<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 17, 2000
CAMERON ASHLEY BUILDING PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Georgia 0-23442 58 - 1984957
(State or Other Juris- (Commission File (IRS Employer Iden-
diction of Incorporation) Number) tification No.)
11651 Plano Road 75243
Dallas, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(214) 860-5100
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ITEM 1(b). CHANGES IN CONTROL OF REGISTRANT
On January 17, 2000, Cameron Ashley Building Products, Inc., (the
"Company") entered into a definitive agreement whereby an investment would group
acquire all the outstanding shares of the Company's common stock at a price of
$15.10 per share in cash. The group consists of CGW Southeast Partners IV, L.P.;
an affiliate of Citicorp Venture Capital, Ltd., a subsidiary of Citigroup Inc.;
and senior management of the Company. The total consideration of the proposed
transaction is approximately $320 million, including the assumption of debt.
Financing commitments, subject to customary conditions, are in place with both
senior and subordinated debt sources, and the transaction is expected to close
in the second calendar quarter of 2000. The Company entered into the agreement
following the unanimous recommendation by the Special Committee, comprised of
independent directors of the Company. Credit Suisse First Boston advised the
Special Committee in this transaction. CGW Southeast Partners I, L.P., an
affiliate, currently owns approximately 11% of the Company's outstanding shares.
The closing of the merger is subject to regulatory and shareholder
approval and customary conditions to closing. The agreement includes a $5
million breakup fee.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of January 17, 2000, by and
among Cameron Ashley Building Products, Inc., CBP Holdings, Inc. and
CBP Acquisition Corp.
99.1 Press Release dated January 18, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAMERON ASHLEY BUILDING PRODUCTS, INC.
Dated: January 20, 2000 By: /s/ GAROLD E. SWAN
-------------------------------------
Name: Garold E. Swan
-------------------------------------
Title: Executive Vice President and CFO
-------------------------------------
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2.1 Agreement and Plan of Merger dated as of January 17, 2000, by and
among Cameron Ashley Building Products, Inc., CBP Holdings, Inc.
and CBP Acquisition Corp.
99.1 Press Release dated January 18, 2000.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 17, 2000
BY AND AMONG
CAMERON ASHLEY BUILDING PRODUCTS, INC.,
CBP HOLDINGS, INC.
AND
CBP ACQUISITION CORP.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 17, 2000, is entered into by and among Cameron Ashley Building Products,
Inc., a Georgia corporation (the "Company"), CBP Holdings, Inc., a Georgia
corporation ("Purchaser"), and CBP Acquisition Corp., a Georgia corporation and
a wholly owned subsidiary of Purchaser ("Acquisition Sub").
WHEREAS, the Board of Directors of each of Purchaser and Acquisition
Sub have approved the execution and delivery of this Agreement and have
determined that it is advisable and in the best interests of their respective
shareholders, that the Company and Acquisition Sub combine pursuant to the
Merger (as hereinafter defined) in which Acquisition Sub will merge with and
into the Company in accordance with the Georgia Business Corporation Code
("GBCC") and upon the terms and subject to the conditions set forth herein, with
the Company being the surviving corporation;
WHEREAS, the Board of Directors of the Company (the "Board") has, in
light of and subject to the terms and conditions set forth herein, in accordance
with the recommendation of a duly-constituted special committee of independent
members of the Board (the "Special Committee"), and after considering the
long-term prospects and interests of the Company and its shareholders (i)
determined that the consideration to be paid for each Share (as hereinafter
defined) in the Merger (other than Shares held by Purchaser or any affiliate
thereof) is fair to the holders of such Shares and that the Merger is in the
best interests of such shareholders, (ii) approved and adopted this Agreement
and (iii) resolved to recommend that the holders of such Shares approve this
Agreement and the Merger upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Purchaser, Acquisition Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Purchaser, Acquisition Sub and the Company
hereby agree as follows:
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ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the GBCC, at the Effective Time (as
hereinafter defined) the Company and Acquisition Sub shall consummate a merger
(the "Merger") pursuant to which (a) Acquisition Sub shall merge with and into
the Company and the separate corporate existence of Acquisition Sub shall
thereupon cease, (b) the Company shall be the successor or the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Georgia and (c) the corporate existence of the Company with all of its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger.
Section 1.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause (a) a Certificate of Merger to be executed and filed on the
date of the Closing (as hereinafter defined) (or on such other date as Purchaser
and the Company may agree) with the Secretary of State of Georgia in such form
as required by, and executed in accordance with the relevant provisions of, the
GBCC and (b) all other filings or recordings required by the GBCC in connection
with the Merger. Prior to the filing referred to in this Section 1.2, a closing
(the "Closing") will be held at the offices of Locke Liddell & Sapp LLP, 2200
Ross Avenue, Suite 2200, Dallas, Texas 75201, at 10:00 a.m., Dallas, Texas time
(or such other place, date and time as the parties may agree in writing). The
Merger shall become effective at such time as such Certificate of Merger is duly
filed with the Secretary of State of Georgia, or at such later time specified in
such Certificate of Merger (the time the Merger becomes effective being referred
to herein as the "Effective Time"). Subject to the terms and conditions hereof,
unless otherwise mutually agreed upon in writing by the authorized officers of
the Company and Purchaser, the parties hereto shall use their reasonable efforts
to cause the Effective Time to occur on the first business day following the
last to occur of (i) the effective date (including expiration of any applicable
waiting period) of the last required consent of any Governmental Entity having
authority over and approving or exempting the Merger and (ii) the date on which
the shareholders of the Company approve this Agreement and the Merger to the
extent such approval is required by applicable law; or such later date within
two (2) business days thereof as may be specified by Purchaser.
Section 1.3 Effects of the Merger. At the Effective Time, the Merger
shall have the effects as set forth in the applicable provisions of the GBCC.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the properties, rights, privileges, powers and franchises of
the Company and Acquisition Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Acquisition Sub shall become
the debts, liabilities and duties of the Surviving Corporation.
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Section 1.4 Amended and Restated Articles of Incorporation and Bylaws.
(a) The Amended and Restated Articles of Incorporation (the
"Restated Articles") of the Company in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until amended in accordance with applicable law.
(b) The Bylaws of the Company in effect at the Effective
Time shall be the Bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.5 Directors. The directors of Acquisition Sub at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Restated Articles and the Bylaws of the
Surviving Corporation until each such director's successor is duly elected or
appointed and qualified.
Section 1.6 Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Restated Articles and the Bylaws of the Surviving
Corporation until each such officer's successor is duly elected or appointed and
qualified.
Section 1.7 Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Acquisition Sub
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or
Acquisition Sub, all such deeds, bills of sale, assignments and assurances and
to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all rights, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 1.8 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of any of Purchaser, Acquisition
Sub or the Company:
(a) Each issued and outstanding share of Common Stock, no
par value, of the Company ("Share") immediately prior to the Effective
Time, together with the associated preferred stock purchase rights (the
"Rights") issued pursuant to that certain Rights Agreement, dated as of
August 19, 1997, as amended (the "Rights Agreement"), by and between
the Company and SunTrust Bank, Atlanta, Georgia, as Rights Agent (other
than (i) any Shares to be canceled pursuant to Sections 1.8(b) and
1.8(c) and (ii) any Dissenting Shares (as defined in Section 2.1
hereof)), shall be canceled and extinguished and be converted into the
right to receive $15.10 in cash (the "Merger Consideration"), payable
to the holder thereof, without interest thereon, upon the
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surrender of the certificate formerly representing such Share in the
manner provided in Section 2.2 hereof and less any required withholding
of Taxes (as hereinafter defined). From and after the Effective Time,
all such Shares shall no longer be outstanding and shall be deemed to
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger
Consideration therefor, without interest thereon, upon the surrender of
such certificate in accordance with Section 2.2 hereof, or the right,
if any, to receive payment from the Surviving Corporation of the "fair
value" of such Shares as determined in accordance with Article 13 of
the GBCC.
(b) Each Share held in the treasury of the Company and each
Share owned by any Subsidiary of the Company immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on
the part of Acquisition Sub, the Company or the holder thereof, be
canceled, retired and cease to exist and no payment or distribution
shall be made with respect thereto.
(c) Each Share held by Purchaser shall be canceled.
(d) As of the Effective Time, by virtue of the Merger and
without any action on the part of the holders of any Shares or holders
of Common Stock, par value $0.01 per share, of Acquisition Sub
("Acquisition Sub Common Stock"), each issued and outstanding share of
Acquisition Sub Common Stock shall be converted into one (1) validly
issued, fully paid and nonassessable share of common stock, no par
value per share, of the Surviving Corporation.
Section 1.9 Stock Options and Warrants. At or immediately prior to the
Effective Time, each outstanding stock option (an "Option") to purchase Shares
granted under any stock option plan, compensation plan or arrangement of the
Company or outstanding warrant (a "Warrant") to purchase Shares shall be
canceled and the holder of each such Option or Warrant (whether or not then
vested or exercisable) shall be paid by the Company promptly after the Effective
Time for each such Option or Warrant an amount equal to the product of (a) the
excess, if any, of the Merger Consideration over the applicable exercise price
per Share and (b) the number of Shares such holder could have purchased
(assuming full vesting and exercisability of such Option or Warrant) had such
holder exercised such Option or Warrant in full immediately prior to the
Effective Time.
Section 1.10 Shareholders' Meeting. If required by applicable law in
order to consummate the Merger, the Company, acting through the Board, shall, in
accordance with applicable law, subject to the terms and conditions of this
Agreement:
(a) as soon as reasonably practicable, duly call, give
notice of, convene and hold an annual or special meeting of its
shareholders (the "Shareholders' Meeting") for the purpose of
considering and taking action upon the approval of the Merger and the
approval and adoption of this Agreement;
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(b) except as permitted in Section 1.10(c) and 5.2 below,
include in the Proxy Statement (as hereinafter defined) the
recommendation of the Board that shareholders of the Company vote in
favor of the approval of the Merger and the approval and adoption of
this Agreement;
(c) use reasonable efforts to obtain shareholder approval
(subject to the Board, after having consulted with legal counsel,
determining in good faith that the taking of such action would
constitute a breach of the Board's fiduciary obligations under
applicable law);
(d) prepare and file with the Securities and Exchange
Commission ("SEC") a preliminary proxy or information statement
relating to the Merger and this Agreement and use its best efforts to
obtain and furnish the information required to be included by it in the
proxy or information statement and, after consultation with Purchaser,
respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement, and cause a definitive
proxy or information statement, including any amendment or supplement
thereto (such proxy or information statement, together with any
amendments or supplements thereto, the "Proxy Statement") to be mailed
to its shareholders at the earliest practicable time; and
(e) incorporate into the Proxy Statement written
information provided by Purchaser concerning Purchaser and Acquisition
Sub required to be included in the Proxy Statement. The Company shall
not be responsible or liable for any untrue statement of a material
fact or omission to state a material fact required to be stated in the
Proxy Statement or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, to the
extent that any such untrue statement of a material fact or omission to
state a material fact was made by the Company in reliance upon and in
conformity with written information concerning Purchaser or Acquisition
Sub furnished to the Company by Purchaser specifically for use in the
Proxy Statement. Purchaser agrees that the written information
concerning Purchaser and Acquisition Sub provided by it for inclusion
in the Proxy Statement and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the meeting(s) of
shareholders of the Company, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE II
DISSENTING SHARES; PAYMENT FOR SHARES
Section 2.1 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, any Shares held by a holder who has demanded and perfected
his demand for payment for his
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Shares in accordance with Article 13 of the GBCC and as of the
Effective Time has neither withdrawn nor lost his right to such
appraisal ("Dissenting Shares") shall not be converted into or
represent a right to receive the Merger Consideration pursuant to
Section 1.8, but the holder thereof shall be entitled to only such
rights as are granted by the GBCC.
(b) Notwithstanding the provisions of Section 2.l(a), if
any holder of Shares who demands payment for his Shares under Article
13 of the GBCC effectively withdraws or loses (through failure to
perfect or otherwise) his right to such payment under Article 13, then
as of the Effective Time or the occurrence of such event, whichever
later occurs, such holder's Shares shall automatically be converted
into and represent only the right to receive the Merger Consideration
as provided in Section 1.8(a), without interest thereon, upon surrender
of the certificate or certificates representing such Shares pursuant to
Section 2.2 hereof.
(c) The Company shall give Purchaser (i) prompt notice of
any such demands for payment under Article 13 of the fair value of any
Shares, withdrawals of such demands and any other instruments served
pursuant to the GBCC received by the Company and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for
payment under the GBCC. The Company shall not voluntarily make any
payment with respect to any demands for payment and shall not, except
with the prior written consent of Purchaser, settle or offer to settle
any such demands.
Section 2.2 Payment for Shares.
(a) Prior to the Effective Time, Purchaser shall designate
a bank or trust company, reasonably acceptable to the Company, to act
as paying agent in connection with the Merger (the "Paying Agent")
pursuant to a paying agent agreement providing for the matters set
forth in this Section 2.2 and otherwise reasonably satisfactory to the
Company. At the Effective Time, Purchaser shall deposit, or cause to be
deposited, in trust with the Paying Agent for the benefit of holders of
Shares the aggregate consideration to which such holders shall be
entitled at the Effective Time pursuant to Section 1.8. Such funds
shall be invested as directed by the Surviving Corporation pending
payment thereof by the Paying Agent to holders of the Shares. Earnings
from such investments shall be the sole and exclusive property of the
Surviving Corporation and no part thereof shall accrue to the benefit
of the holders of the Shares.
(b) As soon as reasonably practicable after the Effective
Time, the Paying Agent shall mail to each record holder, as of the
Effective Time, of an outstanding certificate or certificates which
immediately prior to the Effective Time represented outstanding Shares
(the "Certificates"), whose Shares were converted pursuant to Section
1.8 into the right to receive the Merger Consideration (i) a 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 not inconsistent with this
Agreement) and (ii)
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instructions for use in effecting the surrender of the Certificates in
exchange for payment of the Merger Consideration (together, the
"Transmittal Documents"). Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as
may be appointed by Purchaser, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate, without any
interest thereon, and less any applicable withholding Taxes, and the
Certificate so surrendered shall forthwith be canceled. If payment of
the Merger Consideration is to be made to a Person (as hereinafter
defined) 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 shall
otherwise be in proper form for transfer, that the signatures on the
Certificate or any related stock power shall be properly guaranteed and
that the Person requesting such payment shall have paid any transfer
and other Taxes required by reason of the payment of the Merger
Consideration to a Person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction
of the Surviving Corporation that such Tax either has been paid or is
not applicable. Until surrendered in accordance with the provisions of
and as contemplated by this Section 2.2 each Certificate (other than
(i) Certificates representing Shares subject to Sections 1.8(b) and
1.8(c) and (ii) Dissenting Shares) shall be deemed at any time after
the Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.2. Upon the
surrender of Certificates in accordance with the terms and instructions
contained in the Transmittal Documents, Purchaser shall cause the
Paying Agent to pay the holder of such Certificates in exchange
therefor cash in an amount equal to the Merger Consideration multiplied
by the number of Shares represented by such Certificate (other than
Certificates representing Dissenting Shares and Certificates
representing Shares held by Purchaser or in the treasury of the
Company).
