shall vote or cause to be voted (including by written
consent, if applicable) all of such Stockholder's Subject Shares against such
Adverse Proposal. For purposes of this Agreement, the term "Adverse Proposal"
means any (a) Acquisition Proposal, (b) proposal or action that would reasonably
be expected to result in a breach of any covenant, representation or warranty of
Company set forth in the Merger Agreement, or (c) proposal or action that is
intended or would reasonably be expected to impede, interfere with, delay or
materially and adversely affect the Merger or any of the other transactions
contemplated by the Merger Agreement or this Agreement.
Section 2.2 IRREVOCABLE PROXY.
(a) GRANT OF PROXY. EACH STOCKHOLDER HEREBY APPOINTS PARENT
AND ANY DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, SUCH STOCKHOLDER'S PROXY
AND ATTORNEY-IN-FACT PURSUANT TO THE PROVISIONS OF SECTION 212 OF THE DELAWARE
GENERAL CORPORATION LAW, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, TO
VOTE OR ACT BY WRITTEN CONSENT WITH RESPECT TO SUCH STOCKHOLDER'S SUBJECT SHARES
IN ACCORDANCE WITH SECTION 2.1 HEREOF. THIS PROXY IS GIVEN TO SECURE THE
PERFORMANCE OF THE DUTIES OF SUCH STOCKHOLDER UNDER THIS AGREEMENT. EACH
STOCKHOLDER AFFIRMS THAT THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE. EACH STOCKHOLDER SHALL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH
OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY.
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(b) OTHER PROXIES REVOKED. Each Stockholder represents that
any proxies heretofore given in respect of such Stockholder's Subject Shares are
not irrevocable, and that all such proxies are hereby revoked.
ARTICLE III
PURCHASE OPTION
Section 3.1 GRANT OF OPTION. Each Stockholder hereby grants to Parent
an irrevocable option (each, an "Option" and, collectively, the "Options") to
purchase such Stockholder's Subject Shares on the terms and subject to the
conditions set forth herein at a purchase price per share equal to $15.00 or the
highest per share price paid in the Offer (the "Purchase Price"). If (i) the
Offer is consummated but (whether due to improper tender or withdrawal of
tender) Merger Sub has not accepted for payment and paid for all of the Subject
Shares, or (ii) the Merger Agreement is terminated (otherwise than pursuant to
Section 8.1(a)(i) thereof or pursuant to Section 8.1(a)(iv) thereof under
circumstances in which Company is entitled to so terminate the Merger Agreement)
in accordance with its terms for reasons other than the failure of Parent or
Merger Sub to fulfill their respective obligations under the Merger Agreement,
the Options shall, in any such case, become exercisable (in whole but not in
part) upon the first to occur of any such event and remain exercisable (in whole
but not in part) until the date that is 30 days after the date of the occurrence
of an event in clause (i) above, or the date that is 90 days after the date of
the occurrence of the event in clause (ii) above (the applicable period of
exercisability being the "Option Period").
Section 3.2 EXERCISE OF OPTION. (a) Parent may exercise all of the
Options, in whole but not in part, at any time or from time to time during the
Option Period. Notwithstanding anything in this Agreement to the contrary,
Parent shall be entitled to purchase all Subject Shares in respect of which it
shall have exercised an Option in accordance with the terms hereof prior to the
expiration of the Option Period, and the expiration of the Option Period shall
not affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such expiration.
(b) If Parent wishes to exercise an Option, it shall deliver
to the applicable Stockholder (each a "Selling Stockholder") a written notice
(an "Exercise Notice") to that effect which specifies a date (an "Option Closing
Date") not earlier than three business days after the date such Exercise Notice
is delivered for the consummation of the purchase and sale of such Subject
Shares (an "Option Closing"). If the Option Closing cannot be effected on the
Option Closing Date specified in the Exercise Notice by reason of any applicable
judgment, decree, order, law or regulation, or because any applicable waiting
period under the HSR Act shall not have expired or been terminated, (i) the
Stockholders shall promptly take all such actions as may be requested by Parent,
and shall otherwise fully cooperate with Parent, to cause the elimination of all
such impediments to the Option Closing and (ii) the Option Closing Date
specified in the Exercise Notice shall be extended to the third business day
following the elimination of all such impediments. The place of the Option
Closing shall be at the offices of Jones, Day, Reavis & Pogue, 599 Lexington
Avenue, 32nd Floor, New York, New York 10022, and the time of the Option Closing
shall be 10:00 a.m. (Eastern Time) on the Option Closing Date.
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Section 3.3 PAYMENT AND DELIVERY OF CERTIFICATES. At any Option
Closing, Parent shall deliver to each Selling Stockholder, by wire transfer of
immediately available funds to such account as shall have been designated by
such Selling Stockholder to Parent prior to the Option Closing, the Purchase
Price payable in respect of the Subject Shares to be purchased from such Selling
Stockholder at the Option Closing, and each Selling Stockholder shall deliver to
Parent such Subject Shares, free and clear of all Liens, with the certificate or
certificates evidencing such Subject Shares being duly endorsed for transfer by
such Selling Stockholder and accompanied by all powers of attorney and/or other
instruments necessary to convey valid and unencumbered title thereto to Parent,
and shall assign to Parent (pursuant to a written instrument in form and
substance satisfactory to Parent) all rights that such Selling Stockholder may
have to require Company to register such Subject Shares under the Securities
Act.
Section 3.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the
event of any change in the capital stock of Company by reason of a stock
dividend, subdivision, reclassification, recapitalization, split, combination,
exchange of shares, extraordinary distribution or similar transaction, the type
and number or amount of shares, securities or other property subject to each of
the Options, and the Purchase Price payable therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that (a) Parent shall receive upon exercise of any Option
the type and number or amount of shares, securities or property that Parent
would have retained and/or been entitled to receive in respect of the applicable
Selling Stockholder's Subject Shares if the Option had been exercised
immediately prior to such event relating to Company or the record date therefor,
as applicable, and (b) the applicable Selling Stockholder shall receive upon
exercise of any Option granted by such Selling Stockholder the amount of cash
that such Selling Stockholder would have received as a result of the exercise of
the Option if the Option had been exercised immediately prior to such event
relating to Parent or the record date therefor, as applicable. The provisions of
this Section 3.4 shall apply in a like manner to successive stock dividends,
subdivisions, reclassifications, recapitalizations, splits, combinations,
exchanges of shares, extraordinary distributions or similar transactions.
Section 3.5 ACQUIRED SHARES. In the event that Subject Shares are
acquired by Parent pursuant to the exercise of the Options (such acquired
Subject Shares being "Acquired Shares") and Parent thereafter sells, transfers
or disposes of Acquired Shares within 18 months after the acquisition of such
Acquired Shares (any such sale, transfer or disposition of Acquired Shares
occurring within such 18-month period being a "Sale"), Parent shall promptly pay
to the Selling Stockholders (pro rata, in proportion to the number of Acquired
Shares purchased from each Stockholder) an amount in cash equal to the positive
difference (if any) between the aggregate proceeds received by Parent in the
Sale (net of selling commissions, if any) and the aggregate Purchase Price paid
by Parent for the Acquired Shares sold, transferred or disposed of in such Sale.
Parent shall effect any Sale of Acquired Shares only to an unaffiliated party in
a bona fide arm's-length transaction.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 CERTAIN REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS. Each Stockholder, severally and not jointly, represents and
warrants to Parent as follows:
(a) OWNERSHIP. Such Stockholder is the sole record and
beneficial owner of the number of Shares set forth opposite such Stockholder's
name on Schedule A hereto and has full and unrestricted power to dispose of and
to vote such Shares. Such Shares are now, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all Liens and proxies, except for
any Liens or proxies arising hereunder and restrictions set forth under
applicable securities laws or the Stockholders' Agreement, dated as of October
20, 1992, by and among Company, the Stockholders and other shareholders of
Company named therein (the "Stockholders' Agreement"). The transfer by such
Stockholder of its Subject Shares to Merger Sub pursuant to the Offer or the
applicable Option shall pass to and unconditionally vest in Merger Sub good and
valid title to such Subject Shares, free and clear of all Liens and other than
restrictions set forth under applicable securities laws or the Stockholders'
Agreement. Except as set forth in Schedule A hereto, such Stockholder does not
beneficially own any securities of Company on the date hereof other than such
Shares.
(b) POWER AND AUTHORITY; EXECUTION AND DELIVERY. Such
Stockholder has all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. In the case of each
Stockholder that is not a natural person, the execution and delivery of this
Agreement by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby have been duly authorized by all necessary
action, if any, on the part of such Stockholder. This Agreement has been duly
executed and delivered by such Stockholder and, assuming that this Agreement
constitutes the valid and binding obligation of the other parties hereto,
constitutes a valid and binding obligation of such Stockholder, enforceable
against such Stockholder in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity.
(c) NO CONFLICTS. The execution and delivery of this Agreement
do not, and, subject to compliance with the HSR Act and appropriate filings
under securities laws (which each Stockholder agrees to make promptly), to the
extent applicable, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, result in a
breach or violation of or default (with or without notice or lapse of time or
both) under, or give rise to a material obligation, a right of termination,
cancellation, or acceleration of any obligation or a loss of a material benefit
under, or require notice to or the consent of any person under any agreement,
instrument, undertaking, law, rule, regulation, judgment, order, injunction,
decree, determination or award binding on such Stockholder, other than as set
forth under the Stockholders' Agreement or any such conflicts, breaches,
violations, defaults, obligations, rights or losses that individually or in the
aggregate would not (i) impair the ability of such Stockholder to perform such
Stockholder's obligations under this Agreement or (ii) prevent or delay the
consummation of any of the transactions contemplated hereby.
-5-
<PAGE>
(d) STOCKHOLDERS' AGREEMENT. The Stockholders have delivered
or made available to Parent a true, correct and complete copy of the
Stockholders' Agreement, as amended to the date of this Agreement.