(c) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall not be any further registration
of transfers of any shares of capital stock thereafter on the records
of the Company. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with
the procedures set forth, in this Article II. No interest shall accrue
or be paid on any cash payable upon the surrender of a Certificate or
Certificates which immediately before the Effective Time represented
outstanding Shares.
(d) From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect
to such Shares, except as otherwise provided herein or by applicable
law.
(e) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed, the
Surviving Corporation shall pay or cause to be paid in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration for
the Shares represented
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thereby. When authorizing such payment of the Merger Consideration in
exchange therefor, the Board of Directors of the Surviving Corporation
may, in its discretion and as a condition precedent to the payment
thereof, require the owner of such lost, stolen or destroyed
Certificate to give the Surviving Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made against the
Surviving Corporation with respect to the Certificate alleged to have
been lost, stolen or destroyed.
(f) Promptly following the date which is six (6) months
after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any cash (including any
earnings and interest received with respect thereto), Certificates and
other documents in its possession relating to the Merger, which had
been made available to the Paying Agent and which have not been
disbursed to holders of Certificates, and thereafter such holders shall
be entitled to look to the Surviving Corporation (subject to abandoned
property, escheat or similar laws) only as general creditors thereof
with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon.
(g) The Merger Consideration paid in the Merger shall be
net to the holder of Shares in cash, subject to reduction only for any
applicable federal withholding Taxes or, as set forth in Section
2.2(b), stock transfer Taxes payable by such holder.
(h) Notwithstanding anything to the contrary in this
Section 2.2, none of the Paying Agent, Purchaser or the Surviving
Corporation shall be liable to any holder of a Certificate formerly
representing Shares for any amount properly delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar law. If Certificates are not surrendered prior to two (2) years
after the Effective Time, unclaimed funds payable with respect to such
Certificates 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedule delivered to Purchaser prior to the
execution of this Agreement setting forth specific exceptions to the Company's
representations and warranties set forth herein (the "Company Disclosure
Schedule"), the Company hereby represents and warrants to Purchaser as follows:
Section 3.1 Organization and Qualification, Subsidiaries.
(a) The Company Disclosure Schedule sets forth in Section
3.1(a) a complete list of all Subsidiaries of the Company that are
corporations (identifying its jurisdiction of incorporation, each
jurisdiction in which it is qualified and/or licensed to
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transact business, and the number of shares owned and percentage
ownership interest represented by such share ownership) and all of its
Subsidiaries that are general or limited partnerships, limited
liability companies or other non-corporate entities (identifying the
law under which such entity is organized, each jurisdiction in which it
is qualified and/or licensed to transact business, and the amount and
nature of the ownership interest therein). Except as noted in Section
3.1(a) of the Company Disclosure Schedule, each of the Company and its
Subsidiaries is a corporation and each Subsidiary is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and (as to corporations) has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted. Each
Subsidiary of the Company which is not a corporation has all power and
authority under its governing documents and the law under which it was
organized to own, lease and operate its properties and to carry on its
businesses as now being conducted. The minute book and other
organizational documents for each of the Company and its Subsidiaries
have been made available to Purchaser for its review and, except as
disclosed in Section 3.1(a) of the Company Disclosure Schedule, are
true and complete in all material respects as in effect as of the date
of this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the Board of Directors and
shareholders thereof. The Company has heretofore delivered or made
available to Purchaser accurate and complete copies of the Restated
Articles and Bylaws, as currently in effect, of the Company and
promptly will deliver to Purchaser, upon request, accurate and complete
copies of the certificate or articles of incorporation and bylaws, as
currently in effect, of each of its Subsidiaries. As used in this
Agreement, the term "Subsidiary" shall mean with respect to any party,
any corporation or other organization, whether incorporated or
unincorporated or domestic or foreign to the United States of which (i)
such party or any other Subsidiary of such party is a general partner
or (ii) at least a majority of the securities or other interests having
by their terms ordinary voting power to elect a majority of the board
of directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned
or controlled by such party or by any one or more of its Subsidiaries,
or by such party and one or more of its Subsidiaries.
(b) Each of the Company and its Subsidiaries is duly
qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to
be so duly qualified or licensed and in good standing would not,
individually or in aggregate, have a Company Material Adverse Effect.
As used in this Agreement, the term "Company Material Adverse Effect"
shall mean any change(s) or effect(s) that, individually or in the
aggregate, are materially adverse to the financial condition, business
or results of operations of the Company and its Subsidiaries, taken as
a whole, excluding in all cases: (i) events or conditions generally
affecting the industry in which the Company and its Subsidiaries
operate or arising from changes in general business or economic
conditions; (ii) any effect resulting from any change in law or GAAP,
which generally affects entities such as the Company or its
Subsidiaries; (iii) events resulting from the execution and/or
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announcement of this Agreement; and (iv) any effect resulting from
compliance by the Company or any of its Subsidiaries with the terms of
this Agreement.
(c) Except as set forth in Section 3.1(c) of the Company
Disclosure Schedule, neither the Company nor any Subsidiary owns (i)
any equity interest, or option to purchase such an interest, in any
corporation or other entity or (ii) marketable securities where the
Company's or Subsidiary's equity interest in any entity exceeds five
percent (5%) of the outstanding equity of such entity on the date
hereof.
Section 3.2 Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, no par value (the "Common Stock"),
and 100,000 shares of preferred stock, no par value (the "Preferred
Stock"). As of the date hereof, (i) 8,694,954 shares of Common Stock
are issued and outstanding and no shares of Preferred Stock are
outstanding and (ii) 10,413 shares of Common Stock have been authorized
for issuance but have not been issued. As of the date hereof, 1,189,911
shares of Common Stock and no shares of Preferred Stock are held in the
treasury of the Company. All of the Shares have been validly issued,
are fully paid, nonassessable and have been issued free of preemptive
rights. Section 3.2 of the Company Disclosure Schedule identifies the
number of shares of each class of capital stock of the Company which
are reserved and subject to any Company Benefit Plan, indicating the
name of the plan, the date of the grant, the holder of the option, the
number of shares granted, the type of option and the exercise price
thereof. Section 3.2 of the Company Disclosure Schedule also identifies
the number of shares of each class of capital stock of the Company
which are reserved and subject to any warrant of the Company,
indicating the warrant agreement, the date of the warrant, the holder
of the warrant, the number of shares subject to the warrant and the
exercise price thereof. The actions to be taken in Section 1.9 hereof
with respect to all outstanding options and warrants of the Company are
permissible under the terms of such options and warrants without any
further action on the part of the Company, Purchaser or the holders of
any such options or warrants. As of the date hereof, options to
purchase 1,630,285 shares of Common Stock were outstanding under
Company Benefit Plans and warrants to purchase 200,000 shares of Common
Stock were outstanding. Except as set forth above and except for the
Rights issued pursuant to the Rights Agreement, there are outstanding
(i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) no options or other rights to acquire
from the Company or any of its Subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) of
the Company or any of its Subsidiaries to issue or sell, directly or
indirectly, any capital stock, voting securities, securities
convertible into or exchangeable for capital stock or voting
securities, or other securities of the Company or any of its
Subsidiaries, or any other ownership interests in the Company or any of
its Subsidiaries and (iv) no equity equivalents, interests in the
ownership or earnings of the Company or any of its Subsidiaries or
other similar rights (collectively, "Company Securities"). Except for
the put options relating to the
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capital stock of Field Marketing, Inc., there are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities.
(b) Except as set forth in Section 3.2 of the Company
Disclosure Schedule, all of the outstanding capital stock of, or other
ownership interests in, each Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien (as
hereinafter defined) or any other limitation or restriction (including
any restriction on the right to vote or sell the same, except as may be
provided as a matter of law) and is fully paid and non-assessable and
was issued free of preemptive rights. For purposes of this Agreement,
"Lien" shall mean, with respect to any asset (including, without
limitation, any security) any option, claim, mortgage, lien, pledge,
charge, security interest or encumbrance or restriction of any kind in
respect of such asset (other than rights or interests held by lessors
or sublessors under operating leases entered into in the ordinary
course of business and other than Permitted Liens). For purposes of
this Agreement, "Permitted Liens" shall mean (i) statutory Liens not
yet delinquent, (ii) Liens with respect to the properties or assets
that do not, individually or in the aggregate, materially detract from
the value or interfere with the use of the properties or assets or
otherwise materially impair present business operations at such
properties, (iii) Liens for Taxes and other governmental charges not
yet delinquent or the validity of which are being contested in good
faith by appropriate actions and (iv) Liens reflected on the 1999
Financial Statements or Section 3.2(b) of the Company Disclosure
Schedule.
(c) The Shares and the Rights constitute the only class of
equity securities of the Company or any of its Subsidiaries registered
or required to be registered under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(d) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a
party with respect to the voting of the capital stock of the Company or
any of the Subsidiaries.
(e) Other than as set forth in the 1999 Financial
Statements or in Section 3.2(e) of the Company Disclosure Schedule,
there is no outstanding material Indebtedness (as hereinafter defined)
of the Company or any of its Subsidiaries. Except as identified in the
1999 Financial Statements or in Section 3.2(e) of the Company
Disclosure Schedule, no such Indebtedness of the Company or its
Subsidiaries contains any restriction upon (i) the prepayment of such
Indebtedness, (ii) the incurrence of Indebtedness by the Company or its
Subsidiaries, respectively, or (iii) the ability of the Company or its
Subsidiaries to grant any Liens on its properties or assets. For
purposes of this Agreement, "Indebtedness" shall include (i) all
indebtedness for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with
customary practices and operating leases), (ii) any other indebtedness
which is evidenced by a note, bond, debenture or similar instrument,
(iii) all obligations under financing leases, (iv) all
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obligations in respect of acceptances issued or created, (v) all
liabilities secured by any Lien on any property and (vi) all guarantee
obligations.
Section 3.3 Authority Relative to this Agreement, Consents and
Approvals.
(a) The Company has all the necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
Merger in accordance with the terms hereof (subject to obtaining the
necessary approval and adoption of this Agreement and approval of the
Merger by the shareholders of the Company as contemplated by Section
1.10 hereof). The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the Merger have
been duly and validly authorized by the Board and, except for obtaining
the approval of the Company's shareholders as contemplated by Section
1.10 hereof, no other corporate action or corporate proceedings on the
part of the Company are necessary to authorize the execution and
delivery by the Company of this Agreement and the consummation by the
Company of the Merger. This Agreement has been duly and validly
executed and delivered by the Company, and assuming due and valid
authorization, execution and delivery by Purchaser and Acquisition Sub,
constitutes a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceedings may
be brought).
(b) The Board has duly and validly approved, and taken all
corporate actions required to be taken by it for the consummation of,
the Merger, including, but not limited to, all actions required to
satisfy the provisions of Article VII of the Restated Articles and all
actions required to exempt this Agreement and the transactions
contemplated hereby from Sections 14-2-1131 through 14-2-1133 and
14-2-1110 through 14-2-1113 of the GBCC.
Section 3.4 SEC Reports, Financial Statements.
(a) Except as set forth on Section 3.4(a) of the Company
Disclosure Schedule, since October 31, 1998, the Company has timely
filed with the SEC all forms, reports, schedules, statements and other
documents required to be filed by it with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and the
SEC's rules and regulations promulgated thereunder and the Exchange Act
and the SEC's rules and regulations promulgated thereunder, including,
without limitation, any financial statements or schedules included
therein (any such documents filed prior to the date hereof being
collectively, the "Company SEC Documents"). At the time filed, or in
the case of registration statements on their respective effective
dates, the Company SEC Documents (i) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the rules and regulations
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<PAGE> 14
promulgated thereunder and (ii) did not, at the time filed (or in the
case of registration statements, at the time of effectiveness), contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. No Subsidiary of the Company is required to
file any form, report or other document with the SEC. The audited
financial statements dated October 31, 1999 delivered to Purchaser (the
"1999 Financial Statements") and the financial statements included in
the Company SEC Documents filed since October 31, 1998 (i) have been
prepared from, and are in accordance with, the books and records of the
Company and its Subsidiaries, (ii) complied in all material respects
with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, (iii) have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and (iv)
fairly present, in all material respects, the consolidated financial
position and the consolidated results of operations and cash flows (and
changes in financial position, if any) of the Company and its
Subsidiaries as of the times and for the periods referred to therein,
except that any such Financial Statements that are unaudited, interim
financial statements were or are subject to normal and recurring year
end adjustments, which were not or are not expected to be material in
amount or effect.
(b) The Company has heretofore delivered or made available
to Purchaser, in the form filed with the SEC (including any amendments
thereto), (i) its Annual Reports on Form 10-K for each of the three
fiscal years ended October 31, 1996, October 31, 1997 and October 31,
1998, (ii) all definitive proxy statements relating to the Company's
meetings of shareholders (whether annual or special) held since October
31, 1998 and (iii) all other reports or registration statements filed
by the Company with the SEC since October 31, 1998.
(c) The Company has heretofore furnished or made available
to Purchaser a complete and correct copy of any amendments or
modifications, which have not yet been filed by the Company with the
SEC, to all agreements, documents or other instruments which previously
had been filed by the Company and are currently in effect.
Section 3.5 Proxy Statement. The Proxy Statement to be sent to the
shareholders of the Company in connection with the Shareholders' Meeting, as of
the date first mailed to the shareholders of the Company and at the time of the
Shareholders' Meeting, and the Rule 13E-3 Transaction Statement on Schedule
13E-3 (together with all amendments and supplements thereto, the "Schedule
13E-3"), at the time filed with the SEC, will not 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 were made, not misleading. The Proxy Statement
and the Schedule 13E-3 will, when filed by the Company with the SEC, comply as
to form in all material respects with the applicable provisions of the Exchange
Act and the SEC rules and regulations promulgated thereunder. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect to
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<PAGE> 15
the statements made in any of the foregoing documents based on written
information supplied by or on behalf of Purchaser, Acquisition Sub or any of
their respective affiliates specifically for inclusion therein.
Section 3.6 Consents and Approvals; No Violations. No filing with or
notice to, and no permit, authorization, consent or approval of, any court or
tribunal or any federal, state, county or local administrative, governmental or
regulatory body, agency, authority (including a self-regulated authority),
instrumentality, commission, board or body (a "Governmental Entity") is required
on the part of the Company or any of its Subsidiaries for the execution,
delivery and performance by the Company of this Agreement or the consummation by
the Company of the Merger, except (a) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (b) pursuant to the applicable requirements of the
Exchange Act and the SEC's rules and regulations promulgated thereunder, (c) the
filing and recordation of the Certificate of Merger pursuant to the GBCC or (d)
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings or give such notice would not have a Company Material
Adverse Effect. Except as disclosed in Section 3.6 of the Company Disclosure
Schedule, neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the Merger will (i) conflict
with or result in any breach of any provision of the respective Certificate or
Articles of Incorporation or Bylaws (or similar governing documents) of the
Company or of any its Subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
or require any consent pursuant to, or result in the creation of any Lien on any
asset of the Company or its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except in the case
of (ii) or (iii) for any such violations, breaches, defaults (or rights of
termination, amendment, cancellation or acceleration), Liens or failures to
obtain consents which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
Section 3.7 No Default. None of the Company or any of its Subsidiaries
is in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (a) its Certificate or Articles of Incorporation or
Bylaws (or similar governing documents), (b) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its Subsidiaries is now a party or by which any
of them or any of their respective properties or assets may be bound or (c) any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
the Company, any of its Subsidiaries or any of their respective properties or
assets, except in the case of (b) or (c) for violations, breaches or defaults
which would not, individually or in the aggregate, have a Company Material
Adverse Effect.
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<PAGE> 16
Section 3.8 No Undisclosed Liabilities. Except (a) for liabilities
incurred pursuant to the terms of this Agreement, (b) for liabilities that are
accrued or reserved against in the consolidated balance sheets of the Company
included in the 1999 Financial Statements or (c) as set forth in Section 3.8 of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has incurred any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that have, or would reasonably be expected to
have, a Company Material Adverse Effect or that would be required by GAAP to be
reflected or reserved against on a consolidated balance sheet, or in the notes
thereto, of the Company. Except as set forth in Section 3.8 of the Company
Disclosure Schedule, there is no Indebtedness of the Company and its
Subsidiaries which exceeds $50,000 and will accelerate or become due or result
in a right of redemption or repurchase on the part of the holder of such
Indebtedness (with or without due notice or lapse of time) as a result of this
Agreement or the Merger. Neither the Company nor any Subsidiary has incurred or
paid any liability since the date of the Company Balance Sheet except for such
liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect or (ii) in
connection with the transactions contemplated by this Agreement. Except as
disclosed in the Company SEC Documents or in Section 3.8 of the Company
Disclosure Schedule, neither the Company nor any Subsidiary is directly or
indirectly liable, by guarantee, indemnity, or otherwise, upon or with respect
to, or obligated, by discount or repurchase agreement or in any other way, to
provide funds in respect to, or obligated to guarantee or assume any liability
of any Person for any amount in excess of $100,000. As used in this Section 3.8,
the term "liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
Section 3.9 Litigation. Except as disclosed in the Company SEC
Documents or in Section 3.9 of the Company Disclosure Schedule, there is no
suit, claim, complaint, action, arbitration, criminal prosecution, governmental
or other examination, investigation, hearing, administrative or other proceeding
(collectively, "Litigation") pending or, to the knowledge of the Company,
threatened against, affecting or involving the Company or any of its
Subsidiaries or any of their respective properties or assets before any
Governmental Entity which is reasonably likely to have a Company Material
Adverse Effect. Except as disclosed in the Company SEC Documents or in Section
3.9 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree
which is reasonably likely to have a Company Material Adverse Effect. Reserves
reflected on the 1999 Financial Statements are adequate for all Litigation
disclosed in the Company SEC Documents or in Section 3.9 of the Company
Disclosure Schedule. Section 3.9 of the Company Disclosure Schedule contains a
summary of all Litigation as of the date of this Agreement where the potential
liability is reasonably likely to exceed $25,000 (i) to which the Company or any
Subsidiary is a party or (ii) which names the Company or any Subsidiary as a
defendant or cross-defendant or for which the Company or any Subsidiary has any
potential liability.
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<PAGE> 17
Section 3.10 Compliance with Applicable Law. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not have a Company Material
Adverse Effect. The businesses of the Company and its Subsidiaries are not being
and have not been conducted in violation of any law, ordinance or regulation of
any Governmental Entity, except for violations or possible violations which,
individually or in the aggregate, would not have a Company Material Adverse
Effect. None of the directors, officers, agents, representatives or employees of
the Company or its Subsidiaries (in their capacity as directors, officers,
agents, representatives or employees) has taken any action or made any omission
which would violate any law, ordinance or regulation of any Governmental Entity,
except for violations or possible violations which, individually or in the
aggregate, would not have a Company Material Adverse Effect. Except as set forth
in Sections 3.9 or 3.10 of the Company Disclosure Schedule or in the Company SEC
Documents, no investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries, or with respect to any of their
respective directors, officers, agents, representatives or employees (in regard
to actions taken or omissions made in their capacity as directors, officers,
agents, representatives or employees) is pending or, to the knowledge of the
Company, threatened. Excluded from the scope of this representation and warranty
are all matters related to Environmental Laws, Materials of Environmental
Concern or Environmental Claims; these excluded matters, to the extent subject
to a representation and warranty under this Agreement, are covered exclusively
by Section 3.12.
Section 3.11 Employee Benefit Matters.
(a) All Company Benefit Plans (as defined in Section
3.11(h)) are listed in Section 3.11 of the Company Disclosure Schedule
or in the Company SEC Documents. True and complete copies of the
Company Benefit Plans (including: (i) all trust agreements or other
funding arrangements for such Company Benefit Plans (including
insurance contracts), and all amendments thereto, (ii) with respect to
any such Company Benefit Plans or amendments, all determination
letters, rulings, opinion letters, information letters, or advisory
opinions issued by the United States Internal Revenue Service, the
United States Department of Labor, or the Pension Benefit Guaranty
Corporation after December 31, 1992, (iii) annual reports or returns,
audited or unaudited financial statements, actuarial valuations and
reports and summary annual reports prepared for any Company Benefit
Plan with respect to the most recent three (3) plan years, (iv) the
most recent summary plan descriptions and any material modifications
thereto and (v) any filing or compliance action taken under Revenue
Procedures 98-22, 99-13, or 99-31) have been provided or made available
to the Purchaser. Except as set forth in Section 3.11(a) of the Company
Disclosure Schedule, each Company Benefit Plan has been administered
and maintained in all material respects in compliance with its terms,
with the material provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), with the Internal Revenue Code of
1986, as amended (the "Code"), and with
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all other applicable laws. Each Company Benefit Plan intended to be
qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service (the "IRS") to be so qualified and no event
has occurred that could reasonably be expected to adversely affect the
qualified status of such Company Benefit Plan or the tax-exempt status
of any trust. All government approvals for tax exemption of any trust
applicable to a Company Benefit Plan have been timely obtained and all
such approvals as well as all IRS determination letters applicable to a
Company Benefit Plan continue in full force and effect. Neither the
Company nor any of its Subsidiaries has engaged in a transaction with
respect to any Company Benefit Plan that, assuming the taxable period
of such transaction expired as of the date hereof, would subject the
Company to a Tax imposed by either Section 4975 of the Code or Section
502(i) of ERISA. To the knowledge of the Company, there are no pending,
nor has the Company or any of its Subsidiaries received notice of any
threatened, claims against or otherwise involving any of the Company
Benefit Plans (other than routine claims for benefits). No Company
Benefit Plan is under audit or investigation by the IRS, the Department
of Labor or the Pension Benefit Guaranty Corporation and, to the
knowledge of the Company, no such audit or investigation is threatened.
Except as listed on Section 3.11(a) of the Company Disclosure Schedule,
all contributions and other payments required to be made as of the date
of this Agreement to, or pursuant to, the Company Benefit Plans have
been made or accrued for in the 1999 Financial Statements. Neither the
Company nor any entity under "common control" with the Company within
the meaning of Section 4001 of ERISA has at any time contributed to, or
been required to contribute to, any "pension plan" (as defined in
Section 3(2) of ERISA) that is subject to Title IV of ERISA or Section
412 of the Code, including, without limitation, any "multi-employer
plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA) and
neither the Company nor any such entity has at any time incurred or
could reasonably expect to incur any liability under Title IV of ERISA.
To the knowledge of the Company, neither the Company nor any of its
Subsidiaries nor any employee or agent thereof, has made any oral or
written representation to any participant in or beneficiary of a
Company Benefit Plan, or to any other individual or entity that is
contrary to the written or otherwise preexisting terms and provisions
of any Company Benefit Plan, which representations (in the aggregate)
could reasonably create a material liability for the Company.
(b) Except as listed on Section 3.11(b) of the Company
Disclosure Schedule or in the Company SEC Documents, the consummation
of the Merger will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Company
Benefit Plan, employment or severance agreement, trust, loan or other
compensation or benefits agreement or arrangement that will or may
result in any payment (whether of severance pay, unemployment
compensation, golden parachute or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former
employee, officer, director, agent or consultant of the Company or any
Subsidiary. Except as listed on Section 3.11(b) of the Company
Disclosure Schedule, no such payment, acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits will cause a loss of tax deductions under Section 280G
of the Code.
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(c) Except as listed on Section 3.11(c) of the Company
Disclosure Schedule, (i) neither the Company nor any of its
Subsidiaries maintains or contributes to any Company Benefit Plan which
provides, or has any liability to provide, life insurance, medical,
severance or other employee welfare benefits to any employee upon or
with respect to periods following his retirement or termination of
employment, except as may be required by Section 4980B of the Code and
(ii) there are no restrictions on the rights of the Company to amend or
terminate any such retiree health or benefit Plan without incurring any
liability thereunder.
(d) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of
employees and former employees of the Company and their respective
beneficiaries, have been fully reflected on the 1999 Financial
Statements to the extent required by and in accordance with GAAP.
(e) To the extent a Company Benefit Plan has excluded any
individual from coverage, such exclusion is (i) consistent with the
written terms of the Company Benefit Plan, (ii) enforceable under the
terms of such Plan, (iii) consistent with the terms of any agreement
with such individual (whether written or oral) and (iv) enforceable
under applicable law.
(f) Neither the Company nor any of its Subsidiaries nor,
to the knowledge of the Company, any administrator or fiduciary of any
Company Benefit Plan (or any agent of any of the foregoing) has engaged
in any transaction, or acted or failed to act in any manner which could
subject the Company or Purchaser to any direct or indirect liability
(by indemnity or otherwise) for breach of any fiduciary, co-fiduciary
or other duty under ERISA.
(g) Except as listed on Section 3.11(g) of the Company
Disclosure Schedule, all Company Benefit Plan documents and annual
reports or returns, audited or unaudited financial statements,
actuarial valuations, summary annual reports and summary plan
descriptions issued with respect to the Company Benefit Plans are
correct and complete and have been timely distributed to participants
of the Company Benefit Plans (as required by law).
(h) "Company Benefit Plan" means collectively, each
pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus or
other incentive plan, any other written or unwritten employee program,
arrangement, agreement or understanding, whether arrived at through
collective bargaining or otherwise, any medical, vision, dental or
other health plan, any life insurance plan or any other employee
benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of
ERISA, maintained by, sponsored in whole or in part by, or contributed
to by the Company or any of its Subsidiaries for the benefit of
employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors or
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other beneficiaries are eligible to participate. Company Benefit Plans
include (but are not limited to) "employee benefit plans" as defined in
Section 3(3) of ERISA and any other plan, fund, policy, program,
practice, custom, understanding or arrangement providing compensation
or other benefits to any current or former officer or employee or
director or independent contractor of the Company, or any dependent or
beneficiary thereof, maintained by the Company or under which the
Company has any obligation or liability, whether or not they are or are
intended to be (i) covered or qualified under the Code, ERISA or any
other applicable law, (ii) written or oral, (iii) funded or unfunded,
(iv) actual or contingent or (v) generally available to any or all
employees (or former employees) of the Company (or their beneficiaries
of dependents), including, without limitation, all incentive, bonus,
deferred compensation, flexible spending accounts, cafeteria plans,
vacation, holiday, medical, disability, share purchase or other similar
plans, policies, programs, practices or arrangements.
(i) Neither Purchaser nor the Company has any liability or
obligation with respect to any Company Benefit Plan (including any
previously adopted Company Benefit Plan) or any other employee benefit,
plan, program, arrangement or policy that covers employees of the
Company, other than those listed on Schedule 3.11 of the Company
Disclosure Schedule or reflected on the 1999 Financial Statements or
listed in the Company SEC Documents.
Section 3.12 Environmental Laws and Regulations.
(a) Except as shown on Section 3.12(a) of the Company
Disclosure Schedule, and except for such failures to comply which would
not, individually or in the, aggregate, be reasonably likely to have a
Company Material Adverse Effect, the Company and each of its
Subsidiaries (i) is and has been in full compliance with all
Environmental Laws (as defined in Section 3.12(b)) and including,
without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of
Environmental Concern (as defined in Section 3.12(b)) or otherwise
relating to the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; (ii) has all permits, licenses, certificates,
variances, exemptions, orders, authorizations and approvals of
Governmental Entities ("Permits") required under all applicable
Environmental Laws, except for those Permits which, if the Company or a
Subsidiary did not have, such failure would not have a Company Material
Adverse Effect; and (iii) is in compliance with the terms and
conditions of such Permits.
(b) For purposes of this Agreement, the term
"Environmental Laws" shall mean any and all codes, laws (including,
without limitation, common law), ordinances, regulations, reporting or
licensing requirements, rules, or statutes relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata),
including, without limitation (i) the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. Sections 9601 et
seq. ("CERCLA"); (ii) the Solid Waste Disposal Act, as amended by the
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Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et
seq., ("RCRA"); (iii) the Emergency Planning and Community Right to
Know Act (42 U.S.C. Sections 11001 et seq.); (iv) the Clean Air Act (42
U.S.C. Sections 7401 et seq.); (v) the Clean Water Act (33 U.S.C. I
1251 et seq.); (vi) the Toxic Substances Control Act (15 U.S.C. I 2601
et seq.); (vii) the Hazardous Materials Transportation Act (49 U.S.C.