Section 4.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Each of Parent
and Merger Sub hereby represents and warrants, jointly and severally, to each
Stockholder that:
(a) POWER AND AUTHORITY; EXECUTION AND DELIVERY. Each of
Parent and Merger Sub has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent and Merger Sub. This Agreement has been duly executed and delivered by
Parent and Merger Sub and, assuming that this Agreement constitutes the valid
and binding obligation of each Stockholder, constitutes a valid and binding
obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
(b) NO CONFLICTS. The execution and delivery of this Agreement
do not, and, subject to compliance with the HSR Act and appropriate filings
under securities laws (which Parent and Merger Sub agree to make promptly), to
the extent applicable, the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, conflict with, result in a
breach or violation of or default (with or without notice or lapse of time or
both) under, or give rise to a material obligation, right of termination,
cancellation, or acceleration of any obligation or a loss of a material benefit
under, or require notice to or the consent of any person under any agreement,
instrument, undertaking, law, rule, regulation, judgment, order, injunction,
decree, determination or award binding on Parent or Merger Sub, other than any
such conflicts, breaches, violations, defaults, obligations, rights or losses
that individually or in the aggregate would not (i) impair the ability of Parent
or Merger Sub to perform its obligations under this Agreement or (ii) prevent or
delay the consummation of any of the transactions contemplated hereby.
(c) SECURITIES LAW COMPLIANCE. The Options and the Subject
Shares to be acquired upon exercise of the Options are being and shall be
acquired by Parent without a view to public distribution thereof otherwise than
in compliance with the Securities Act and applicable state securities laws and
shall not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act and in
compliance with applicable state securities laws. Neither Parent nor Merger Sub
will effect any offer or sale of Subject Shares which would cause any
Stockholder to violate the registration requirements of the Securities Act of
1933, as amended, or the registration or qualification requirements of the
securities laws of any jurisdiction.
-6-
<PAGE>
ARTICLE V
CERTAIN COVENANTS
Section 5.1 CERTAIN COVENANTS OF STOCKHOLDERS.
(a) RESTRICTION ON TRANSFER OF SUBJECT SHARES, PROXIES AND
NONINTERFERENCE. No Stockholder shall, directly or indirectly: (A) except
pursuant to the terms of this Agreement and for the conversion of Subject Shares
at the Effective Time pursuant to the terms of the Merger Agreement, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Subject Shares; (B) except pursuant to the terms of this
Agreement, grant any proxies or powers of attorney, deposit any of such
Stockholder's Subject Shares into a voting trust or enter into a voting
agreement with respect to any of such Stockholder's Subject Shares; or (C) take
any action that would reasonably be expected to make any representation or
warranty contained herein untrue or incorrect or have the effect of impairing
the ability of such Stockholder to perform such Stockholder's obligations under
this Agreement or preventing or delaying the consummation of any of the
transactions contemplated hereby.
(b) NO SOLICITATION. Subject to Section 6.12, no Stockholder
shall take, or authorize or permit any of its officers, directors, employees,
agents or representatives (including any investment banker, financial advisor,
attorney or accountant) to take, any action that Company would be prohibited
from taking under the first sentence of Section 6.5(a) of the Merger Agreement
(disregarding for purposes of this Section 5.1(b) the proviso to such sentence).
(c) WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger that such
Stockholder may have.
(d) NONEXERCISE OF RIGHTS OF FIRST REFUSAL. No Stockholder
shall exercise any purchase right or right of first refusal that it may have
with respect to any Shares of any other person in connection with any tender by
such other person of such Shares pursuant to the Offer.
(e) COOPERATION. Each Stockholder shall cooperate fully with
Parent and Company in connection with their respective reasonable best efforts
to fulfill the conditions to the Merger set forth in Article VII of the Merger
Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1 FEES AND EXPENSES. Each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
-7-
<PAGE>
Section 6.2 AMENDMENT; TERMINATION. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. This Agreement shall terminate immediately upon the earlier of (i) the
Effective Time and (ii) the date on which the Option Period expires (or, if
later, the date on which the last Option Closing occurs). In addition, this
Agreement may be terminated at any time by mutual written consent of Parent and
Stockholders representing a majority of the Subject Shares subject to this
Agreement. In the event of termination of this Agreement pursuant to this
Section 6.2, this Agreement shall become null and void and of no effect with no
liability on the part of any party hereto and all proxies granted hereby shall
be automatically revoked; provided, however, that no such termination shall
relieve any party hereto from any liability for any breach of this Agreement
occurring prior to such termination, and provided further that the
representations and warranties set forth in Sections 4.1 and 4.2 and covenants
set forth in Section 6.1 shall survive the termination of this Agreement.
Section 6.3 EXTENSION; WAIVER. Any agreement on the part of a party to
waive any provision of this Agreement, or to extend the time for any performance
hereunder, shall be valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
Section 6.4 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement, and is not intended to confer upon any person
other than the parties any rights or remedies.
Section 6.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
Section 6.6 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, or sent by overnight courier (providing proof of
delivery), in the case of the Stockholders, to the address set forth on Schedule
A hereto with a copy (which shall not constitute notice) to Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York
10019-6064, Attention: Bruce A. Gutenplan, Esq., Telecopy: (212-757-3990, or, in
the case of Parent, to the address set forth below (or, in each case, at such
other address as shall be specified by like notice).
Louisiana-Pacific Corporation
111 S.W. Fifth Avenue, #4200
Portland, Oregon 97204
Attention: Mr. Mark Suwyn
Telecopy: (503) 821-5322
-8-
<PAGE>
with a copy (which shall not constitute notice) to:
Jones, Day, Reavis & Pogue
32nd Floor
599 Lexington Avenue
New York, NY 10022-6030
Attention: Robert A. Profusek, Esq.
Mark E. Betzen, Esq.
Telecopy: (212) 755-7306
Section 6.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise, by any Stockholder without
the prior written consent of Parent, and any such assignment or delegation that
is not consented to shall be null and void. This Agreement, together with any
rights, interests, or obligations of Parent hereunder, may be assigned or
delegated, in whole or in part, by Parent without the consent of or any action
by any Stockholder upon notice by Parent to each Stockholder affected thereby as
herein provided. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns (including without limitation any person
to whom any Subject Shares are sold, transferred or assigned).
Section 6.8 FURTHER ASSURANCES. Each Stockholder shall execute and
deliver such other documents and instruments and take such further actions as
may be necessary or appropriate or as may be reasonably requested by Parent in
order to ensure that Parent receives the full benefit of this Agreement. Parent
and Merger Sub shall not amend the Merger Agreement to increase the Merger
Consideration without the prior written consent of Stockholders representing a
majority of the Subject Shares subject to this Agreement.
Section 6.9 ENFORCEMENT. Irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware), this being in
addition to any other remedy to which they are entitled at law or in equity.
Each of the parties hereto (i) shall submit itself to the personal jurisdiction
of the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware) in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (iii) shall not bring
any action relating to this Agreement or any of the transactions contemplated
hereby in any court other than the Court of Chancery in and for New Castle
County in the State of Delaware (or, if such court lacks subject matter
jurisdiction, any appropriate state or federal court in New Castle County in the
State of Delaware).
-9-
<PAGE>
Section 6.10 SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 6.11 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same instrument
and shall become effective when one or more counterparts have been signed by
each party and delivered to the other parties.
Section 6.12 STOCKHOLDER CAPACITY. By executing this Agreement, no
person (including any officer, director, employee, partner, principal, agent or
affiliate of such person) who is or becomes during the term hereof a director,
officer, agent or financial advisor of Company makes any agreement or
understanding in his or her capacity as such officer, director, agent or
financial advisor. Each Stockholder signs solely in his or her capacity as the
record holder and beneficial owner, respectively, of the number of Subject
Shares set forth opposite his or her name on Schedule A hereto, respectively,
and nothing herein shall limit or affect any actions taken by a Stockholder in
his or her capacity as an officer, director, agent or financial advisor of
Company.
[signature page follows]
-10-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
LOUISIANA-PACIFIC CORPORATION
By: /S/ MARK A. SUWYN
--------------------------------
Name: Mark A. Suwyn
Title: Chief Executive Officer
STRIPER ACQUISITION, INC.
By: /S/ MARK A. SUWYN
--------------------------------
Name: Mark A. Suwyn
Title: President
STOCKHOLDERS:
KOHLBERG ASSOCIATES, L.P.
By: KOHLBERG & KOHLBERG, L.L.C.
By: /S/ SAMUEL P. FRIEDER
--------------------------------
Name: Samuel P. Frieder
Title: Vice President
KABT ACQUISITION COMPANY, L.P.
By: KOHLBERG ASSOCIATES, L.P.
By: KOHLBERG & KOHLBERG, L.L.C.
By: /S/ SAMUEL P. FRIEDER
--------------------------------
Name: Samuel P. Frieder
Title: Vice President
/S/ GEORGE T. BROPHY
--------------------------------
GEORGE T. BROPHY
-11-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Total Number of Shares
NAME AND ADDRESS OF STOCKHOLDER OF COMMON STOCK OWNED
- ------------------------------- ------------------------
<S> <C>
Kohlberg Associates, L.P. 7,820 Shares
c/o Kohlberg & Co.
111 Radio Circle
Mt. Kisco, NY 10549
KABT Acquisition Company, L.P. 4,899,776 Shares
c/o Kohlberg & Co.
111 Radio Circle
Mt. Kisco, NY 10549
George T. Brophy 44,958 Shares
1100 Beach Road, Apartment 3J 710,000 Options to
Vero Beach, Florida 32963 Purchase Shares
</TABLE>
A-1
<PAGE>
<PAGE>
Exhibit 3
EXHIBIT 3 TO SCHEDULE 14D-9
DIRECTORS MEETINGS AND COMPENSATION
The Board of Directors held four meetings during the year ended December 31,
1997. Each of the Company's incumbent directors participated in more than 75% of
the meetings of the board and of each committee of the board on which such
person served during such year. Messrs. Frazier and Rohrbach receive a retainer
of $12,000 per annum plus $1,000 for each day on which a board and/or committee
meeting is attended. All directors are reimbursed for expenses incurred in
connection with attendance at meetings.
Independent directors of the Company may be granted options to purchase up to
100,000 shares in the aggregate of Common Stock of the Company under the
Company's 1994 Director Stock Option Plan (the "Directors' Option Plan"). The
Directors' Option Plan is administered by the non-independent directors of the
Compensation Committee. Options under the Directors' Option Plan are granted at
fair market value at the time of grant and become exercisable within six months
of the grant. On November 24, 1997, options to purchase 1,000 shares were
granted to each of Messrs. Rohrbach and Frazier, with an exercise price of
$17.875 per share.
3
<PAGE>
The Board of Directors has established an Executive Committee, an Audit
Committee, a Compensation Committee and an Environmental Committee. The
Executive Committee, which consists of Messrs. Brophy, Frieder and Kohlberg,
generally exercises the powers of the Board of Directors when the board is not
in session, subject to the limitations of Delaware law, and has the ability to
approve expenditures of up to $1.0 million. The Audit Committee, which currently
consists of Messrs. Rohrbach, Frieder and Frazier, oversees actions taken by the
Company's independent auditors and recommends the engagement of auditors. The
Compensation Committee, which currently consists of Messrs. Peck, Rohrbach and
Frieder, approves the compensation of executives of the Company, makes
recommendations to the Board of Directors with respect to standards for setting
compensation levels and administers the Company's incentive plans. The
Environmental Committee, which currently consists of Messrs. Frazier, Frieder
and Rohrbach, oversees actions taken by the Company to ensure compliance with
Federal, state and local environmental regulations. During 1997, the Executive
Committee held four meetings, the Audit Committee held two meetings and the
Compensation Committee held two meetings. The Environmental Committee was
created on November 24, 1997 and has not yet held any meetings.
CERTAIN RELATIONSHIPS
Kohlberg & Co. receives an annual management fee of $95,000 from the Company
and will continue to receive such fee through the earlier of (i) October 20,
2002 or (ii) the end of the fiscal year in which the aggregate percentage
ownership of the Common Stock by affiliates of Kohlberg & Co. falls below 20%.
Currently, affiliates of Kohlberg & Co. own approximately 40% of the outstanding
Common Stock of the Company.
Warner C. Frazier, a director since October 1993, is Chairman and Chief
Executive Officer of Simplicity Manufacturing, Inc., a majority interest in
which is held by an affiliate of Kohlberg & Co. George Brophy is also a director
of Simplicity. In addition, Mr. Brophy is a director of Color Spot, a majority
interest in which is held by an affiliate of Kohlberg & Co.
John R. Garrett, a nominee for director, is a shareholder of Brownstein,
Hyatt, Farber & Strickland, P.C., one of the Company's outside legal counsel.
The Company, KABT Acquisition Company, L.P., KABT II Acquisition Company, L.P.
(together with KABT Acquisition Company, L.P., "KABT"), George Brophy, Richard
Parker, William Adams and Donald Grimm are parties to a Stockholders' Agreement,
dated as of October 20, 1992 (the "Stockholders' Agreement") which provides,
among other things, that upon the termination of employment of any manager who
is a party to this agreement, the Company may elect to repurchase (i) the shares
of Common Stock held by such manager at fair market value and the vested options
held by such manager at the excess of fair market value on the date of
termination over the exercise price of such options, if the termination is
without "cause"; or (ii) the shares of Common Stock held by such manager at the
lesser of fair market value on the date of termination or original cost, if the
termination is with "cause." Options held by the manager that are not vested in
the case of (i) and all options in the case of (ii) will be canceled. "Cause"
for purposes of the Stockholders' Agreement means a manager's willful and
repeated failure to comply with the lawful directives of the Board of Directors
or such manager's supervisory personnel or any criminal act or act of
dishonesty, disloyalty, misconduct or moral turpitude by a manager that is
injurious to the property, operations, business or reputation of the Company or
its subsidiaries. The Stockholders' Agreement also provides KABT with rights of
first refusal upon any transfer of Common Stock by the managers party the
agreement other than transfers to such managers' family group and other than
transfers by will or pursuant to applicable laws of descent and distribution.
Holders of a majority of the Common Stock held by managers who are party to the
agreement also have participation rights in the event of a transfer of Common
Stock by KABT. The Stockholders' Agreement provides that if holders of a
majority of the Common Stock approve the sale or other transfer of the Company
to an independent third party, the managers who are party to the agreement will
consent and raise no objections (including exercising any rights or appraisal)
to the sale or transfer of the Company and will take all necessary and desirable
actions in connection with the consummation of such transaction (including
selling their stock if the transfer is structured as a stock transaction),
provided that all holders of Common Stock receive the same consideration per
share in connection with the transaction. The Stockholders' Agreement also
provides demand and piggy-back registration rights to the manager and KABT.
4
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following summary compensation table reflects individual compensation
information for the Company's Chief Executive Officer, the four other most
highly compensated executives of the Company and two additional executives for
whom disclosure would be required but for the fact that they were not employed
by the Company as of December 31, 1997 (collectively, the "named executive
officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ------------
OTHER SECURITIES ALL
ANNUAL COM- UNDERLYING OTHER
NAME AND POSITION YEAR SALARY BONUS PENSATION (1) OPTIONS/SARS COMPENSATION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George T. Brophy....... 1997 $420,024 -- $121,425 20,000 $ --
(Chairman, President 1996 379,186 379,186 124,122 --
and CEO) --
1995 350,016 -- 104,553 65,000 --
William J. Adams....... 1997 180,024 -- 15,972 20,000 14,396(2)
(Executive Vice Presi- 1996 180,024 180,024 1,734 --
dent) --
1995 150,016 -- 571 50,000 11,370(2)
Donald B. Grimm........ 1997 126,816 44,386 4,742 7,500 --
(Vice President) 1996 127,322 88,771 4,915 -- --
1995 118,800 10,284 2,324 20,000 --
Joseph P. O'Neill...... 1997 115,008 -- 2,408 7,500 --
(Vice President) 1996 115,008 80,506 391 -- --
1995 116,568 -- 350 10,000 --
Richard E. Parker...... 1997 185,016 50,000 10,197 20,000 --
(Executive Vice Presi- 1996 185,016 185,016 5,286 --
dent) --
1995 165,000 12,621 3,668 50,000 --
Michael A. Lupo(3)..... 1997 185,016 -- 17,746 -- --
1996 185,016 185,016 1,009 -- --
1995 165,000 -- 821 50,000 --
J. Philippe 1997 165,000 -- 5,981 --
Latreille(3).......... --
1996 165,000 165,000 -- -- --
1995 150,020 -- -- 50,000 --
</TABLE>
- --------
(1) Includes personal use of auto, tax gross-ups on amounts included in taxable
compensation (other than salary or bonuses) and $100,000 annual payment to
Mr. Brophy.
(2) Represents moving expense reimbursement paid to Mr. Adams. (3) No longer an
executive officer of the Company.
The Company has entered into an employment agreement (as amended) with Mr.
Brophy providing for his employment as the Company's Chairman of the Board of
Directors, President and Chief Executive Officer until the earlier of (i) the
termination by the Company's Board of Directors, (ii) Mr. Brophy's death or
disability, (iii) January 1, 2000, or (iv) 180 days after notice from Mr. Brophy
of his resignation. Mr. Brophy's agreement provides for an annual salary of not
less than $250,000 (currently $420,000) plus an annual payment of $100,000 to be
made on January 1 of each year through January 1, 2000. During his employment,
Mr. Brophy is entitled to participate in the Company's medical and dental
insurance plans and all other benefit plans generally available to the Company's
executive officers as in effect from time to time. In the event that Mr.
Brophy's employment is terminated by the Board of Directors without cause (as
defined) or by reason of death or disability, Mr. Brophy is entitled to receive
a lump sum payment equal to the greater of $250,000 or the amount payable under
the Company's executive severance plan described below payable within 90 days of
such termination plus, in each case, $100,000 in cash, payable on each January 1
following such termination through January 1, 2000. The agreement also provides
a two-year non-competition agreement following Mr. Brophy's termination of
employment for any reason.
5
<PAGE>
The Company also entered into a consulting agreement with Mr. Brophy. This
agreement will become effective upon Mr. Brophy's retirement at age 65 from his
position with the Company and will continue for a term of five years thereafter.
Under this agreement, Mr. Brophy will provide up to 32 hours per month of
consulting services to the Board of Directors and senior management of the
Company and will not own, manage, control, participate in, consult with, render
services for or in any manner engage in hardboard siding, hardboard paneling,
fiber cement siding or vinyl siding. In compensation for his services and his
covenant not to compete, Mr. Brophy (or his estate) will be entitled to receive
an annual fee of $150,000 until the termination of his agreement notwithstanding
his death or disability. In the event of Mr. Brophy's death at or prior to age
65, his spouse will be entitled to medical coverage until she reaches age 65.
BONUS PLAN
Each of the named executive officers and other key personnel participate in an
executive/management bonus plan (the "Bonus Plan") providing for annual bonus
awards contingent upon achievement of certain performance targets based on
earnings before interest and taxes on both a Company-wide basis and on a
separate basis for the Company's various operations. Participants are divided
into five tiers of participation designed to reflect each participant's sphere
of responsibility within the Company. An individual participant's bonus is
determined as a percentage of base salary (not to exceed 100% effective as of
1994) based upon (i) the relevant performance target(s) achieved, (ii) the
employee's participation tier and (iii) the weighting given to the relevant
performance targets. Bonus amounts are prorated for new participants who are
added during the course of a given year. Bonus payments are subject to
modification at the discretion of the Company's Board of Directors.