Sections 5101 et seq.); (viii) any state, county, municipal or local
statues, laws or ordinances similar or analogous to the federal
statutes listed in parts (i) - (vii) of this subparagraph, (ix) any
amendments to the statutes, laws or ordinances listed in parts (i) -
(viii) of this subparagraph, in existence on the date hereof, (x) any
rules, regulations, guidelines, directives, orders or the like adopted
pursuant to or implementing the statutes, laws, ordinances and
amendments listed in parts (i) - (ix) of this subparagraph in existence
on the date hereof; and (xi) any other law, statute, ordinance,
amendment, rule, regulation, guideline, directive, order or the like
now in effect relating to environmental, health or safety matters.
For purposes of this Agreement, the term "Materials
of Environmental Concern" shall mean any and all chemicals, substances,
wastes, materials, pollutants, contaminants, equipment or fixtures
defined as or deemed hazardous or toxic or otherwise regulated under
any Environmental Law, including, without limitation, RCRA hazardous
wastes, CERCLA hazardous substances, pesticides and other agricultural
chemicals, oil and petroleum products or byproducts and any
constituents thereof, lead or lead-based paints or materials, radon,
asbestos or asbestos-containing materials and polychlorinated biphenyls
(PCBs).
(c) Except as shown on Section 3.12(c) of the Company
Disclosure Schedule, and except for such written communications which
would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect, neither the Company nor any of
its Subsidiaries has received any written communication whether from a
Governmental Entity, citizens group, employee or otherwise, that
alleges that the Company or any of its Subsidiaries is not in full
compliance with or is potentially liable under any Environmental Laws.
In addition, no Lien has arisen on any properties or assets of the
Company or any Subsidiary under or as a result of any Environmental
Law.
(d) Except as shown on Section 3.12(d) of the Company
Disclosure Schedule, and except for such Environmental Claims which
would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect, the Company has not received
written notice of any claim, action, cause of action, investigation or
notice (together, "Environmental Claims") alleged, filed or being
conducted by any Person alleging potential liability (including,
without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of,
based on or resulting from (i) the presence, disposal, placement,
burial, migration or release, of any Materials of Environmental Concern
at, on, under, to or from any location or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental
Law, that in either case is pending or threatened against the Company
or any of its Subsidiaries or against any Person whose liability for
any Environmental Claim
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<PAGE> 22
the Company or any of its Subsidiaries has retained or assumed either
contractually or by operation of law.
(e) Except as set forth in Section 3.12(e) of the Company
Disclosure Schedule, there has been no disposal, placement, burial or
release of Materials of Environmental Concern by the Company or any
Subsidiary or, to the knowledge of the Company, by any other Person,
on, in, at or from any of the properties or facilities owned or
operated by the Company or any of its Subsidiaries, except for such
disposal, placement, burial or release which would not, individually or
in the aggregate, be reasonably likely to have a Company Material
Adverse Effect.
(f) Without in any way limiting the generality of the
foregoing, except as set forth in Section 3.12(f) of the Company
Disclosure Schedule and, except for any of the matters below which
would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect, (i) there are no above ground
storage tanks, underground storage tanks, oil/water separators, water
treatment facilities or septic systems located on any property owned,
leased, operated or controlled by the Company or any of its
Subsidiaries, (ii) there is no asbestos contained in or forming part of
any building, building component, structure or office space owned,
leased, operated or controlled by the Company or any of its
Subsidiaries and (iii) no PCBs or PCB-containing items are used or
stored at any property owned, leased, operated or controlled by the
Company or any of its Subsidiaries.
(g) Except as set forth in Section 3.12(g) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries are not
subject to any Environmental Laws requiring the performance of site
assessment for Materials of Environmental Concern, or the removal or
remediation of Materials of Environmental Concern, or the giving of
notice to or receiving the approval of any Governmental Entity, or the
recording or delivery to other Persons of any disclosure document or
statement pertaining to environmental matters by virtue of the Merger
or as a condition to the Merger.
Section 3.13 Rights Agreement. The Company has taken all necessary
action so that the execution of this Agreement, announcement or consummation of
the Merger and announcement or consummation of the other transactions
contemplated by this Agreement do not and will not (a) cause the Rights issued
pursuant to the Rights Agreement to separate from the shares of Common Stock to
which they are attached or to be triggered or to become exercisable, (b) cause
any Person to become an Acquiring Person (as such term is defined in the Rights
Agreement) or (c) give rise to a Distribution Date or a Triggering Event (as
each such term is defined in the Rights Agreement). The Company has furnished to
Purchaser true and complete copies of all amendments to the Rights Agreement
that fulfill the requirements of this Section 3.13 and such amendments are in
full force and effect.
Section 3.14 Brokers. No broker, finder or investment banker (other
than Credit Suisse First Boston Corporation (the "Financial Advisor")), a true
and correct copy of whose engagement agreement has been provided to Purchaser)
is entitled to any brokerage, finder's or
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<PAGE> 23
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Company.
Section 3.15 Absence of Certain Changes. Except as disclosed in Section
3.15 of the Company Disclosure Schedule or in the Company SEC Documents, since
October 31, 1998, the Company and each of its Subsidiaries have conducted their
respective businesses only in the ordinary course of business and consistent
with past practice and (a) there has not been any Company Material Adverse
Effect and (b) the Company has not taken any of the actions set forth in
paragraphs (a) through (r) of Section 5.1.
Section 3.16 Taxes. Except as set forth in Section 3.16 of the Company
Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has (i) duly
filed (or there have been filed on its behalf) with the appropriate Tax
Authorities (as hereinafter defined) all Tax Returns (as hereinafter
defined) required to be filed by it on or prior to the date of this
Agreement, and each such Tax Return is correct and complete in all
material respects and (ii) duly paid in full or, made adequate accruals
and reserves in its books and records in accordance with GAAP with full
provision (or there has been paid or such provision has been made on
its behalf for its sole benefit and recourse) for the payment of, all
Taxes for all periods ending on or prior to the date of this Agreement,
except for those Taxes being contested in good faith.
(b) There are no Liens for Taxes upon any property or
assets of the Company or any Subsidiary thereof, except for Liens for
Taxes not yet due and for which adequate reserves have been established
in accordance with GAAP with full provision made for the payment
thereof.
(c) Neither the Company nor any of its Subsidiaries has
made any change in accounting methods, received a ruling from any Tax
Authority or signed an agreement with regard to Taxes reasonably likely
to have a Company Material Adverse Effect.
(d) No Audit (as hereinafter defined) by a Tax Authority
is presently pending with regard to any Taxes or Tax Returns of the
Company or any of its Subsidiaries and, to the knowledge of the
Company, no such Audit is threatened.
(e) An Audit of each United States federal income Tax
Return of the Company or any of its Subsidiaries has been completed by
the applicable Tax Authorities (or the applicable statutes of
limitation for the assessment of Taxes for such periods have expired)
for all periods through and including 1996, and no adjustments were
asserted as a result of such Audits which have not been finally
resolved and fully paid.
(f) There are no agreements, consents or waivers to extend
the statutory period of limitations applicable to the assessment or
payment of any Taxes or
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<PAGE> 24
deficiencies against the Company or any of its Subsidiaries, and no
power of attorney applicable to either the Company or any of its
Subsidiaries with respect to any Taxes is in force.
(g) Neither the Company nor any of its Subsidiaries is a
party to, or is bound by, any agreement, arrangement or policy relating
to the allocation, indemnification or sharing of Taxes.
(h) The Company, as the common parent of an affiliated
group of corporations (as defined in Section 1504 of the Code)
consisting solely of the Company and the Subsidiaries that are
"includable corporations" (within the meaning of Section 1504(b) of the
Code), has filed since 1994 a consolidated return for United States
federal income Tax purposes on behalf of itself and such Subsidiaries
and neither the Company nor any of such Subsidiaries has been a member
of an affiliated group filing a consolidated United States federal Tax
Return other than the affiliated group in which they are currently
members and of which the Company is the common parent.
(i) With respect to completed pay periods, the Company and
each of its Subsidiaries has withheld from its employees, independent
contractors, creditors, stockholders, customers and third parties, and
timely paid to the appropriate Tax Authority, proper amounts in all
material respects with all Tax withholding provisions of applicable
law.
(j) No power of attorney is currently in force with
respect to any matter relating to Taxes that could affect the Company
or any of its Subsidiaries.
(k) Neither the Company nor any Subsidiary shall become
obligated in connection with the closing of the Merger for the payment
of any amount described in Section 162(m)(1) of the Code.
(l) "Audit" means any audit, assessment or other
examination relating to Taxes by any Tax Authority or any judicial or
administrative proceedings relating to Taxes. "Tax" or "Taxes" means
all federal, state, local and foreign taxes, levies, tariffs, duties
(including custom duties) and other assessments and obligations
(including liability with respect to unclaimed property) of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, penalties or costs applicable or related
thereto, imposed, assessed or collected by any Tax Authority. "Tax
Authority" means the IRS and any other Governmental Entity (domestic or
foreign) responsible for the administration, assessment or collection
of any Taxes. "Tax Returns" mean all federal, state, local and foreign
tax returns (including information returns), declarations, statements,
reports, requests, schedules and forms, including other documents or
information submitted in connection therewith and any amendments
thereto.
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<PAGE> 25
Section 3.17 Intellectual Property.
(a) Each of the Company and its Subsidiaries owns or has a
license or other right to use all intellectual property used in and
material to the conduct of its business, including, without limitation,
all patents and patent applications, trademarks, trademark
registrations and applications, copyrights and copyright registrations
and applications, service marks and service names, computer software,
technology rights and licenses, know-how, trade secrets, proprietary
processes and formulae, franchises and inventions (collectively, the
"Intellectual Property"), free and clear of all Liens.
(b) Section 3.17(b) of the Company Disclosure Schedule
sets forth a list of all license agreements (other than license
agreements for non-customized third-party software) under which the
Company or any of its Subsidiaries has granted or received the right to
use any Intellectual Property, and neither the Company nor any of its
Subsidiaries is in default under any such license.
(c) Except as disclosed in the Company SEC Documents or in
Section 3.17(c) of the Company Disclosure Schedule, no Person has a
right to receive a royalty or similar payment in respect of any item of
Intellectual Property pursuant to any contractual arrangements entered
into by the Company or any of its Subsidiaries or otherwise. To the
knowledge of the Company, no former or present employees, officers or
directors of the Company or any Subsidiary hold any right, title or
interest, directly or indirectly, in whole or in part, in or to any
Intellectual Property.
(d) There are no claims or suits pending or, to the
knowledge of the Company, threatened (i) alleging that the conduct of
the Company's or any of its Subsidiary's business infringes upon or
constitutes the unauthorized use of the proprietary rights of any third
party or (ii) challenging the ownership, use, validity or
enforceability of the Intellectual Property. To the knowledge of the
Company, no Intellectual Property of the Company or any Subsidiary is
being violated or infringed upon by any third party. There are no
settlements, consents, judgments, orders or other agreements which
restrict the Company's or any of its Subsidiary's rights to use any
Intellectual Property.
(e) Except as set forth in the Company SEC Documents or in
Section 3.17(e) of the Company Disclosure Schedule, the Company has
made no binding commitments to make any material expenditure in
relation to the hardware or software or communications systems used or
planned to be used in connection with the Company's business. All
material computer equipment and systems used by any of the Company and
its Subsidiaries and, to the knowledge of the Company, any major
supplier of the Company or its Subsidiaries recognize the advent of the
year 2000 and can correctly recognize and manipulate date information
relating to dates on or after January 1, 2000, and the operation and
functionality of such computer systems has not been adversely affected
by the advent of the year 2000 or any manipulation of data featuring
date information relating to dates before, on or after January 1, 2000,
in each case, except for such failures to recognize, manipulate,
operate or function as would not reasonably be expected to have a
Company Material Adverse Effect.
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<PAGE> 26
Section 3.18 Labor Matters.
(a) (i) There is no labor strike, dispute, slowdown,
stoppage or lockout actually pending, or to the knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries, (ii) except as discussed on Section 3.18(a)(ii) of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or bound by any collective bargaining or
similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of the Company or any of its Subsidiaries,
(iii) except as disclosed on Section 3.18(a)(iii) of the Company
Disclosure Schedule, none of the employees of the Company or any of its
Subsidiaries is represented by any labor organization and the Company
does not have any knowledge of any union organizing activities among
the employees of the Company or any of its Subsidiaries, (iv) there are
no written personnel policies, rules or procedures applicable to
employees of the Company or any of its Subsidiaries, other than the
Company Benefit Plans and those set forth on Section 3.18(a)(iv) of the
Company Disclosure Schedule, true and correct copies of which have
heretofore been delivered or made available to Purchaser, (v) each of
the Company and its Subsidiaries is, and has at all times been, in
compliance, in all material respects, with all applicable laws and
regulations respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety
and health, and is not engaged in any unfair labor practices as defined
in the National Labor Relations Act or other applicable laws, except
for such non-compliance which has not had a Company Material Adverse
Effect, (vi) there is no unfair labor practice charge or complaint
against the Company pending or, to the knowledge of the Company,
threatened before the National Labor Relations Board or any similar
state or foreign agency, (vii) there is no material pending grievance
arising out of any collective bargaining agreement or other grievance
procedure and (viii) to the knowledge of the Company, no charges with
respect to or relating to the Company are pending before the Equal
Employment Opportunity Commission or any other agency responsible for
the prevention of unlawful employment practices which, if determined
adversely to the Company, would have or could reasonably be expected to
have a Company Material Adverse Effect.
(b) In any ninety (90)-day period during the twelve (12)
months ending on the date of the Agreement, (i) neither the Company nor
any of its Subsidiaries has effectuated a "plant closing," (as defined
in the Worker Adjustment and Retraining Notification Act (the "WARN
Act")) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the
Company and (ii) there has not occurred a "mass layoff" (as defined in
the WARN Act) affecting any site of employment or facility of the
Company or any of its Subsidiaries; nor has the Company or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of
any similar state, local or foreign law or regulation.
Section 3.19 Opinion of Financial Advisor. The Financial Advisor has
delivered its opinion, dated the date of this Agreement, to the Special
Committee and the Board to the effect
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<PAGE> 27
that, as of such date, and based upon and subject to the matters stated in the
opinion, the Merger Consideration to be received in the Merger by the holders of
Shares (other than Purchaser and its affiliates) is fair from a financial point
of view to such holders. A copy of the written opinion will be delivered to
Purchaser promptly following receipt thereof by the Special Committee.