SEVERANCE PLAN
On April 30, 1996, the Board of Directors adopted an executive severance
policy for the benefit of the Company's executive officers (including Messrs.
Brophy, Adams, O'Neill, Parker and Von Behren, providing that, in the event of
termination of an executive officer's employment with the Company for any reason
other than cause or a voluntary termination of employment by the executive
officer (other than a voluntary termination within 90 days of a change in
control), such person shall receive severance compensation equal to 150% of such
person's then-current annual base salary plus 150% of the annual average of such
person's three most recent annual bonuses under the Bonus Plan. A "change in
control" is deemed to occur when (a) a person or group, other than affiliates of
Kohlberg & Co., becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then-outstanding securities and (b) during any period of 24
consecutive months, commencing before or after the event described in clause (a)
above, individuals who at the beginning of such 24-month period were directors
of the Company, or persons whose election to the Board of Directors was approved
by such individuals, cease for any reason to constitute at least a majority of
the Board of Directors. "Cause" is defined as an executive officer's commission
of a felony or other act of dishonesty or moral turpitude resulting in
significant injury to the Company or such person's willful and repeated refusal
to comply with the good faith directives of the Board of Directors or such
person's supervisory personnel.
STOCK OPTION PLANS
The Company maintains various stock option plans (including the 1994 Employee
Stock Option Plan and the Directors' Option Plan) providing for the issuance of
options to purchase up to an aggregate of 3,100,000 shares of Common Stock
(collectively, the "Stock Option Plans"). As of December 31, 1997, options to
purchase 2,307,325 shares of Common Stock were outstanding under the Stock
Option Plans at exercise prices ranging from $2.50 to $29.50 per share. The
Stock Option Plans are administered by the Compensation Committee of the Board
of Directors. The Compensation Committee determines the terms of the options
granted under the Stock Option Plans (which in certain cases, may be incentive
or nonqualified options), including the exercise price, term (not to exceed ten
years), number of shares and exercisability. The exercise price of options
issued under the Stock Option Plans must equal or exceed the fair market value
of the Common Stock on the date of grant. Payment of the option exercise price
may be made in cash or by a note (at the discretion of the
6
<PAGE>
Committee), by a surrender of shares of Common Stock or a combination of the
foregoing. One of the Stock Option Plans authorizes grants of alternative cash
settlement rights that would entitle participants to receive on exercise of an
option a payment in cash equal to the excess of the then-current fair market
value of the shares with respect to which the option is exercised over the
applicable exercise price. Upon a change in control (as defined in Severance
Plan), all options in the Stock Option Plans will become fully vested.
The following tables disclose information regarding stock options granted,
exercised during, or held at the end of fiscal 1997 for the named executive
officers pursuant to the Stock Option Plans. The Company has not granted any
stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION
NAME GRANTED(#) FISCAL YEAR BASE PRICE ($/SH) DATE
- ---- ---------- ------------ ----------------- ----------
<S> <C> <C> <C> <C> <C>
George T. Brophy........ 20,000 6.6% 17.875 11/24/07
William J. Adams........ 20,000 6.6% 17.875 11/24/07
Donald B. Grimm......... 7,500 2.5% 17.875 11/24/07
Joseph P. O'Neill....... 7,500 2.5% 17.875 11/24/07
Richard E. Parker....... 20,000 6.6% 17.875 11/24/07
Michael A. Lupo(3)...... -- -- -- --
J. Philippe
Latreille(3)........... -- -- -- --
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN THE MONEY OPTIONS
YEAR-END AT FISCAL YEAR-END
SHARES ACQUIRED VALUE (#) EXERCISABLE/ ($) EXERCISABLE/
ON EXERCISE(#) REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(2)
--------------- ----------- --------------------- --------------------
<S> <C> <C> <C> <C>
George T. Brophy........ -- -- 625,000/65,000 8,990,000/2,500
William J. Adams........ -- -- 102,500/52,500 1,085,000/2,500
Donald B. Grimm......... -- -- 70,000/17,500 930,000/938
Joseph P. O'Neill....... -- -- 43,000/12,500 489,000/938
Richard E. Parker....... -- -- 137,500/57,500 1,552,500/2,500
Michael A. Lupo(3)...... 45,000 $135,000 80,000/25,000 90,000/0
J. Philippe
Latreille(3)........... -- -- 125,000/25,000 131,250/0
</TABLE>
- --------
(1) Assumes appreciation of exercise prices at the specified annual rates from
the date of grant until the end of the option term.
(2) Value equals closing market price as of December 31, 1997 ($18.00 per share)
less the exercise price.
(3) No longer an executive officer of the Company.
RETIREMENT BENEFITS
All salaried employees, including executive officers and certain hourly
employees of the Company, participate in a defined benefit pension plan funded
on an actuarial basis entirely by the Company. Although benefits for certain
hourly groups are based on a flat dollar rate multiplied by years of service,
most employees earn an annual pension benefit at age 65 equal to one percent of
their highest five-year average compensation plus three-tenths of one percent of
the amount of such compensation which exceeds "covered compensation" (as defined
in the Internal Revenue Code), all multiplied by years of service not to exceed
35 years. This plan provides for a minimum benefit of one percent of the
employee's average compensation multiplied by the employee's total years of
service. Alternative minimum benefits may be payable to some employees based on
their accruals under prior benefit formulas or predecessor plans.
7
<PAGE>
Certain employees whose benefits under the plan have been reduced as the
result of recent formula changes, or who are otherwise designated by the
Compensation Committee, may accrue additional benefits under supplemental
nonqualified plans which the Company has established.
The following table shows the projected annual pension benefits payable under
the pension plan at the normal retirement age of 65:
<TABLE>
<CAPTION>
ANNUAL NORMAL PENSION BENEFITS FOR
YEARS OF SERVICE SHOWN(2)
----------------------------------------
AVERAGE ANNUAL
PENSION EARNINGS(1)(3) 5 10 20 30 40 50
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50,000................................ 2,810 5,621 11,242 16,863 20,000 25,000
100,000............................... 6,060 12,121 24,242 36,363 42,423 50,000
150,000............................... 9,310 18,621 37,242 55,863 65,173 75,000
200,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
250,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
300,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
350,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
400,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
</TABLE>
- --------
(1) Section 401(a)(17) of the Internal Revenue Code limits the annual
compensation which can be recognized in a qualified pension plan. The
current limit for 1997 is $160,000. Executives who participate in the
Company's nonqualified supplemental retirement plans will receive pension
benefits calculated on their entire annual compensation. (2) Section 415 of
the Internal Revenue Code currently limits the annual benefits to $130,000
for retirement under the Plan after December 31, 1997. Executives who
participate in the Company's nonqualified supplemental retirement plans may
receive pension benefits in excess of such limits.
(3) Bonus compensation paid to certain executive and management employees
pursuant to the Bonus Plan is included in the employees' compensation base
for purposes of determining Average Annual Pension Earnings.
CONSULTING AGREEMENTS
The Company entered into a consulting agreement with Mr. J. Philippe
Latreille, former executive vice-president of the Company, for a term of two
years pursuant to which Mr. Latreille will provide consulting services to the
Company in return for an annual compensation of $100,000. In addition, Mr.
Latreille's group life insurance coverage ($495,000), medical and dental
coverage will be continued by the Company through the terms of the agreement.
Mr. Latreille's options will continue to vest through the end of the agreement
and will terminate in their entirety on January 1, 2001.
The Company entered into a consulting agreement with Mr. Michael A. Lupo.
former executive vice-president of the Company, for a term of one year,
renewable annually by the Chairman of the Board of Directors pursuant to which
Mr. Lupo will provide consulting services to the Company in return for an annual
compensation of $50,000. In addition, Mr. Lupo is entitled to a life insurance
coverage of $2,500 and the Company will continue to pay all expenses with
respect to the leasing of a vehicle for Mr. Lupo. Mr. Lupo's options will
continue to vest and will terminate on January 1, 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Company's fiscal year ended December 31, 1997, Messrs. George W.
Peck IV and Samuel P. Frieder served as members of the Compensation Committee of
the Board of Directors. Messrs. Peck and Frieder both are currently limited
partners of Kohlberg & Co. Currently, affiliates of Kohlberg & Co. hold 40% of
the outstanding Common Stock of the Company.
8
<PAGE>
REPORT OF COMPENSATION COMMITTEE
The Committee
The three-member Compensation Committee of the Company's Board of Directors is
responsible for annually recommending to the Board of Directors the cash and
stock option compensation payable to the Company's executive officers.
Compensation decisions by the Compensation Committee are submitted to the Board
of Directors for approval.
The Committee's primary goal is to have the Company's executive officers
compensation program structured and implemented in a manner that recognizes the
Company's need to retain and attract the caliber of executive needed to compete
in the highly competitive business in which it operates.
Compensation Structure
The key components of the compensation of the Company's Chief Executive
Officer and other officers are base salary, annual bonus and the issuance of
stock option incentives, from time to time. The objective of the Company is to
create a compensation package that provides both short-term rewards and
long-term incentives for positive individual and corporate performance.
Base Salaries
Every other year, based on comparisons with peer group companies and other
industry data, the Chief Executive Officer recommends to the Compensation
Committee base salary adjustments for the officers of the Company. On a periodic
basis, the Chief Executive Officer's base salary is reviewed by the Compensation
Committee and adjusted as deemed necessary. Based on recommendations made by the
Chief Executive Officer and the Compensation Committee the Board of Directors
approved base salary adjustments for the officers of the Company to be effective
January 1, 1998. There were no other base salary increases issued to the Chief
Executive Officer or officers of the Company during 1997.
Bonuses
The objective of the Company is to emphasize positive short-term corporate
performance with an annual bonus program. Each of the executive officers (as
well as other key employees) participates in a bonus program that provides for
annual bonus awards contingent on the achievement of certain performance targets
based on earnings before interest and taxes of the Company. The bonus payout is
determined as a percentage of the participant's base salary (not to exceed 100%)
based upon the achievement of targets which are related to the improvement in
earnings as compared to the Company's annual operating plan and prior year's
earnings.
Stock Options Incentives
The third component of the Company's executive compensation is comprised of a
stock option plan. Whereas the cash bonus payments are intended to reward for
positive short-term corporate performance, grants under the stock option plan
are intended to provide the executives with longer term incentives which
appreciate in value with the continued favorable future performance of the
Company. Options are granted at fair market value and vest 50% on each of the
second and fourth anniversaries of the grant date of the option and expire 10
years from the date of issuance.
The Company's executive officers (as well as other key employees) also
participate in the Company's nonqualified defined benefit pension plan.
The Compensation Committee
Nelson J. Rohrbach
George W. Peck IV
Samuel P. Frieder
9
<PAGE>
EXHIBIT 4
FORM OF AMENDMENT NO.1 TO
AMENDED AND RESTATED BY-LAWS
OF ABT BUILDING PRODUCTS CORPORATION
Article III Section 4 of the Amended and Restated By-laws of
ABT BUILDING PRODUCTS CORPORATION is hereby amended and restated in its entirety
as follows:
"Section 4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Unless
otherwise provided in the Certificate of Incorporation, newly created
Directorships resulting from an increase in the number of Directors and
vacancies occurring in the Board for any other reason, including the removal of
Directors without cause, may be filled by the affirmative votes of a majority of
the entire Board, although less than a quorum, or by a sole remaining Director,
or may be elected by a plurality of the votes cast by the holders of shares of
capital stock entitled to vote in the election at a special meeting of
stockholders called for that purpose. A Director elected to fill a vacancy shall
be elected to hold office until the next annual election and a successor shall
have been duly elected and qualified, or until the Director's earlier death,
resignation or removal."
<PAGE>
EXHIBIT 5
Kohlberg & Company, L.L.C.
111 Radio Circle
Mt. Kisco, NY 10549
January 19, 1999
ABT Building Products Corporation
One Neenah Center
Suite 600
Neenah, Wisconsin 54956
Louisiana-Pacific Corporation
111 S.W. Fifth Avenue
Portland, Oregon 97204
Re: TERMINATION OF FEE AGREEMENT
Ladies and Gentlemen:
Reference is hereby made to (i) that certain Fee Agreement
(the "Fee Agreement"), dated as of October 20, 1992, between ABT Building
Products Corporation, a Delaware corporation ("Company") and Kohlberg & Company,
L.L.C. (formerly Kohlberg & Co., L.P.), a Delaware limited liability company
("KoCo"), and (ii) that certain Agreement and Plan of Merger (the "Merger
Agreement"), dated as of January 19, 1999, by and among Louisiana-Pacific
Corporation, a Delaware corporation ("Parent"), Striper Acquisition, Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and
Company, pursuant to which Merger Sub will merge with and into Company (the
"Merger").
Except as otherwise defined herein, terms used herein with
initial capital letters have the respective meanings ascribed thereto in the
Merger Agreement.
KoCo hereby elects to terminate the Fee Agreement, effective
upon the purchase of Shares pursuant to the Offer. KoCo hereby agrees that,
notwithstanding anything to the contrary contained in the Fee Agreement, all
fees to which it would otherwise be entitled under Section 2 of the Fee
Agreement in respect of the year in which such termination occurs shall be
prorated on the basis of the number of days elapsed and remaining, respectively,
in such year at the time of such termination. Nothing contained herein shall
affect the survival of those provisions of the Fee Agreement which survive
termination including without limitation the indemnity provision thereof.
<PAGE>
ABT Building Products Corporation
Louisiana Pacific Corporation
January 19, 1999
Page 2
If you are in agreement with the foregoing, please so indicate
by executing the acceptance set forth below and returning a copy of this letter
agreement to KoCo, whereupon this letter agreement shall be a binding agreement
between KoCo, Company and Parent.
Very truly yours,
KOHLBERG & CO., L.P.
KOHLBERG & KOHLBERG
PARTNERS, L.L.C.
By: __________________________
Name:
Title:
ACCEPTED AND AGREED:
ABT BUILDING PRODUCTS CORPORATION
By: _______________________________
Name:
Title:
LOUISIANA-PACIFIC CORPORATION
By: _______________________________
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT 6
EXECUTIVE SEVERANCE PAY PLAN
OF ABT BUILDING PRODUCTS CORPORATION
INTRODUCTION
ABT Building Products Corporation and its subsidiaries (the
"Company") hereby establishes by resolution of the Board, on January 18, 1999,
and effective as of such date, the Executive Severance Pay Plan of ABT Buildings
Products Corporation (the "Plan") which clarifies and defines those
circumstances under which the Company shall, subject to satisfaction of certain
Plan requirements and the Company's right to amend or terminate the Plan at any
time, provide assistance in the form of severance pay to covered Employees in
the event of Position Eliminations and Change of Control Terminations (as such
terms are hereinafter defined).
SECTION 1. DEFINITIONS
1.1 "Board" means the Board of Directors of the Company.
1.2 "Cause" means a Covered Employee's (i) willful and
repeated failure to comply with the lawful directions of the Board or (ii) any
criminal act or act of dishonesty, disloyalty, misconduct or moral turpitude
that is injurious to the property, operations, business or reputation of the
Company.
1.3 "Change of Control" means (a) any person or group (as
such term is used in Rule 13d-5 under the Securities Exchange Act of 1934),
other than affiliates of Kohlberg & Co., is or becomes a beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company then-outstanding securities, and (b)
during any period of 24 consecutive
<PAGE>
months, commencing before or after the event described in clause (a) above,
individuals who at the beginning of such 24-month period were directors of the
Company, or persons whose election to the board of directors was approved by
such individuals, cease for any reason to constitute at least a majority of the
board of directors.
1.4 "Change of Control Terminations" means the involuntary
termination of a Covered Employee's employment with the Company for any reason
other than for "Cause" within one year after a Change of Control or the
voluntary termination of employment by the Covered Employee within the period
beginning 60 days after a Change of Control, and ending 90 days after a Change
of Control.
1.5 "Committee" means the Compensation Committee appointed by
the Board.
1.6 "Company" means ABT Buildings Products Corporation and
its Subsidiaries.
1.7 "Covered Employee" means the following full-time salaried
executive personnel of the Company, each having one or more full years of
service. Richard E. Parker, William J. Adams, Donald B. Grimm, Joseph P.
O'Neill, Dale H. Von Behren; and Thomas J. Kelly.
1.8 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.9 "Plan" means this Executive Severance Pay Plan of ABT
Building Products Corporation, as amended from time to time.
<PAGE>
1.10 "Position Elimination" means a Covered Employee's
involuntary termination of employment with the Company due to a job elimination
or reduction in force. Position Elimination does not include a Covered
Employee's termination of employment with the Company for any other reason not
specifically stated above, including, but not limited to, discharge for Cause,
voluntary resignation (except as provided for "Change of Control Terminations")
or retirement, death or termination due to such Employee's disability or
physical or mental incapacity.
1.11 "Release" means a written release, in form and substance
satisfactory to the Committee, in its sole discretion, executed by a Covered
Employee who has been granted Severance Pay, releasing and discharging the
Company, its trustees, officers, employees, advisers, consultants, agents and
other representatives (including, but not limited to, the members of the
Committee) from and against all claims, liabilities and obligations in respect
of or arising out of the Covered Employee's employment, Position Elimination or
Change of Control Termination, including but not limited to, claims under the
Age Discrimination in Employment Act of 1967, as amended.
1.12 "Salary" means the annual rate of base salary of a
Covered Employee (prior to any reduction for such Covered Employee's
contributions to any employee benefit, deferred compensation, retirement or
other plan or arrangement maintained or administered by the Company) as in
effect immediately prior to the Change of Control Termination or Position
Elimination. Monthly Salary shall be determined by dividing the rate referred to
in the preceding sentence by 12.
<PAGE>
1.13 "Severance Pay" means the amounts, if any, payable under
Section 2 of this Plan to a Covered Employee upon a Change of Control and/or
Position Elimination.
1.14 "Service" means an Eligible Employee's last continuous
period of employment with the Company.
1.15 "SERP" means the Supplemental Employee Retirement Plan
#2.
1.16 "Year of Service" shall mean a period of 12 consecutive
months of Service.
SECTION 2. GRANTS AND AMOUNTS OF SEVERANCE PAY
2.1 Upon a Covered Employee's Change of Control Termination or
Position Elimination, he will receive Severance Pay equal to the following:
A. STOCK OPTIONS. All options or portions of options
granted by the Company under the Company's Stock Option Plan that are not vested
or exercisable on the date of termination shall not be forfeited as of such
date. All Covered Employee's outstanding options held shall immediately vest
with the occurrence of a Change of Control Termination or a Position
Elimination.
B. SEVERANCE PAY. Provided satisfactory performance
up to the date of termination, a Covered Employee will be paid regular monthly
Salary for a period of eighteen months commencing on the date of the Change of
Control Termination or Position Elimination.
C. BONUS. A Covered Employee will receive a pro-rata
payment (through the date of Change of Control Termination or Position
Elimination) of his bonus entitlement for the current year, to be paid in the
following January and
<PAGE>
another bonus payment equaling the average of the prior three years, to be paid
at the end of 18 months.
D. VACATION PAY. Covered Employees will receive pay
for all vacation to which they were entitled as of their last anniversary date
of Service but have not taken, plus prorated vacation from their last
anniversary date of Service to the date of Change of Control Termination or
Position Elimination.
E. MEDICAL/DENTAL INSURANCE. Medical/dental insurance
coverage for the Covered Employee and his eligible dependents is to be continued
(the plan in effect at the location at the date of the Change of Control
Termination or Position Elimination). The Company will pay it's normal share of
the coverage rate for a period of eighteen months or until such time as the
Covered Employee is covered by the medical/dental insurance of another employer,
whichever occurs first. Covered Employees may continue their medical/dental
insurance through COBRA for up to an additional eighteen months by paying the
required premiums monthly in advance to the Company, as provided by and subject
to COBRA.