Section 3.20 Real Property.
(a) Section 3.20 of the Company Disclosure Schedule sets
forth a complete list of all real property owned or leased by the
Company or any of its Subsidiaries or otherwise used by the Company or
any of its Subsidiaries in, and material to, the conduct of their
business or operations (collectively, together with all buildings,
structures and other improvements and fixtures located on or under the
land described in this Section 3.20 and all easements, rights and other
appurtenances thereto, the "Real Property"). The Company or its
Subsidiaries has good title to the owned Real Property and good
leasehold interests in the leased Real Property, free and clear of all
Liens. Copies of (i) all deeds, title insurance policies (including
copies of exception documents thereunder) and surveys of the Real
Property and (ii) all documents evidencing all Liens upon the Real
Property, to the extent such are in the files and records of the
Company, have been furnished or made available to Purchaser or will be
furnished or made available to Purchaser as promptly as practicable
after the date of this Agreement. Except for the matters disclosed in
the Company SEC Documents or in Section 3.20 of the Company Disclosure
Schedule, there are no proceedings, claims, disputes or, to the
Company's knowledge, conditions affecting any Real Property that would
reasonably be expected to curtail or interfere with the use of such
property, nor is an action of rezoning or eminent domain pending or, to
the knowledge of the Company, threatened for all or any portion of the
Real Property.
(b) All buildings on the Real Property are free of
material title and physical defects which do not have, individually or
in the aggregate, a Company Material Adverse Effect.
(c) Each of the Company and its Subsidiaries has obtained
all appropriate certificates, licenses, permits, easements and rights
of way, including proofs of dedication, required to use and operate the
Real Property in the manner in which the Real Property is currently
being used and operated, except for such easements, certificates,
licenses, permits or rights of way the failure of which to have
obtained does not have, individually or in the aggregate, a Company
Material Adverse Effect.
(d) To the Company's knowledge, neither the Company nor
any of its Subsidiaries is in violation in any material respect of any
applicable building, zoning, health or other law, ordinance,
regulation, contractual restriction or covenant in respect of the use
or occupation of the Real Property or structures or their operations
thereon.
Excluded from the scope of this representation and
warranty are all matters related to Environmental Laws, Materials of
Environmental Concern or
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<PAGE> 28
Environmental Claims; these excluded matters, to the extent subject to
a representation and warranty under this Agreement, are covered by
Section 3.12.
Section 3.21 Material Contracts.
(a) Section 3.21(a) of the Company Disclosure Schedule
lists each of the following contracts and agreements of the Company and
each of its Subsidiaries (such contracts and agreements, together with
all contracts and agreements disclosed in Section 3.17(b) of the
Disclosure Schedule, being "Material Contracts"):
(i) each contract, agreement and other arrangement for
the purchase of inventory, spare parts, other materials or
personal property with any supplier or for the furnishing of
services to the Company or any of its Subsidiaries or
otherwise related to the businesses of the Company or any of
its Subsidiaries under the terms of which the Company or any
of its Subsidiaries: (A) have paid or otherwise given
consideration of more than $50,000 in the aggregate during the
fiscal year ended October 31, 1999 or (B) are likely to pay or
otherwise give consideration of more than $250,000 in the
aggregate over the remaining term of such contract;
(ii) each contract, agreement and other arrangement
for the sale of inventory or other personal property or for
the furnishing of services by the Company or any of its
Subsidiaries which: (A) is likely to involve consideration of
more than $50,000 in the aggregate during the fiscal year
ended October 31, 1999 or (B) is likely to involve
consideration of more than $100,000 in the aggregate over the
remaining term of the contract;
(iii) all material broker, distributor, dealer,
manufacturer's representative, franchise, agency, consulting
and advertising contracts and agreements to which the Company
or any of its Subsidiaries is a party;
(iv) all management contracts (including those
relating to severance, change of control, termination or
retirement) and contracts with independent contractors or
consultants (or similar arrangements) to which the Company or
any of its Subsidiaries is a party and which provide for
payments to any Person in any calendar year in excess of
$50,000;
(v) all contracts and agreements relating to
Indebtedness of the Company or any of its Subsidiaries in
excess of $25,000 or to any direct or indirect guaranty by the
Company or any of its Subsidiaries of Indebtedness of any
other Person in excess of $25,000;
(vi) all contracts and agreements that limit or
purport to limit the ability of the Company or any of its
Subsidiaries to compete in any line of
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<PAGE> 29
business or with any Person or in any geographic area or
during any period of time;
(vii) any exchange-traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial
contract or any other interest rate or foreign currency
protection contract not included on its balance sheet which is
a financial derivative contract;
(viii) any other contract or amendment thereto that
would be required to be filed as an exhibit to a Form 10-K
filed by Company with the SEC as of the date of this Agreement
(excluding this Agreement or any other agreements contemplated
by or related to this Agreement or the Merger);
(ix) all contracts and agreements that provide
indemnification rights or obligations of the Company or any of
its Subsidiaries, which provide for potential payments after
the Effective Time to any Person in excess of $250,000; and
(x) all other contracts and agreements, whether or not
made in the ordinary course of business, which are material to
the Company and its Subsidiaries, taken as a whole, or to the
conduct of the business of the Company and its Subsidiaries,
taken as a whole, or the absence of which would, in the
aggregate, have or reasonably be expected to have a Company
Material Adverse Effect.
(b) Each Material Contract: (i) is legal, valid and
binding on the Company or the respective Subsidiary which is a party
thereto and, to the knowledge of the Company, the other parties
thereto, and is in full force and effect and (ii) upon consummation of
the Merger, except to the extent that any consents set forth in Section
3.6 of the Company Disclosure Schedule are not obtained, shall continue
in full force and effect without penalty or other adverse consequence.
Except as set forth in Section 3.21(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries (x) is in
breach of, or default under, any Material Contract or (y) to the
knowledge of the Company, has repudiated or waived any material
provision thereunder.
(c) Except as shown at Section 3.21 of the Company
Disclosure Schedule, no other party to any Material Contract is, to the
knowledge of the Company, in material breach thereof or material
default thereunder.
(d) Except as set forth in Section 3.21(d) of the Company
Disclosure Schedule, there is no contract, agreement or other
arrangement granting any Person any preferential right to purchase any
Company Securities or any properties or assets of the Company or any of
its Subsidiaries.
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<PAGE> 30
Section 3.22 Suppliers and Customers. Since October 31, 1998, no
material licensor, vendor, supplier, licensee or customer of the Company or any
of its Subsidiaries has canceled or otherwise modified (in a manner materially
adverse to the Company) its relationship with the Company or its Subsidiaries
and, to the Company's knowledge, (a) no such Person has notified the Company or
any of its Subsidiaries of its intention to do so and (b) the consummation of
the Merger will not affect any of such relationships in a manner that would
result in a Company Material Adverse Effect.
Section 3.23 Accounts Receivable, Inventory.
(a) The accounts receivable of the Company and its
Subsidiaries as set forth on the most recent consolidated balance sheet
included in the 1999 Financial Statements (the "Company Balance Sheet")
delivered prior to the date of this Agreement or arising since the date
thereof are valid and genuine; have arisen out of bona fide sales and
deliveries of goods, performance of services and other business
transactions in the ordinary course of business consistent with past
practice; and are not subject to valid defenses, set-offs or
counterclaims. The allowance for collection losses on the Company
Balance Sheet and reserves for the return of inventory have been
determined in accordance with GAAP consistently applied and, to the
knowledge of the Company, are sufficient to provide for any losses or
returns which may be sustained on realization of the accounts
receivable or return of inventory shown in the Company Balance Sheet.
(b) As of the date of the Company Balance Sheet, the
inventories shown on the Company Balance Sheet consisted in all
material respects of items of a quantity and quality usable or saleable
in the ordinary course of business. All of such inventories were
acquired in the ordinary course of business. All such inventories are
valued on the Company Balance Sheet in accordance with GAAP, applied on
a basis consistent with the Company's past practices.
Section 3.24 Insurance. Section 3.24 of the Company Disclosure Schedule
lists the Company's material insurance policies. Such policies are in adequate
amounts and cover risks customarily insured against by businesses of the type
operated by the Company and its Subsidiaries. All such policies are in full
force and effect, all premiums with respect thereto covering all periods up to
and including the date of this Agreement have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies will remain in full force and effect through the respective dates
set forth in Section 3.24 of the Company Disclosure Schedule. Except as set
forth in Section 3.24 of the Company Disclosure Schedule, there are presently no
claims for amounts exceeding in any individual case $250,000 pending under such
policies of insurance and no notices of claims in excess of such amounts have
been given by the Company or any of its Subsidiaries under such policies.
Section 3.25 Title and Condition of Properties. The Company and its
Subsidiaries own good title, free and clear of all Liens, to all of the personal
property and assets shown on the Company Balance Sheet, except for assets which
have been disposed of to nonaffiliated third parties since the date of the
Company Balance Sheet, in the ordinary course of business. All of
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the machinery, equipment and other tangible personal property and assets owned
or used by the Company or its Subsidiaries are in good condition and repair,
except for ordinary wear and tear not caused by neglect and are usable in the
ordinary course of business, except for any matter otherwise covered by this
sentence which would not have, individually or in the aggregate, a Company
Material Adverse Effect. All assets which are material to the Company's business
on a consolidated basis and held under leases or subleases by the Company or any
of its Subsidiaries are held under valid contracts enforceable in accordance
with their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such contract is in full force and effect.
Section 3.26 Statements True and Correct. No representation or warranty
of the Company contained in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section 3.27 Board Recommendation. The Board, at a meeting duly called
and held, has by unanimous vote of those directors present (who constituted all
of the directors then in office) (a) determined that this Agreement and the
Merger are fair to and in the best interests of the shareholders of the Company
(other than Purchaser or any affiliate thereof) and (b) resolved to recommend
that such holders of the shares of Common Stock approve and adopt this Agreement
and approve the Merger.
Section 3.28 Required Vote. The affirmative vote of the holders of
shares of Common Stock representing a majority of all shares entitled to vote at
the Shareholders' Meeting is required to approve and adopt this Agreement and
approve the Merger. No other vote of the shareholders of the Company is required
by law, the Restated Articles, the Bylaws of the Company or otherwise in order
for the Company to consummate the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
Section 4.1 Organization. Each of Purchaser and Acquisition Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia. Each of Purchaser and Acquisition Sub has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
Section 4.2 Authority Relative to this Agreement. Each of Purchaser and
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to
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consummate the Merger in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by Purchaser and Acquisition Sub and
the consummation of the Merger by Purchaser and Acquisition Sub have been duly
and validly authorized by the Board of Directors of Purchaser and the Board of
Directors of Acquisition Sub, and no other corporate action or other proceedings
on the part of Purchaser or Acquisition Sub are necessary to authorize the
execution and delivery by Purchaser and Acquisition Sub of this Agreement or to
consummate the Merger. This Agreement has been duly and validly executed and
delivered by Purchaser and Acquisition Sub and, assuming due and valid
authorization, execution and delivery by the Company, constitutes a valid, legal
and binding agreement of Purchaser and Acquisition Sub, enforceable against
Purchaser and Acquisition Sub in accordance with its terms, (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought).
Section 4.3 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state securities or blue sky
laws, the HSR Act and the filing and recordation of a Certificate of Merger as
required by the GBCC, no filing with or notice to, and no permit, authorization,
consent or approval of, any Governmental Entity is necessary for the execution
and delivery by Purchaser or Acquisition Sub of this Agreement or the
consummation by Purchaser or Acquisition Sub of the Merger, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Purchaser Material Adverse
Effect. Neither the execution, delivery or performance of this Agreement by
Purchaser or Acquisition Sub, nor the consummation by Purchaser and Acquisition
Sub of the Merger, will (a) conflict with or result in any breach of any
provision of the Certificate or Articles of Incorporation or Bylaws of Purchaser
or Acquisition Sub, (b) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) or require any
consent pursuant to, or result in the creation of any Lien on any asset of
Purchaser or Acquisition Sub under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Purchaser or Acquisition Sub is a party
or by which either of them or any of their respective properties or assets may
be bound or (c) violate any order, writ, injunction, decree, law, statute, rule
or regulation applicable to Purchaser or Acquisition Sub or any of their
respective properties or assets, except in the case of (b) or (c) for any such
violations, breaches, defaults (or rights of termination, amendment,
cancellation or acceleration), Liens or failures to obtain consents which would
not individually or in the aggregate, have a Purchaser Material Adverse Effect.
As used in this Agreement, the term "Purchaser Material Adverse Effect" shall
mean any change or effect that is materially adverse to the business, results of
operations or condition (financial or otherwise) of Purchaser or Acquisition Sub
other than any change or effect that does not affect Purchaser's or Acquisition
Sub's ability to perform its obligations under this Agreement.
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Section 4.4 Proxy Statement. None of the information supplied by
Purchaser in writing for inclusion in the Proxy Statement or Schedule 13E-3
will, at the respective times filed with the SEC and first published or sent or
given to holders of Shares, and in the case of the Proxy Statement, at the time
that it or any amendment or supplement thereto is mailed to the Company's
shareholders, at the time of the Shareholders' Meeting or at the Effective Time,
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 were made, not
misleading. The Schedule 13E-3 will, when filed by Purchaser with the SEC,
comply as to form in all material respects with the provisions of the Exchange
Act and the SEC's rules and regulations promulgated thereunder.
Section 4.5 Financing. Purchaser has provided the Company with complete
and correct copies of (a) a commitment letter dated December 6, 1999 from Fleet
Capital Corporation pursuant to which it has committed, subject to the terms and
conditions set forth therein, to provide a senior credit facility in an
aggregate amount of $315 million (the "Senior Commitment Letter") and (b) a
commitment letter dated January 13, 2000 from J.H. Whitney & Co. pursuant to
which it has committed, subject to the terms and conditions set forth therein,
to purchase subordinated notes in an aggregate amount of $55 million
(collectively, the "Financing Commitments," and the financing to be provided
pursuant to the foregoing, the "Financing"). As of the date hereof, the
Financing Commitments have not been withdrawn. If such Financing has been
obtained at the Effective Time, Purchaser will have available $55 million in
equity for purposes of financing the Merger.
Section 4.6 Brokers. Except as set forth in a disclosure letter to be
provided separately to the Company by Purchaser, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of
Purchaser.