F. LIFE INSURANCE. The amount of basic life insurance
coverage in effect at the time of separation will be continued for a period of
eighteen months or until such time as a Covered Employee is eligible for
coverage by the life insurance of another employer, whichever occurs first.
G. JOB SEARCH. The Company will reimburse for out-of-
pocket expenses incurred on a job search (up to $2,000); or if the Covered
Employee elects to use the services of an outplacement counseling firm, the
Company will pay the outplacement firm's fee (up to $6,000). Expense reports for
the above should be
<PAGE>
sent directly to the Director of Human Resources or the outplacement firm should
send a bill for up to $6,000 directly to the Director of Human Resources.
H. PENSION. Benefits accrued through the termination
date are vested as provided under the applicable "Qualified Retirement Plan"
documents.
I. SERP. Covered Employees shall receive compensation
credit for the Severance Pay provided under this Plan and Service credit for the
18 month period of payments under this Plan.
J. UNEMPLOYMENT COMPENSATION. The Company will not
apply Severance Pay or vacation pay to a specific time for unemployment
compensation purposes. Thus, the Company will not contest an unemployment
compensation claim a Covered Employee files after your last day of employment
with the Company.
K. LEASED VEHICLES. The Covered Employee shall
continue to use the assigned Company leased vehicle at Company expense for a
period of 12 months. All operating expenses associated with the vehicle will be
covered by the Company. At the end of that period, the Covered Employee shall
have the right to purchase the vehicle for the remaining liability of the lease
contract.
2.2 Notwithstanding anything to the contrary in this Plan,
under no circumstances may the Covered Employee receive any Severance Pay under
the terms of this Plan unless the Committee has received from such Covered
Employee an executed Release that has remained unrevoked for at least eight (8)
days.
<PAGE>
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 The Committee shall be the plan administrator, and shall
have such rights, powers and authorities commensurate with such position.
3.2 The Company shall indemnify any individual who is a
trustee, officer, employee, adviser, consultant, agent or other representative
of the Company (including, but not limited to, the members of the Committee),
and his or her heirs and legal representatives, against all liability and
expense, including reasonable counsel fees and expenses, amounts paid in
settlement and amounts of judgments, fines, or penalties, incurred or imposed
upon him or her in connection with any claim, action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, in connection with
his or her duties with respect to the administration of this Plan, provided that
such act or omission does not constitute gross negligence or willful misconduct.
SECTION 4. MISCELLANEOUS
4.1 The Board reserves the right to modify, amend, or
terminate the Plan at any time prior to a Change of Control. Subsequent to a
Change of Control, the Plan may not be modified, amended or terminated in a
manner which would impair or reduce the rights of any Covered Employee. All
modifications of or amendments to the Plan shall be in writing.
4.2 Neither the establishment of the Plan nor any designation
or award of Severance Pay hereunder shall be held or construed to confer upon
any person any legal right to continued employment with the Company. The Company
expressly reserves the right to discharge any employee whenever the interest of
the Company,
<PAGE>
in its sole judgment, may so require, without any liability on the part of the
Company, its trustees, officers, employees, advisers, consultants, agents or
other representatives (including, but not limited to, the members of the
Committee), or their respective heirs and legal representatives.
4.3 Benefits payable under the Plan shall be subject to
federal and state income tax and social security tax withholdings and any other
withholdings mandated by law and shall be paid out of the general assets of the
Company, and are not required to be funded in any manner, although the Company
in its discretion may set aside amounts in respect of, or fund, benefits payable
hereunder. Benefits payable to a Covered Employee will represent an unsecured
claim by such Covered Employee against the general assets of the Company.
4.4 Except to the extent required by law, benefits payable
under the Plan shall not be subject to assignment, alienation, transfer, pledge,
levy, attachment, or other legal process or encumbrance by the Covered Employee
and any attempt to do so shall be void.
4.5 SETTLEMENT OF DISPUTES; ARBITRATION. If there has been a
Change of Control and any dispute arises between the Covered Employee and the
Company as to the validity, enforceability and/or interpretation of any right or
benefit afforded by this Plan, at the Covered Employee's option, any other
agreement or policy notwithstanding, such dispute shall be resolved by binding
arbitration proceedings in accordance with the rules of the American Arbitration
Association. The results of any arbitration shall be conclusive on both parties
and shall not be subject to judicial interference or review on any ground
whatsoever.
<PAGE>
The Company shall pay the cost of any arbitration proceedings
under this Plan. In the event the Covered Employee brings a claim or is required
to defend in any legal action or other proceeding the validity or enforceability
of any right or benefit afforded by this Plan, the Company will pay any and all
actual legal fees and expenses incurred by the Covered Employee regardless of
the outcome of such action.
4.6 This Plan shall be interpreted and applied in accordance
with the laws of the State of New York (without reference to the rules relating
to conflicts of laws), except to the extent superseded by applicable federal
law.
4.7 This Plan replaces and supercedes any other severance
policy, plan or arrangement in effect prior to the date listed above with
respect to the Covered Employees.
<PAGE>
Executive Severance Pay Plan
OF ABT BUILDING PRODUCTS CORPORATION
RELEASE
Introduction
Various federal, state and local laws and regulations prohibit
employment discrimination based upon, among other things, age, sex, race, color,
national origin, religion, disability and/or veteran status. These
anti-discrimination laws and regulations are enforced through the United States
Equal Employment Opportunity Commission, the United States Department of Labor,
and various state and local fair employment practices agencies. Other laws and
regulations prohibit employers from terminating employees tortiously or
wrongfully, in breach of express or implied covenants of good faith and fair
dealing, in violation of public policy, or in such a manner as to negligently or
intentionally inflict emotional distress. In other situations, employees may
have claims against an employer for fraud, misrepresentation or defamation.
Eligibility for severance pay under the terms outlined in the
Executive Severance Pay Plan of ABT Building Products Corporation (the "Plan")
is contingent upon your signature and delivery of this Release to ABT Building
Products Corporation (the "Company"). IF YOU DO NOT SIGN THE RELEASE (OR IF YOU
SUBSEQUENTLY REVOKE THE RELEASE), YOU WILL NOT BE ENTITLED TO ANY SEVERANCE PAY
AWARDED UNDER THE PLAN AND WILL HAVE NO RIGHT TO ANY SEVERANCE PAY AWARDED UNDER
THE PLAN. If you breach the terms of your Release, the Company will be entitled
to the return of any
<PAGE>
Severance Pay you have received and to reimbursement by you of any counsel fees
and expenses incurred by the Company in enforcing such right of return.
Under the terms of this Release, you waive any rights to bring
claims against the Company, its trustees, officers, employees, advisers,
consultants, agents and other representatives (including, but not limited to,
the members of the Committee) with respect to employment or other work with the
Company and other matters, except as specifically and expressly allowed by this
Release. This is a legally binding document. DO NOT SIGN THIS RELEASE UNLESS YOU
THOROUGHLY UNDERSTAND IT.
Release
Under the Executive Severance Pay Plan of ABT Building
Products Corporation, in exchange for the severance pay of $______ (less the
amount necessary to satisfy applicable withholding requirements (the "Severance
Amount")), I hereby acknowledge that my employment with the Company has
terminated as of ______________*/ and hereby release the Company and all its
past and/or present trustees, officers, employees, advisers, consultants, agents
and other representatives (including, but not limited to, the members of the
Committee), successors and assigns, in their individual and/or representative
capacities (hereinafter together with the Company collectively referred to as
"Company Releasees"), from any and all causes of action, suits, agreements,
promises, damages, disputes, controversies, contentions, differences, judgments,
claims and demands of any kind whatsoever
- ----------------------
*/ If no date is inserted, the date of your execution of this Release shall be
deemed to be the date of termination of employment.
<PAGE>
("Claims") that I or my heirs, executors, administrators, successors and assigns
ever had, now have or may have against the Company Releasees, whether known or
unknown to me, by reason of my employment and/or cessation of employment with
the Company, or otherwise involving facts that occurred on or prior to the date
that I have signed this Release other than a Claim that the Company has failed
to pay me severance pay in the amount equal to the Severance Amount as awarded
pursuant to the Plan. Such released Claims include, without limitation, any and
all claims under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Civil Rights Act of 1971, the
Civil Rights Act of 1991, the Fair Labor Standards Act, the Employee Retirement
Income Security Act of 1974 ("ERISA"), the Americans with Disabilities Act, the
Family and Medical Leave Act of 1993, and any and all other federal, state or
local laws, statutes, rules and regulations pertaining to employment, as well as
any and all Claims under state contract or tort law.
I understand that except as provided in Section 2 of the Plan,
my receipt of the Severance Pay will in no way affect any receipt of the
pension, vacation, health care or other benefits to which I am entitled as of my
termination date under any plans, policies or arrangements of the Company in
which I am a participant or in respect of which I am a beneficiary.
I understand and agree that I must not disclose the terms of
this Release to anyone other than my spouse, my legal counsel and accountants to
the extent necessary in order to obtain professional advice, that I must
immediately inform my spouse, legal counsel and accountants that they are also
prohibited from disclosing the terms of the Release, and that I must not make
any derogatory allegations about the
<PAGE>
Company Releasees. I further agree to return to the Company any property of the
Company Releasees that I may have, no matter where located, and not to keep any
copies or portions thereof.
I represent that I have not filed, and will not hereafter
file, any Claim against the Company Releasees relating to my employment and/or
cessation of employment with the Company, or otherwise involving facts that
occurred on or prior to the date that I have signed this Release, other than a
Claim that the Company has failed to pay me severance pay in the amount equal to
the Severance Amount as awarded pursuant to the Plan.