Section 4.7 No Default. Neither Purchaser nor Acquisition Sub is in
default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation) of any term, condition
or provision of (a) its Articles of Incorporation or Bylaws, (b) any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which Purchaser or Acquisition Sub is now a party or by which any
of them or any of their respective properties or assets may be bound or (c) any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
Purchaser or Acquisition Sub or any of their respective properties or assets,
except in the case of (b) or (c) for violations, breaches or defaults that would
not, individually or in the aggregate, have a Purchaser Material Adverse Effect.
Section 4.8 Litigation. Except as would not reasonably be expected to
have a Purchaser Material Adverse Effect, there is no Litigation pending or, to
the knowledge of Purchaser, threatened against, affecting or involving Purchaser
or Acquisition Sub or any of their respective properties or assets before any
Governmental Entity, and neither Purchaser nor Acquisition Sub is subject to any
outstanding order, writ, injunction or decree.
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Section 4.9 Compliance with Applicable Law. Purchaser and Acquisition
Sub hold all permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Purchaser Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect.
Purchaser and Acquisition Sub are in compliance with the terms of the Purchaser
Permits, except where the failure so to comply would not have a Purchaser
Material Adverse Effect. The businesses of Purchaser and Acquisition Sub are not
being and have not been conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for violations or possible
violations which, individually or in the aggregate, would not have a Purchaser
Material Adverse Effect. None of the directors, officers, agents,
representatives or employees of Purchaser or Acquisition Sub (in their capacity
as directors, officers, agents, representatives or employees) has taken any
action or made any omission which would violate any law, ordinance or regulation
of any Governmental Entity, except for violations or possible violations which,
individually or in the aggregate, would not have a Purchaser Material Adverse
Effect. No investigation or review by any Governmental Entity with respect to
Purchaser or Acquisition Sub or with respect to any of their respective
directors, officers, agents, representatives or employees (in regard to actions
taken or omissions made in their capacity as directors, officers, agents,
representatives or employees) is pending or, to the knowledge of Purchaser,
threatened.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement, during the period from the date hereof until the
Effective Time, each of the Company and its Subsidiaries will conduct its
operations in the ordinary course of business consistent with past practice and
preserve intact its business organization and assets and maintain its rights and
franchises. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, until the Effective Time the
Company will not, and the Company will not permit its Subsidiaries to, without
the prior written consent of Purchaser (which will not be unreasonably withheld
or delayed):
(a) amend or propose to amend the charter, bylaws or other
governing instruments of the Company or any of its Subsidiaries;
(b) authorize for issuance, issue, sell, deliver, or agree
or commit to issue, sell or deliver, dispose of, encumber or pledge
(whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any securities, except as disclosed at Section 5.1(b)
of the Company Disclosure Schedule or as required by agreements with
the Company's employees under the Company Benefit Plans as in effect as
of the date hereof, or amend any of the terms of any such securities or
agreements outstanding as of the date hereof, except as specifically
contemplated by this Agreement;
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(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, or redeem or otherwise acquire any of its
securities, except intercompany cash dividends in the ordinary course
of business;
(d) (i) incur or assume any long-term or short-term debt
or issue any debt securities, except for borrowings under existing
lines of credit in the ordinary course of business and in amounts not
in excess of an aggregate of $1,000,000 (on a consolidated basis); (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business consistent
with past practice and in amounts not material to the Company and its
Subsidiaries, taken as a whole, and except for obligations of wholly
owned Subsidiaries of the Company to the Company or to other wholly
owned Subsidiaries of the Company; (iii) make any loans, advances or
capital contributions to, or investments in, any other Person (other
than to wholly owned Subsidiaries of the Company or customary loans or
advances to employees in the ordinary course of business consistent
with past practice and in amounts not material to the maker of such
loan or advance) or make any change in its existing borrowing or
lending arrangements for or on behalf of any such Person, whether
pursuant to, a Company Benefit Plan or otherwise; (iv) pledge or
otherwise encumber shares of capital stock of the Company or any of its
Subsidiaries; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(e) adopt a plan of complete or partial liquidation or
adopt resolutions providing for the complete or partial liquidation,
dissolution, consolidation, merger, restructuring or recapitalization
of the Company or any of its Subsidiaries;
(f)(i) make any change in the compensation payable or to
become payable to any of its officers, directors, employees, agents or
consultants (other than general increases in wages to employees in the
ordinary course consistent with past practice as disclosed in Section
5.1(f) of the Company Disclosure Schedule) or to Persons providing
management services; (ii) pay any severance or termination cost or any
bonus other than pursuant to written contracts in effect on the date of
this Agreement or disclosed in Section 5.1(f) of the Company Disclosure
Schedule or enter into or amend any severance agreements with officers
of the Company or any Subsidiary; (iii) make any loans to any of its
officers, directors, employees, affiliates, agents or consultants; (iv)
adopt, amend or terminate any new or existing Company Benefit Plan
(other than as required by applicable law); or (v) permit a new Option
Period (as such term is defined in the Employee Stock Purchase Plan) to
commence under the Employee Stock Purchase Plan after the Shareholders'
Meeting;
(g) acquire, sell, transfer, lease, encumber or dispose of
any assets outside the ordinary course of business or any assets which
in the aggregate are material
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to the Company and its Subsidiaries, taken as a whole, or enter into
any commitment or transaction outside the ordinary course of business
consistent with past practice which would be material to the Company
and its Subsidiaries, taken as a whole;
(h) except as may be required as a result of a change in
law or in GAAP, change any of the Tax or accounting principles or
practices used by it or make any material Tax election or amend any Tax
Return previously filed or settle any material Audit;
(i) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory or
writing-off notes or accounts receivable other than in the ordinary
course of business;
(j)(i) acquire (by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or any equity interest therein; (ii)
enter into any contract or agreement other than in the ordinary course
of business consistent with past practice which would be material to
the Company and its Subsidiaries, taken as a whole; (iii) authorize any
new capital expenditure or expenditures which, individually, is in
excess of $50,000 or, in the aggregate, are in excess of $100,000,
except for the budgeted capital expenditures listed in Section 5.1(j)
of the Company Disclosure Schedule; or (iv) enter into or amend any
contract, agreement commitment or arrangement providing for the taking
of any action that would be prohibited hereunder;
(k) discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities fully reflected or reserved
against in, or contemplated by, the consolidated 1999 Financial
Statements (or the notes thereto) of the Company and its Subsidiaries
or incurred in the ordinary course of business consistent with past
practice;
(l) permit any insurance policy naming the Company as a
beneficiary or a loss payable payee to be canceled or terminated
without notice to Purchaser, unless the Company shall have obtained a
comparable replacement policy;
(m) enter into or amend any employment contract between
the Company or any Subsidiary and any Person having a base salary
thereunder in excess of $100,000 per year (unless such amendment is
required by law) that the Company or any Subsidiary does not have the
unconditional right to terminate without liability (other than
liability for services already rendered), at any time on or after the
Effective Time;
(n) commence or settle any Litigation other than in
accordance with past practice and, with respect to any settlement, for
an amount greater than $250,000;
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(o) enter into, modify, amend or terminate any Material
Contract (including any standstill agreement, loan contract with an
unpaid balance exceeding $250,000 or any of the agreements referred to
in Section 5.10 hereof) or waive, release, compromise or assign any
material rights or claims, except in the ordinary course of business;
(p) take any action that would adversely affect the
ability of any party to this Agreement to perform its covenants and
agreements under this Agreement;
(q) take any action that would cause an event of default
under any Material Contract;
(r) cause (or permit to exist) any circumstances that
would result in a Company Material Adverse Effect; or
(s) take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(a) through 5.1(r) or any action
which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect as of the date
when made.
Section 5.2 Acquisition Proposals. Except as hereinafter provided,
neither the Company nor any of its Subsidiaries shall, directly or indirectly,
through any officer, director, agent or otherwise, solicit, initiate or
knowingly encourage the submission of any proposal or offer from any Person (as
hereinafter defined) relating to any acquisition or purchase of all or (other
than in the ordinary course of business) a substantial portion of the assets of,
or a substantial equity interest in, the Company or any of its Subsidiaries or
any recapitalization, business combination or similar transaction with the
Company or any of its Subsidiaries (any such proposal or offer being an
"Acquisition Proposal") or participate in any negotiations regarding, or furnish
to any other Person any non-public information with respect to, or take any
other action to knowingly facilitate the making of an Acquisition Proposal.
Notwithstanding the foregoing provisions of this Section 5.2, (a) the Company
may engage in discussions or negotiations with a third party who seeks to
initiate such discussions or negotiations and may furnish such third party
information concerning the Company and its Subsidiaries, in each case only in
response to a request for such information or access which was not solicited,
initiated or knowingly encouraged by the Company or any of its affiliates, (b)
the Board or the Special Committee may take and disclose to the Company's
shareholders a position contemplated by Rule l4e-2 promulgated under the
Exchange Act and (c) following receipt of an Acquisition Proposal from a third
party, the Board or the Special Committee may withdraw or modify its
recommendation referred to in Section 1.10, but in each case referred to in the
foregoing clauses (a) through (c) only to the extent that the Board or the
Special Committee shall conclude in good faith after consultation with legal
counsel that the failure to take such action could reasonably be determined to
be a breach of the Board's or the Special Committee's fiduciary obligations to
the Company's shareholders under applicable law. In connection with any party's
Acquisition Proposal, the Company will enter into an appropriate confidentiality
agreement with such party. The Company will immediately cease all existing
activities, discussions and negotiations with any parties
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conducted heretofore with respect to any Acquisition Proposal. From and after
the execution of this Agreement, the Company shall promptly notify Purchaser of
the receipt of any Acquisition Proposal, and, in any such notice to Purchaser,
shall indicate in reasonable detail the material terms thereof and the identity
of the other party or parties involved. Nothing in this Section 5.2 shall
preclude the Company from making any disclosure to its shareholders that is
required under applicable law. As used in this Agreement, "Person" shall mean a
natural person, entity, organization or association, including, but not limited
to, a partnership, corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, joint venture, Governmental
Entity, group acting in concert or any person acting in a representative
capacity.
Section 5.3 Access to Information.
(a) Between the date hereof and the Effective Time, the
Company will give Purchaser and its authorized representatives and
Persons providing or committed to provide Purchaser with financing for
the Merger and their representatives, reasonable access to all
employees, plants, offices, warehouses and other facilities and
properties and to all books and records of the Company and its
Subsidiaries, will permit Purchaser to make such inspections (including
any physical inspections or soil or groundwater investigations) as it
may reasonably request and will cause the Company's officers and those
of its Subsidiaries to furnish Purchaser with such financial and
operating data and other information with respect to the business and
properties of the Company and any of its Subsidiaries as Purchaser may
from time to time reasonably request.
(b) Each of the Company and the Purchaser will hold and
will cause its consultants, advisors, representatives, agents and
employees, including, without limitation, its auditors, attorneys,
financial advisors and other consultants and advisors (including
financing sources), to hold in confidence, unless compelled to disclose
by judicial or administrative process or, in the written opinion of its
legal counsel, by other requirements of law, all documents and
information concerning the other party furnished to it in connection
with this Agreement (except to the extent that such information can be
shown to have been (i) previously known by the disclosing party from
sources other than the other party, its directors, officers,
representatives or affiliates, (ii) in the public domain through no
fault of the disclosing party or its affiliates or (iii) later lawfully
acquired by the disclosing party on a non-confidential basis from other
sources who are not known by the disclosing party to be bound by a
confidentiality agreement or otherwise prohibited from transmitting the
information to the disclosing party by a contractual, legal or
fiduciary obligation) and will not release or disclose such information
to any other Person, except its auditors, attorneys, financial advisors
and other consultants and advisors (including financing sources) in
connection with this Agreement who need to know such information. If
the Merger is not consummated, such confidence shall be maintained and,
if requested by or on behalf of the Company or the Purchaser, the other
party hereto will, and will use all reasonable efforts to cause its
auditors, attorneys, financial advisors and other consultants, agents
and representatives to return or destroy all copies of written
information furnished by the Company or Purchaser, as applicable, for
purposes of
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evaluating the Merger. It is understood that each of the parties hereto
shall be deemed to have satisfied its obligation to hold such
information confidential if it exercises the same care as it takes
to preserve confidentiality for its own similar information.
(c) Prior to the consummation of the Merger, the Company
and its accountants, counsel, agents and other representatives shall
cooperate with Purchaser by providing information about the Company
which is reasonably necessary for Purchaser and its accountants,
counsel, agents and other representatives to prepare the syndication or
other materials to be delivered to potential financing sources in
connection with the Merger (the "Financing Documents") and such other
documents and information with respect to such documents as may be
reasonably requested. Notwithstanding anything in this Agreement to the
contrary, Purchaser may disclose, or cause its representatives to
disclose, and at the request of Purchaser, the Company shall disclose,
information concerning the Company and its Subsidiaries, and their
respective businesses, assets and properties, and the Merger in the
Financing Documents and to prospective financing sources in connection
with the Merger.
(d) Each party hereto agrees to give the other party notice
as soon as practicable after any determination by it of any fact or
occurrence relating to the other party which it has discovered through
the course of its investigation and which represents, or is reasonably
likely to represent, either a material breach of any representation,
warranty, covenant or agreement of the other party or which has had or
is reasonably likely to have a Company Material Adverse Effect or a
Purchaser Material Adverse Effect, as applicable.
Section 5.4 Additional Agreements; Reasonable Efforts.
(a) Prior to the consummation of the Merger upon the terms
and subject to the conditions of this Agreement, each of Purchaser,
Acquisition Sub and the Company agree to use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the Merger as promptly as practicable,
including, but not limited to, (i) the preparation and filing of all
forms, registrations and notices required to be filed to consummate the
Merger and the taking of such actions as are necessary to obtain any
requisite approvals, consents, orders, exemptions or waivers by any
third party or Governmental Entity, (ii) the preparation of any
Financing Documents reasonably requested by Purchaser, (iii) the
satisfaction of the other parties' conditions to the consummation of
the Merger and (iv) obtaining consents of all third parties necessary,
proper or advisable for the consummation of the Merger. In addition, no
party hereto shall take any action after the date hereof that would
reasonably be expected to materially delay the obtaining of, or result
in not obtaining, any permission, approval or consent from any
Governmental Entity necessary to be obtained prior to the consummation
of the Merger.
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(b) Prior to the consummation of the Merger, each party
hereto shall promptly consult with the other parties hereto with
respect to, provide any necessary information with respect to and
provide the other parties (or their counsel) copies of, all filings
made by such party with any Governmental Entity or any other
information supplied by such party to a Governmental Entity in
connection with this Agreement and the Merger. Each party hereto shall
promptly inform the other parties of any communication from any
Governmental Entity regarding the Merger. If any party hereto or
affiliate thereof receives a request for additional information or
documentary material from any such Governmental Entity with respect to
the Merger, then such party will endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after
consultation with the other parties, an appropriate response in
compliance with such request. To the extent that transfers of Company
Permits are required as a result of execution of this Agreement or
consummation of the Merger, the Company shall use commercially
reasonable efforts to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this
Agreement shall be deemed to require Purchaser to (i) enter into any
agreement with any Governmental Entity or to consent to any order,
decree or judgment requiring Purchaser to hold separate or divest, or
to restrict the dominion or control of Purchaser or any of its
affiliates over, any of the assets, properties or businesses of
Purchaser, its affiliates or the Company, in each case as in existence
on the date hereof, or (ii) defend against any Litigation brought by
any Governmental Entity seeking to prevent the consummation of the
Merger.
(d) The Company agrees to use reasonable efforts to assist
Purchaser in connection with structuring or obtaining the Financing in
connection with consummation of the Merger.
Section 5.5 Public Announcements. Each of Purchaser and the Company
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the Merger without the prior consent
of the other party, which consent shall not be unreasonably withheld or delayed;
provided, however, that such disclosure can be made without obtaining such prior
consent if (a) the disclosure is required by law or by obligations pursuant to
any listing agreement with any national securities exchange and (b) the party
making such disclosure has first used reasonable efforts to consult with the
other party about the form and substance of such disclosure.
Section 5.6 Indemnification.
(a) Purchaser agrees that all rights to indemnification or
exculpation now existing in favor of the present and former directors,
officers, employees and agents of the Company and its Subsidiaries as
provided in their respective charters or bylaws or otherwise in effect
as of the date hereof with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full
force and effect and shall not be amended, repealed or otherwise
modified for a period of six and one-half (6 1/2) years from the
Effective Time in any manner that would affect adversely the rights
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thereunder of individuals who prior to or at the Effective Time were
such present or former directors, officers, employees or agents of the
Company or its Subsidiaries.
(b) Purchaser shall cause the Surviving Corporation to
maintain in effect for not less than five (5) years from the Effective
Time the policies of the directors' and officers' liability and
fiduciary insurance most recently maintained by the Company (provided
that the Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions which are not
materially less favorable to the beneficiaries thereof so long as such
substitution does not result in gaps or lapses in coverage) with
respect to matters occurring prior to the Effective Time, provided that
in no event shall the Surviving Corporation be required to expend more
than an amount per year equal to 200% of the current annual premiums
paid by the Company (the "Premium Amount") to maintain or procure
insurance coverage pursuant hereto, and further provided that if the
Surviving Corporation is unable to obtain the insurance called for by
this Section 5.6(b), the Surviving Corporation will obtain the maximum
insurance coverage obtainable for the Premium Amount per year.
(c) After the Effective Time, Purchaser and the Surviving
Corporation shall, to the fullest extent that a Georgia corporation may
now or hereafter legally indemnify its own officers and directors,
indemnify and hold harmless, each present director or officer of the
Company and each Subsidiary (collectively, the "Indemnified Parties")
against all costs and expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and settlement amounts paid
in connection with any claim, action, suit, proceeding or investigation
(whether asserted or commencing before or after the Effective Time),
whether civil, criminal, administrative or investigative, arising out
of or pertaining to any action or omission in their capacity as an
officer or director occurring before or at the Effective Time
(including, without limitation, the Merger and all actions taken in
contemplation of, or to effect the Merger), for a period of six and
one-half (6 1/2) years after the date hereof. Without limiting the
generality of the foregoing, in the event of any such claim, action,
suit, proceeding or investigation, (i) the Surviving Corporation or
Purchaser, as the case may be, shall pay as incurred, each Indemnified
Party's legal and other expenses (including costs of investigation and
preparation), including the fees and expenses of counsel selected by
the Indemnified Party, which counsel shall be reasonably satisfactory
to the Surviving Corporation or Purchaser, promptly after statements
therefor are received and (ii) the Surviving Corporation and Purchaser
shall cooperate in the defense of any such matter; provided, however,
that neither the Surviving Corporation nor Purchaser shall be liable
for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed); and provided further
that neither the Surviving Corporation nor Purchaser shall be obligated
pursuant to this Section 5.6(c) to pay the fees and expenses of more
than one (1) counsel for all Indemnified Parties in any single action,
except to the extent that two (2) or more of such Indemnified Parties
shall have conflicting interests in the outcome of such action; and
provided further that, in the event that any claim for indemnification
is asserted or made within such six and one-half (6 1/2) year period,
all rights to indemnification in respect of such claim shall continue
until the disposition of such claim. The parties intend,
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to the extent not prohibited by applicable law, that the
indemnification provided for in this Section 5.6(c) shall apply without
limitation to negligent acts or omissions of any Indemnified Party. Any
determination to be made as to whether any Indemnified Party has met
any standard of conduct imposed by law shall be made by legal counsel
reasonably acceptable to such Indemnified Party, Purchaser and the
Surviving Corporation, retained at the Surviving Corporation's expense.
The Surviving Corporation or Purchaser shall pay all expenses,
including counsel fees and expenses, that any Indemnified Party may
incur in enforcing the indemnity and other obligations provided for in
this Section 5.6. Notwithstanding the foregoing, the Purchaser and the
Surviving Corporation shall have no additional indemnification
obligations hereunder with respect to any costs that would otherwise be
covered under the Surviving Corporation's directors' and officers'
liability and fiduciary insurance policies.
(d) In the event the Surviving Corporation or Purchaser or
any of their respective successors or assigns after the Effective Time
(i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers all or substantially all of its properties
and assets to any Person, then, and in each such case, proper provision
shall be made so that the successors and assigns of the Surviving
Corporation or Purchaser, as the case may be, shall assume the
obligations set forth in this Section 5.6.
(e) This Section 5.6 is intended to benefit the Indemnified
Parties and the other Persons otherwise covered by this Section 5.6 and
their respective heirs, executors and personal representatives and
shall be binding on the successors and assigns of Purchaser and the
Surviving Corporation. This Section 5.6 shall not limit or otherwise
adversely affect any rights any Indemnified Party or any other Person
otherwise covered by this Section 5.6 may have under any agreement with
the Company or any Subsidiary or the Company's or any Subsidiary's
respective Certificate or Articles of Incorporation or Bylaws.
(f) In consideration for the indemnification rights set
forth herein, the Company shall request prior to the Effective Time
general releases from all directors and former directors (who were
directors at any time after October 31, 1997) and officers of the
Company and the Subsidiaries releasing the Purchaser, the Company and
the Subsidiaries and their officers, directors, employees and agents of
any claim that they or any of them may have against Purchaser, the
Company or its Subsidiaries (and their officers, directors, employees
and agents), exclusive of employment compensation obligations or
obligations arising under this Section 5.6.
Section 5.7 State Takeover Laws. The Company shall take all necessary
steps to exempt the Merger from, or if necessary to challenge the validity or
applicability of Sections 14-2-1131 through 14-2-1133 and 14-2-1110 through
14-2-1113 of the GBCC.
Section 5.8 Rights Agreement. The Company shall take all necessary
action (including, if required, redeeming all of the outstanding Rights (as
defined in the Rights Agreement) or
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amending or terminating the Rights Agreement) so that (a) the entering into of
this Agreement and consummation of the Merger do not and will not result in any
Person becoming able to exercise any Rights under the Rights Agreement or
enabling or requiring the Rights to be separated from the shares of Common Stock
to which they are attached or to be triggered or to become exercisable and (b)
no Rights are outstanding at the Effective Time.
Section 5.9 Disclosure Schedule Supplements. From time to time after
the date of this Agreement and prior to the Effective Time, the Company will
supplement or amend the Company Disclosure Schedule with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in the
Company Disclosure Schedule or which is necessary to correct any information in
a schedule or in any representation and warranty of the Company which has been
rendered inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of the Company contained in this Agreement in
order to determine the fulfillment of the conditions set forth in Article VI,
the Company Disclosure Schedule shall be deemed to include only that information
contained therein on the date of this Agreement and shall be deemed to exclude
any information contained in any subsequent supplement or amendment thereto.
Section 5.10 Change of Control Agreements. The Company has change of
control agreements with the Persons listed in Section 5.10 of the Company
Disclosure Schedule which provide certain benefits upon (a) consummation of the
Merger and/or (b) a termination of employment following the Effective Time.
Purchaser shall take all appropriate steps necessary to, and will, give
reasonable advance notice prior to the Effective Time of its intention to
continue employment, or not to continue employment, to each such Person. The
Company has previously made written disclosure to Purchaser of the total
estimated amount payable to such Persons for all obligations owed to them under
all contractual and Company Benefit Plan arrangements assuming that the
employment of each such Person was terminated during the year in which the
Effective Time occurred.
Section 5.11 Purchaser's Financing. Purchaser shall use its best
efforts to obtain the Financing on the terms contemplated by the Financing
Commitments (other than the terms set forth in the eighth paragraph of the
Senior Commitment Letter relating to changes in the terms of the financing
described by such Senior Commitment Letter) or alternative financing on terms no
less favorable than those set forth in the Financing Commitments (again, other
than the terms in the eighth paragraph of the Senior Commitment Letter referred
to above) (such financing, "Alternative Financing") and to satisfy the
conditions to such Financing as detailed in the Commitments delivered to the
Company pursuant to Section 4.5 hereof. In addition, Purchaser shall use its
reasonable efforts to enter into definitive agreements with respect to the
Financing or Alternative Financing prior to the mailing of the Proxy Statement,
which obligation shall in no way (i) restrict the conditions that may be imposed
in such definitive agreements with respect to the closing of such Financing or
Alternative Financing or (ii) alter the Company's obligation to mail the Proxy
Statement to its shareholders at the earliest practicable time. For the
avoidance of doubt, obtaining Alternative Financing shall not require Purchaser
to pay greater financing or other fees than as set forth in the Financing
Commitments or require Purchaser to issue any equity
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to any source of such Alternative Financing beyond what is contemplated by the
Financing Commitments.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect the
Merger.
(a) The respective obligations of each party hereto
to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any and all of
which may be waived in whole or in part to the extent permitted by
applicable law:
(i) Shareholder Approval. The Merger and this
Agreement shall have been approved and adopted by the
affirmative vote of the shareholders of the Company by the
requisite vote.
(ii) Statutes, Court Orders. No statute, rule,
regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or enforced by
any court or Governmental Entity of competent jurisdiction
which prohibits, restrains, enjoins or restricts the
consummation of the Merger; and there shall be no order or
injunction of a court of competent jurisdiction in effect
precluding consummation of the Merger.
(iii) Regulatory Approvals. All consents of,
filings and registrations with, and notifications to, all
Governmental Entities required for consummation of the Merger
shall have been obtained or made and shall be in full force
and effect and all waiting periods required by law for
consummation of the Merger shall have expired.
(iv) Consents and Approvals. Each party hereto
shall have obtained any and all consents required for
consummation of the Merger (other than those referred to in
Section 6.1(a)(iii)) or for the preventing of any default
under any contract or permit of such party which, if not
obtained or made, is reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect or a
Purchaser Material Adverse Effect, as applicable.
(v) Purchaser Financing. Purchaser shall have
obtained the Financing on the terms contemplated by the
Financing Commitments or alternative financing on terms no
less favorable than those set forth in the Financing
Commitments, unless the failure to obtain the Financing was
the result of a failure by Purchaser to perform any covenant
or condition contained therein or herein or the inaccuracy of
any representation or warranty of Purchaser.
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(b) The obligation of the Company to effect the
Merger is also subject to the satisfaction (or waiver) at or prior to
the Closing of each of the following additional conditions:
(i) Accuracy of Representations and Warranties.
All representations and warranties made by Purchaser and
Acquisition Sub herein shall be true and correct in all
material respects (except for representations and warranties
qualified by materiality or Purchaser Material Adverse Effect
which shall be correct in all respects) when made and as of
the Effective Time, with the same force and effect as though
such representations and warranties had been made on and as of
the Effective Time, except for changes permitted or
contemplated by this Agreement and except for representations
and warranties that are made as of a specified date or time,
which shall be true and correct in all material respects
(except for representations and warranties qualified by
materiality or Purchaser Material Adverse Effect which shall
be correct in all respects) only as of such specific date or
time.
(ii) Compliance with Covenants. Purchaser and
Acquisition Sub shall have performed in all material respects
all obligations and agreements, and complied in all material
respects with all covenants, contained in this Agreement to be
performed or complied with by them prior to or as of the
Effective Time.
(iii) Officer's Certificate. The Company shall
have received a certificate of Purchaser and Acquisition Sub,
dated as of the Closing Date, signed by an executive officer
of each of Purchaser and Acquisition Sub, to evidence
satisfaction of the conditions set forth in Section 6.1(b)(i)
and (ii).
(c) The respective obligations of Purchaser and
Acquisition Sub to effect the Merger is also subject to the
satisfaction (or waiver) at or prior to the Closing of each of the
following additional conditions:
(i) Accuracy of Representations and Warranties.
All representations and warranties made by the Company herein
shall be true and correct in all material respects (except for
representations and warranties qualified by materiality or
Company Material Adverse Effect which shall be correct in all
respects and except that the representations and warranties
set forth at Section 3.2(a) shall be true and correct in all
respects) when made and as of the Effective Time, with the
same force and effect as though such representations and
warranties had been made on and as of the Effective Time,
except for changes permitted or contemplated by this Agreement
and except for representations and warranties that are made as
of a specified date or time, which shall be true and correct
in all material respects (except for representations and
warranties qualified
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by materiality or Company Material Adverse Effect which shall
be correct in all respects) only as of such specific date or
time.
(ii) Compliance with Covenants. The Company shall
have performed in all material respects all obligations and
agreements, and complied in all material respects with all
covenants, contained in this Agreement to be performed or
complied with by it prior to or as of the Effective Time
(except that the covenant set forth in Section 5.1(a) shall
have been performed in all respects).
(iii) Officer's Certificate. Purchaser shall have
received (A) a certificate of the Company, dated as of the
Closing Date, signed by an executive officer of the Company,
to evidence satisfaction of the conditions set forth in
Section 6.1(c)(i) and (ii) and (B) certified copies of
resolutions duly adopted by the Board and the Company's
shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the Merger.