I understand and agree that if I am made a member of a class
in any proceeding relating to a Claim against any Company Releasee, I will opt
out of the class at the first opportunity afforded to me after learning of my
inclusion. In this regard, I agree that I will execute, without objection or
delay, an "opt-out" form presented to me either by the court in which such
proceeding is pending or by counsel for any Company Releasee who is made a
defendant in any such proceeding.
I understand and agree that if I commence, continue, join in,
or in any other manner attempt to assert any Claim released herein against the
Company Releasees, or otherwise violate the terms of this Release, the Company
shall have a right to the return of all Severance Pay paid me by the Company
(together with interest thereon), and I shall reimburse the Company for all
counsel fees and expenses incurred by it in defending against such a Claim,
provided that this right of return of such Severance Pay is without prejudice to
the Company's other rights hereunder, including any waiver and release of any
and all Claims against the Company.
<PAGE>
I understand and agree that the Company's payment of Severance
Pay to me and my signing of this Release do not in any way indicate that I have
any viable Claims against the Company Releasees or that the Company Releasees
admit any liability to me whatsoever.
I have read this Release carefully, have been given at least
twenty-one (21) days to consider all its terms, have been advised to consult an
attorney and any other advisors of my choice, and fully understand that by
signing below I am giving up any right which I may have to sue or bring any
other Claims against the Company Releasees. I have not been forced or pressured
in any manner whatsoever to sign this Release, and I agree to all its terms
voluntarily.
I have not relied on any representations, promises or
agreements of any kind made to me in connection with my decision to accept the
severance pay except for those set forth in this Release. I understand that if I
wish, I can consider this Release for at least twenty-one (21) days before I
decide whether to sign it.
I understand and agree that this Release will be governed by
New York law. I also agree and understand if one or more of these provisions is
found to be invalid, illegal or unenforceable, that will not affect any other
provisions of this Release.
I understand that I have seven (7) days from the date I have
signed this Release below to revoke this Release, that this Release will not
become effective until the eighth (8th) day following the date that I have
signed this Release, and that the
<PAGE>
Company will have no obligation to pay me the severance pay set forth in this
Release unless and until this Release becomes effective.
- ------------ --------------------------
Date Employee's Signature
<PAGE>
EXHIBIT 7
ABT Building Products Corporation
One Neenah Center, Suite 600
Neenah, Wisconsin 54956
January 18, 1999
Mr. George Brophy
173 North Park Avenue
Neenah, Wisconsin 54956
Severance Arrangement
Dear Mr. Brophy:
The terms of this letter are intended to clarify your
entitlement to severance payments in the event that you are terminated without
Cause (as defined in your employment agreement) or you voluntarily terminate
your employment within the period beginning 60 days after a Change of Control
and ending 90 days after a Change of Control (as defined in the ABT Building
Products Corporation Executive Severance Pay Plan) of ABT Building Products
Corporation (the "Company"):
1. LUMP SUM SEVERANCE PAYMENT. Fifteen (15) days after a termination of your
employment with the Company in a manner as set forth in the immediately prior
paragraph, you shall receive a lump sum payment of $1,777,368, which shall be in
full satisfaction of all rights to severance or other post-termination payments
to which you are entitled, except as set forth elsewhere in this agreement (the
"Agreement").
2. STOCK OPTIONS. All outstanding stock options held shall immediately vest upon
a Change of Control, and upon your exercise of such stock options, you shall be
entitled to receive the difference between the purchase price and the grant
price of each option.
<PAGE>
2
3. MEDICAL/DENTAL INSURANCE. Medical/dental insurance continuation for you and
your eligible dependents may be continued under COBRA, at your expense, through
January 1, 2005 . You shall be liable for any taxes arising as a result of this
continued coverage.
4. PENSION. Benefits accrued through the termination date are vested as provided
under the applicable "Qualified Retirement Plan" documents.
5. SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN #2. Benefits accrued through the
termination date are vested as provided under the SERP document.
6. FULL SATISFACTION. You hereby acknowledge and agree that, except for
the severance payments that will become payable to you hereunder if you
do not revoke this Agreement as described in Section 9(d), you will not
be entitled to any other compensation or benefits from the Company or
its affiliates, including, without limitation, any other severance or
termination benefits; PROVIDED that it is agreed that nothing in this
Agreement shall constitute a waiver of your rights to vested benefits,
if any, under the Company's group health plan in respect of your
services to the Company prior to the date of termination (the
"Termination Date").
7. CONFIDENTIAL INFORMATION; CONFIDENTIALITY OF THIS AGREEMENT.
(a) You will keep secret and retain in strictest confidence and
will not release or divulge either orally or in writing to any
person, firm or entity except as may be required by law or
regulation or by order of any court, and will not use for the
benefit of yourself or others, all confidential matters of the
Company or its affiliates including, without limitation, (i)
"know-how," trade secrets, details of client or consultant
contracts, pricing policies, compensation arrangements,
business acquisition plans, new personnel acquisition plans,
and other projects and inventions and research projects of the
Company or its affiliates learned by you heretofore, and (ii)
each and every term of this Agreement.
(b) You acknowledge and agree that the remedies available to the
Company at law for a breach or threatened breach of any of the
provisions of this Section 7 would be inadequate and, in
recognition of this fact, you agree that, in the event of a
breach or threatened breach, in addition to any remedies at
law, the Company shall be entitled to obtain equitable relief
in the form of specific performance, temporary restraining
order
<PAGE>
3
or permanent injunction or any other equitable remedy that may
be available.
8. RETURN OF PROPERTY TO THE COMPANY. All memoranda, notes, lists, records
and other documents or papers (and all copies thereof), including items
stored in computer memories, on microfilm or by other means, made or
compiled by you, or made available to you relating to the Company or
its affiliates or its business, are and shall remain the property of
the Company and shall be delivered to the Company promptly upon the
execution of this Agreement.
9. GENERAL RELEASE.
(a) For and in consideration of the severance payments, you hereby
agree on behalf of yourself, your agents, assignees,
attorneys, successors, assigns, heirs and executors, to, and
you do hereby, fully and completely forever release the
Company and its affiliates, predecessors and successors and
all of their respective past and/or present officers,
directors, partners, members, managing members, managers,
employees, agents, representatives, administrators, attorneys,
insurers and fiduciaries in their individual and/or
representative capacities (hereinafter collectively referred
to as the "Releasees"), from any and all causes of action,
suits, agreements, promises, damages, disputes, controversies,
contentions, differences, judgments, claims, debts, dues, sums
of money, accounts, reckonings, bonds, bills, specialities,
covenants, contracts, variances, trespasses, extents,
executions and demands of any kind whatsoever, which you or
your heirs, executors, administrators, successors and assigns
ever had, now have or may have against the Releasees or any of
them, in law, admiralty or equity, whether known or unknown to
you, for, upon, or by reason of, any matter, action, omission,
course or thing whatsoever occurring up to the date this
Agreement is signed by you, including, without limitation, in
connection with or in relationship to your employment or other
service relationship with the Company or its affiliates, the
termination of any such employment or service relationship and
any applicable employment, compensatory or equity arrangement
with the Company or its respective affiliates; PROVIDED that
such released claims shall not include any claims to enforce
your rights under, or with respect to, this Agreement (such
released claims are collectively referred to herein as
the "Released Claims").
<PAGE>
4
(b) Notwithstanding the generality of clause (a) above, the
Released Claims include, without limitation, (i) any and all
claims under Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967, the Civil Rights
Act of 1971, the Civil Rights Act of 1991, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of
1974, the Americans with Disabilities Act, the Family and
Medical Leave Act of 1993, and any and all other federal,
state or local laws, statutes, rules and regulations
pertaining to employment or otherwise, and (ii) any claims for
wrongful discharge, breach of contract, fraud,
misrepresentation or any compensation claims, or any other
claims under any statute, rule or regulation or under the
common law, including compensatory damages, punitive damages,
attorney's fees, costs, expenses and all claims for any other
type of damage or relief.
(C) THIS MEANS THAT, BY SIGNING THIS AGREEMENT, YOU WILL HAVE
WAIVED ANY RIGHT YOU MAY HAVE HAD TO BRING A LAWSUIT OR MAKE
ANY CLAIM AGAINST THE RELEASEES BASED ON ANY ACTS OR OMISSIONS
OF THE RELEASEES UP TO THE DATE OF THE SIGNING OF THIS
AGREEMENT.
(d) You represent that you have read carefully and fully
understand the terms of this Agreement, and that you have been
advised to consult with an attorney and have had the
opportunity to consult with an attorney prior to signing this
Agreement. You acknowledge that you are executing this
Agreement voluntarily and knowingly and that you have not
relied on any representations, promises or agreements of any
kind made to you in connection with your decision to accept
the terms of this Agreement, other than those set forth in
this Agreement. You acknowledge that you have been given at
least twenty-one days to consider whether you want to sign
this Agreement and that the Age Discrimination in Employment
Act gives you the right to revoke this Agreement within seven
(7) days after it is signed, and you understand that you will
not receive any payments due you under this Agreement until
such seven (7) day revocation period (the "Revocation Period")
has passed and then, only if you have not revoked this
Agreement. To the extent you have executed this Agreement
within less than twenty- one (21) days after its delivery to
you, you hereby acknowledge that your decision to execute this
Agreement prior to the expiration of such twenty-one (21) day
period was entirely voluntary.
<PAGE>
5
10. CONFLICT RESOLUTION. In the event that you bring a claim against the
Company for enforcement of any of the provisions of this Agreement, the
Company shall pay for all your legal fees and related expenses, unless
your claim is determined by the judge or arbitrator to have been
frivolous.
11. GOVERNING LAW. This Agreement will be governed, construed and
interpreted under the laws of the State of New York.
12. ENTIRE AGREEMENT/COUNTERPARTS. This constitutes the entire agreement
between the parties, and shall replace and supersede any prior plans,
policies, arrangements with respect to your entitlement to severance
payments. It may not be modified or changed except by written
instrument executed by all parties. This Agreement may be executed in
counterparts, each of which shall constitute an original and which
together shall constitute a single instrument.
Please evidence your agreement that the foregoing represents
in its entirety your entitlements upon termination of employment without Cause
and subsequent to a Change of Control by executing this agreement in the space
provided below.
ABT BUILDING PRODUCTS CORPORATION
By:______________________________________
Accepted and agreed to:
- ---------------------
George Brophy
<PAGE>
<PAGE>
ABT BUILDING PRODUCTS CORPORATION
One Neenah Center
Suite 600
Neenah, WI 54956-3070
(920) 751-8611
[LOGO]
January 25, 1999
To our Shareholders:
I am pleased to inform you that ABT Building Products Corporation has
entered into an agreement and plan of merger with Louisiana-Pacific Corporation
pursuant to which Louisiana-Pacific has agreed to acquire the Company. Under the
terms of this agreement, a wholly owned subsidiary of Louisiana-Pacific has
today commenced a tender offer for all of the outstanding shares of Common Stock
of the Company at a purchase price per share of $15.00, in cash. The shares of
Common Stock of the Company not acquired in the tender offer will be converted
into the right to receive the same consideration per share as paid in the tender
offer, in cash, pursuant to a subsequent merger of the subsidiary of
Louisiana-Pacific and the Company.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AGREEMENT AND PLAN OF
MERGER WITH LOUISIANA-PACIFIC AND DETERMINED THAT THE TENDER OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE COMPANY
AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE
TENDER OFFER AND TENDER ALL OF THEIR SHARES IN THE TENDER OFFER.
In arriving at its decision, the Board of Directors considered a number of
factors, including the opinion of Warburg Dillon Read LLC that the consideration
to be received by the shareholders in the tender offer and the merger is fair,
from a financial point of view, to the shareholders.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which contains
information regarding the factors considered by the Board of Directors in its
deliberations, a copy of the opinion of Warburg Dillon Read LLC and certain
other information regarding the tender offer and the merger, including an
Information Statement which is attached as Annex A to the Schedule 14D-9. In
addition, enclosed is the Offer to Purchase, submitted by Louisiana-Pacific,
dated January 25, 1999, together with related materials, including a Letter of
Transmittal to be used for tendering your shares. I urge you to read the
enclosed materials carefully before making a decision with respect to tendering
your shares in the tender offer.
I personally wish to thank you for your loyal support through the years.
Very truly yours,
/s/ George T. Brophy
George T. Brophy
Chairman of the Board and
Chief Executive Officer
<PAGE>
EXHIBIT 9
CONTACT
JOSEPH P. O'NEILL
VICE PRESIDENT FINANCE - CFO
(920) 751-4981
ABT Building Products Corporation
Announces Sale of Company to Louisiana-Pacific
FOR IMMEDIATE RELEASE:
January 19, 1999
Neenah, WI - ABT Building Products Corporation (NASDAQ:ABTC) - announced today
that they have entered into a definitive agreement to sell the company to
Louisiana-Pacific for $15 per share in cash. Louisiana-Pacific will commence a
tender offer for the ABT Building Products Corporation shares by Monday, January
25, 1999. The transaction is valued at approximately $225 million, including
assumption of debt. It is expected to close in late February.
In discussing the offer, George T. Brophy, Chairman &CEO, made the following
comments:
"I'm pleased that we will be associated with Louisiana-Pacific for the following
reasons:
o The offer is a fair one that the Board considered carefully. It is also
risk free in that only cash is involved.
o We have some significant growth strategies and financing of these
important plans will be made easier as part of Louisiana-Pacific.
o The marriage is good in that separately, Louisiana-Pacific and ABT
Building Products have developed outstanding technology in the
engineered wood field. with the exchange of technology, the combined
entity will be world class.
o The opportunities provided our people was a positive factor. They will
have a much bigger universe to expand their personal careers. It is a
good meld of cultures and we frankly like the integrity and style of
the people at Louisiana- Pacific."
<PAGE>
The transaction is subject to compliance with certain regulatory requirements
and other customary conditions, but has received the approval of the Boards of
Directors of both companies. In addition, holders of approximately 46% of ABT
Building Products Corporation's outstanding shares have agreed to tender their
shares.
ABT Building Products Corporation produces specialty building products
manufactured from engineered wood and plastics. Premium products include
paneling, mouldings, exterior shutters, exterior accessories, doorskins and
siding. The major markets served are home improvement, remodeling, commercial
and new construction. (HOME PAGE ADDRESS ON THE WORLD WIDE WEB -
HTTP://WWW.ABTCO.COM)
Forward-looking statements contained in this news release involve risks and
uncertainties that could cause actual results to differ from those contemplated
by such statements. Factors that could cause such differences include the
cyclical nature of the construction industry, changes in interest rates and
general economic conditions, adverse weather, cost and availability of materials
used to manufacture the company's products, competitive developments affecting
the building products industry, and the risk factors described from time to time
in the reports and disclosure documents filed by ABT Building Products
Corporation with US securities regulatory agencies and commissions.
# # #
<PAGE>
Warburg Dillon Read
January 19, 1999
The Board of Directors
ABT Building Products Corporation
One Neenah Center, Suite 600
Neenah, Wisconsin 54956
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, of the consideration to be paid to the holders (the "Shareholders") of
common stock, par value $0.01 per share (the "Common Stock") of ABT Building
Products Corporation (the "Company") in connection with the proposed acquisition
(the "Acquisition") of the Company by Striper Acquisition, Inc., a wholly owned
subsidiary (the "Acquisition Subsidiary") of Louisiana-Pacific Corporation
("Acquiror"). Pursuant to the terms of an agreement and plan of merger among the
Company, the Acquiror and the Acquisition Subsidiary (the "Merger Agreement"),
the Shareholders will receive $15.00 in cash (the "Consideration") in exchange
for each share of Common Stock. The terms and conditions of the Acquisition are
more fully set forth in the Merger Agreement dated as of January 19, 1999. We
understand that the Acquisition is to be effected in a two-step transaction, the
first step of which will be a cash tender offer (the "Tender Offer") by the
Acquisition Subsidiary for all outstanding shares of Common Stock at a per share
price of $15.00 net to the seller in cash upon the terms and conditions set
forth in the Merger Agreement. We further understand that each share of Common
Stock not acquired in the Tender Offer will be converted, in a subsequent merger
of the Acquisition Subsidiary with and into the Company, into the right to
receive $15.00 in cash.
Warburg Dillon Read LLC ("WDR") and its predecessors have rendered financial
advisory services to the Company, affiliates of Kohlberg & Company, LLC (a
significant shareholder of the Company) ("Kohlberg") and Acquiror from time to
time and have received customary fees in connection with certain of such
services rendered. In addition, WDR will receive a fee for services provided in
connection with its opinion. In the ordinary course of business, WDR, its
successors and affiliates may have traded securities of the Company or Acquiror
for their own accounts and for the accounts of customers and, accordingly, may
at any time hold a long or short position in such securities.
Our opinion does not address the Company's underlying business decision to
effect the Acquisition. In addition, we have not been asked to, nor do we, offer
any opinion as to the material terms of the Merger Agreement or the form of the
Acquisition. WDR has not been requested, nor did we, solicit other third party
indications of interest in acquiring the Company. In rendering this opinion, we
have assumed, with your consent, that the Company and Acquiror will comply with
all the materials terms of the Merger Agreement.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and financial information relating to the
Company; (ii) reviewed the historical price and trading activity for the shares
of common stock of the Company; (iii) reviewed certain internal financial
information and other data provided to us by the Company relating to the
business and prospects of the Company, including, but not limited to, (a)
financial projections prepared by management of the Company, (b) pro forma
financial results for the pending sale of the Company's fiber cement operations,
and (c) financial data for certain of the Company's product lines, much of which
information is not publicly available; (iv) conducted discussions with members
of the senior management of the Company, including, but not limited to,
discussions concerning the Company's pending product liability litigation; (v)
reviewed the financial terms, to the extent publicly available, of certain
acquisition transactions which we considered relevant; (vi) reviewed publicly
available financial and securities market data pertaining to certain publicly
held companies in lines of business which we believed to be generally comparable
to those of the Company; and (vii) conducted such other financial studies,
analyses and investigations, and considered such other information as we deemed
necessary or appropriate.
<PAGE>
In connection with our review, with your consent, we have not assumed any
responsibility for independent verification of any of the foregoing information
and have relied upon its being complete and accurate in all material respects.
We have not been requested to and have not made an independent evaluation or
appraisal of any assets or liabilities (contingent or otherwise) of the Company
or any of its subsidiaries, nor have we been furnished with any such evaluation
or appraisal. We have relied, with your consent, upon Company management's
estimates of the proposed settlement and resolution costs with respect to
pending product liability litigation. Similarly, we have not reviewed or
investigated the pending sale of the Company's fiber cement operations, and have
relied, with your consent, on Company management for such information and the
estimated effects on the Company of such transaction. Further, we have assumed,
with your consent, that all of the information, including the projections
provided to us by the Company's management, was prepared in good faith and was
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the Company's management as to the future financial performance
of the Company, and was based upon the historical performance and certain
estimates and assumptions which were reasonable at the time made. In addition,
our opinion is based on economic, monetary and market conditions existing on the
date hereof.
It is understood that the opinion expressed herein is provided for the
information of the Board of Directors in their evaluation of the Acquisition,
and our opinion is not intended to be and does not constitute a recommendation
as to whether or not any Shareholder should tender shares of Common Stock
pursuant to the Tender Offer or otherwise participate in the Acquisition
pursuant to the terms of the Merger Agreement.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the per share Consideration to be paid to the Shareholders for
Common Stock in connection with the Acquisition is fair, from a financial point
of view, to such Shareholders.
Very truly yours,
WARBURG DILLON READ LLC