(iv) Rights Agreement. A Triggering Event (as
defined in the Rights Agreement) shall not have occurred, and
the Rights shall not have become (A) non-redeemable or (B)
exercisable for capital stock of Purchaser upon consummation
of the Merger.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time notwithstanding
any requisite approval and adoption of this Agreement and approval of the Merger
by the shareholders of the Company:
(a) by mutual written consent duly authorized by the Board
of Directors of the Company and the Board of Directors of each of
Acquisition Sub and Purchaser; or
(b) by Purchaser or the Company if (i) any court or
Governmental Entity of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger (including the denial of
any consent of a Governmental Entity required for consummation of the
Merger) and such order, decree, ruling or other action is or shall have
become final and nonappealable or (ii) the Effective Time is not
occurring concurrently therewith on or before June 30, 2000 (the "Drop
Dead Date"); provided, however, that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date; or
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(c) by Purchaser if the Board shall have withdrawn,
modified, failed to reaffirm or changed its recommendation or approval
in respect of this Agreement or the Merger, or shall have adopted any
resolution to effect the foregoing, or shall have affirmed, recommended
or authorized entering into any other Acquisition Proposal; or
(d) by Purchaser if there shall have been a breach of the
Company's representation set forth in Section 3.2(a) or covenant set
forth in Section 5.1(c) or a material breach of any of the Company's
other representations, warranties or covenants which breach cannot be
or has not been cured within ten (10) days following receipt of written
notice of such breach; or
(e) by the Company if there shall have been a material
breach of any of Purchaser's representations, warranties or covenants
which breach cannot be or has not been cured within ten (10) days of
the receipt of written notice thereof; or
(f) by the Purchaser or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in
the event the shareholders of Company fail to vote their approval and
adoption of this Agreement and the approval of the Merger at the
Shareholders' Meeting where such matters were presented to such
shareholders for approval and voted upon; or
(g) by the Company if, a Person or group (other than
Purchaser or any of its affiliates) shall have made a bona fide
Acquisition Proposal that the Board or the Special Committee determines
in good faith that failing to accept or recommend to the Company's
shareholders such Acquisition Proposal could reasonably be determined
to constitute a breach of the fiduciary duties of the Board or the
Special Committee to the Company's shareholders under applicable law
after consultation with (i) a nationally recognized investment banking
firm regarding the financial superiority of the Acquisition Proposal
and (ii) legal counsel; provided that such termination under this
clause (g) shall not be effective until payment of the fee required by
Section 7.3 hereof.
Section 7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or shareholders, other
than the provisions of this Section 7.2 and Sections 5.3(b), 7.3 and Article
VIII hereof. Nothing contained in this Section 7.2 shall relieve any party from
liability for any breach of this Agreement.
Section 7.3 Fees and Expenses.
(a) Except as otherwise provided in this Section 7.3, each
of the parties hereto shall bear and pay all direct costs and expenses
incurred by it or on its behalf in
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connection with this Agreement and the Merger, including filing and
application fees, printing fees, and fees and expenses of its own
financial or other consultants, investment bankers, accountants and
counsel, except that the filing fee in connection with any HSR Act
filing or any other required consent or approval shall be shared
equally by Purchaser and Company.
(b) Notwithstanding the foregoing,
(i) if this Agreement is terminated by
Purchaser pursuant to Section 7.1(d),
(ii) if the Merger is not consummated as
a result of the failure of Company to satisfy any of the
conditions set forth in Section 6.1(c), or
(iii) if this Agreement is terminated by
Purchaser pursuant to Section 7.1(c) or the Company pursuant to
Section 7.1(g),
then Company shall promptly pay Purchaser the sum of (A) $1 million,
which amount represents the best estimate by the parties hereto of the
value of the management time, overhead, opportunity costs and other
unallocated costs of Purchaser incurred by or on behalf of Purchaser in
connection with this Agreement and the Merger which cannot be
calculated with certainty, plus (B) all the out-of-pocket costs and
expenses of Purchaser, including costs of counsel, investment bankers,
actuaries and accountants up to but not exceeding an additional $2
million in the aggregate.
(c) If no payment is due under Section 7.3(b) and the
Agreement is terminated or the Merger is not consummated, then the
Company shall promptly pay Purchaser all the out-of-pocket costs and
expenses of Purchaser, including costs of counsel, investment bankers,
actuaries and accountants, up to but not exceeding $2 million in the
aggregate unless
(i) the Agreement is terminated pursuant to
Section 7.1(a) or 7.1(e), or
(ii) the Merger is not consummated because
the conditions set forth at Section 6.1(a)(v) or 6.1(b) are
not satisfied.
(d) If, after the date of this Agreement and within
twelve (12) months following
(i) any termination of this Agreement
(1) by Purchaser pursuant to Section
7.1(c) or 7.1(d),
(2) by Company pursuant to Section
7.1(g), or
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(3) by either Party pursuant to Section
7.1(f) (with respect to approval of the shareholders
of the Company), or
(ii) failure to consummate the Merger by reason of
any failure of Company to satisfy the conditions enumerated in
Section 6.1(c) or Section 6.1(a)(i) (as such section relates
to approval by the shareholders of Company),
any third party shall acquire, merge with, combine with, purchase a
significant amount of assets of (including a significant amount of
assets of, or the stock of, any Subsidiary), or engage in any other
business combination with, or purchase any equity securities involving
an acquisition of 20% or more of the voting stock of, the Company on
terms that are financially superior to those of the Merger, or enter
into any letter of intent or agreement to do any of the foregoing
(collectively, a "Superior Business Combination"), such third party
that is a party to the Superior Business Combination shall pay to
Purchaser, (A) upon execution of such letter of intent or agreement
relating to such Superior Business Combination, the sum of (i) $1
million, which amount represents the best estimate by the parties
hereto of the value of the management time, overhead, opportunity costs
and other unallocated costs of Purchaser incurred by or on behalf of
Purchaser in connection with this Agreement and the Merger which cannot
be calculated with certainty, plus (ii) all the out-of-pocket costs and
expenses of Purchaser, including costs of counsel, investment bankers,
actuaries and accountants up to but not exceeding an additional $2
million in the aggregate, and (B) upon the consummation of any Superior
Business Combination that occurs within the later of 24 months from the
date hereof or 12 months from the date of such letter of intent or
agreement, an amount in cash equal to the product of $5 million and the
percentage of the Company assets or equity securities acquired in the
Superior Business Combination, which sum represents additional
compensation for Purchaser's loss (including expenses) as a result of
this Agreement and the Merger not being consummated. The amounts owed
under the preceding clauses (A) and (B) shall be reduced by any amounts
previously paid to Purchaser pursuant to subsection (b), (c) or (d) of
this Section 7.3. In the event such third party shall refuse to pay
such amounts within ten days of demand therefor by Purchaser, the
amounts shall be an obligation of Company and shall be paid by Company
promptly upon notice to Company by Purchaser.
(e) Nothing contained in this Section 7.3 shall constitute
or shall be deemed to constitute liquidated damages for the willful
breach by a party hereto of the terms of this Agreement or otherwise
limit the rights of the nonbreaching party.
Section 7.4 Amendment. Subject to applicable law, this Agreement may be
amended by action taken by the Company and Purchaser at any time before or after
approval of the Merger by the shareholders of the Company but, after any such
approval, no amendment shall be made which requires the approval of such
shareholders under applicable law without such approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of the parties
hereto.
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Section 7.5 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document,
certificate or writing delivered pursuant hereto or (c) waive compliance by the
other party with any of the agreements, covenants or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time.
Section 8.2 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof (including, without limitation, that certain
Confidentiality Agreement, as amended, between the Company and an affiliate of
Purchaser) and (b) shall not be assigned by operation of law or otherwise.
Section 8.3 Validity. If any provision of this Agreement, or the
application thereof to any Person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other Persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
Section 8.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing (including by facsimile with
written confirmation thereof) and unless otherwise expressly provided herein,
shall be delivered during normal business hours by hand, by Federal Express,
United Parcel Service or other nationally recognized overnight commercial
delivery service, or by facsimile notice, confirmation of receipt received,
addressed as follows, or to such other address as may be hereafter notified by
the respective parties hereto:
(a) If to Purchaser or Acquisition Sub:
CBP Holdings, Inc.
Attention: Bart A. McLean, President
Facsimile No.: (404) 816-3258
With a copy to:
Alston & Bird LLP
One Atlantic Center
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<PAGE> 51
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attention: Teri Lynn McMahon, Esq.
Facsimile No.: (404) 881-7777
(b) If to the Company:
Cameron Ashley Building Products, Inc.
11651 Plano Road
Dallas, Texas 75243
Attention: Ronald R. Ross, Chairman and CEO
Facsimile No.: (214) 860-5148
With a copy to:
The Special Committee
C/o Lawrence P. Klamon
2665 Dellwood Drive, N.W.
Atlanta, Georgia 30305-3519
Facsimile No.: (404) 885-1840
With a copy to:
Locke Liddell & Sapp LLP
2200 Ross Avenue
Suite 2200
Dallas, TX 75201
Attention: Guy Kerr, Esq.
Facsimile No.: (214) 740-8800
Section 8.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without regard to
the principles of conflicts of law thereof. The parties hereto hereby agree and
consent to be subject to the exclusive jurisdiction of the United States
District Court for the District of Georgia in any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the Merger. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by law, (a) any objection
that it may now or hereafter have to laying venue of any suit, action or
proceeding brought in such court and (b) any claim that any suit, action or
proceeding brought in such court has been brought in an inconvenient forum.
Section 8.6 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
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Section 8.7 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Section 5.6 and this Article VIII,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 8.8 Signatures. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement. Copies of signatures
transmitted via facsimile shall constitute original signatures for all purposes
of this Agreement.
Section 8.9 Definition. For purposes of this Agreement, the term
"knowledge" shall mean with respect to the Company the actual knowledge of the
executive officers of the Company.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
CAMERON ASHLEY BUILDING PRODUCTS,
INC.
By: /s/ Ronald R. Ross
--------------------------------
Name: Ronald R. Ross
Title: Chairman and CEO
CBP HOLDINGS, INC.
By: /s/ Bart A. McLean
--------------------------------
Name: Bart A. McLean
Title: President
CBP ACQUISITION CORP.
By: /s/ Bart A. McLean
--------------------------------
Name: Bart A. McLean
Title: President
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<PAGE> 1
EXHIBIT 99.1
FOR: CAMERON ASHLEY BUILDING
PRODUCTS, INC.
APPROVED BY: Garold E. Swan
Chief Financial Officer
(214) 860-5100
Final Draft - Approved for Release
CONTACT: Morgen-Walke Associates
Gordon McCoun/Jennifer Angell
Media contact: Stacey Reed
(212) 850-5600
CAMERON ASHLEY ANNOUNCES PENDING SALE TO
CGW SOUTHEAST PARTNERS AND CITICORP VENTURE CAPITAL
- PURCHASE CONSIDERATION TO BE $15.10 PER SHARE -
DALLAS, Texas, January 18, 2000-- Cameron Ashley Building Products,
Inc. (NYSE:CAB) announced today that it has entered into a definitive agreement
whereby an investment group consisting of CGW Southeast Partners IV, L.P. and an
affiliate of Citicorp Venture Capital, Ltd., a subsidiary of Citigroup Inc.
(NYSE:C), along with senior management of the Company will acquire all the
outstanding shares of Cameron Ashley's common stock at a price of $15.10 per
share in cash. The total consideration of the proposed transaction is
approximately $320 million including the assumption of debt. Financing
commitments, subject to customary conditions, are in place with both senior and
subordinated debt sources, and the transaction is expected to close in the
second calendar quarter of 2000. The Company entered into the agreement
following the unanimous recommendation by the Special Committee, comprised of
independent directors of the Company. Credit Suisse First Boston advised the
Special Committee in this transaction. CGW Southeast Partners I, L.P., an
affiliate, currently owns approximately 11% of Cameron Ashley's outstanding
shares.
Ronald R. Ross, Chairman and Chief Executive Officer, commented: "We
believe in the merits of the transaction and feel it is in the best interest of
our shareholders. With this transaction, Cameron Ashley shareholders are being
offered a premium of approximately 35% over last Friday's closing price, which
also represents a 12-month high in the stock. However, when compared with
calendar fourth quarter 1999 average trading prices, the premium is in excess of
70%. We believe a sale at this time captures a better return for our
shareholders than the alternative of remaining a public company."
The closing of the merger is subject to regulatory and shareholder
approval and customary conditions to closing. The agreement includes a $5
million breakup fee. Cameron Ashley announced it will file for review by the
Securities and Exchange Commission a proxy statement to be mailed to
shareholders in connection with a shareholder meeting that will be called to
consider the merger.
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CAMERON ASHLEY ANNOUNCES PENDING SALE TO
CGW SOUTHEAST PARTNERS AND CITICORP VENTURE CAPITAL PAGE 2
Cameron Ashley Building Products, Inc. is a distributor of a broad line
of building products that are used principally in home improvement, remodeling
and repair work and in new residential construction. The Company distributes its
products to independent building material dealers, professional builders, large
contractors and mass merchandisers through a network of more than 160 branches
located throughout the United States and Canada. Product lines include roofing,
millwork, pool and patio enclosure materials, insulation, siding, steel
products, industrial metals and a variety of other building materials.
CGW Southeast Partners IV, L.P. is a private equity fund which supports
management teams in middle-market acquisitions and recapitalizations, and is
managed by Atlanta, GA based Cravey, Green & Wahlen, Inc.
Certain statements in this release are "forward-looking statements"
that are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be indicated by
phrases such as "believes", "anticipates", "expects", "intends", "foresees",
"projects", "predicts", "forecasts" or similar words and are subject to known
and unknown risks and uncertainties which may cause actual results in the future
to differ materially from forecasted results. Among the key factors that could
cause results to differ materially are: (i) the inability of the parties to the
definitive merger agreement to complete the proposed buy-out; (ii) actions by
competitors, suppliers, customers, shareholders, regulators and others following
the announcement of the proposed buy-out; (iii) stock market and financing
market conditions; (iv) business and economic conditions in North America and in
the regional markets in which the Company operate; (v) adverse homebuilding
conditions including those related to weather and interest rates; (vi) reliable
and cost-effective supply of products from manufacturers; and (vii) technology
risks in implementing new and/or converting existing information systems and
other risks more fully described in the Company's filings with the Securities
and Exchange Commission. The Company does not undertake any obligations to
update the information contained herein, which speaks only as of this date.
Note: More information on Cameron Ashley Building Products can be found on the
Wide World Web at http://www.cabp.com.
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