-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UC7Ln930x5KqyehgMEBIF7n8szYwbp6iWH9IBpmqA2aI+h+XBnmWz0wa1CU3mYL3 zpjIFMC4H4wFo4X43ewXcA== /in/edgar/work/0000950144-00-012531/0000950144-00-012531.txt : 20001025 0000950144-00-012531.hdr.sgml : 20001025 ACCESSION NUMBER: 0000950144-00-012531 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001019 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001024 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERKSHIRE HATHAWAY INC CENTRAL INDEX KEY: 0001067983 STANDARD INDUSTRIAL CLASSIFICATION: [6331 ] IRS NUMBER: 470813844 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-14905 FILM NUMBER: 745050 BUSINESS ADDRESS: STREET 1: 1440 KIEWIT PLZ CITY: OMAHA STATE: NE ZIP: 68131 BUSINESS PHONE: 4023461400 MAIL ADDRESS: STREET 1: 1440 KIEWIT PLAZA CITY: OMAHA STATE: NE ZIP: 68131 FORMER COMPANY: FORMER CONFORMED NAME: NBH INC DATE OF NAME CHANGE: 19980810 8-K 1 g64822e8-k.txt BERKSHIRE HATHAWAY INC. 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): October 19, 2000 Berkshire Hathaway Inc. (Exact Name Of Registrant As Specified In Its Charter) Delaware 001-14905 47-0813844 (State Or Other Jurisdiction (Commission (I.R.S. Employer Of Incorporation) File Number) Identification No.) 1440 Kiewit Plaza, Omaha, Nebraska 68131 (Address Of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (402) 346-1400 2 Item 5. Other Events. On October 19, 2000, Berkshire Hathaway Inc. ("Berkshire Hathaway") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Shaw Industries, Inc. ("Shaw ") and SII Acquisition, Inc. ("Merger Sub"), a corporation which will be owned by an investor group comprised of Berkshire Hathaway; Robert E. Shaw, Julian D. Saul and certain members of their immediate families and certain family-related entities; and certain members of management of Shaw. Pursuant to the Merger Agreement, Merger Sub will be merged with and into Shaw, with Shaw as the surviving corporation in the merger (the "Surviving Corporation"), and holders of Shaw's common stock, other than Merger Sub, will have the right to receive $19.00 per share in cash, without interest, for each share of Shaw common stock owned at the time of the merger. In connection with and as contemplated by the Merger Agreement, Berkshire Hathaway and Merger Sub entered into a contribution and participation agreement (the "Contribution Agreement") with the other members of the investor group. In accordance with the terms of the Contribution Agreement, Berkshire Hathaway and the other members of the investor group will contribute an aggregate amount of 17,996,838 shares of Shaw common stock and, in the case of Berkshire Hathaway, $2,016,686,315 in cash to Merger Sub and, in exchange therefor, will receive shares of Merger Sub common stock which, in the merger, will be converted into shares of common stock of the Surviving Corporation. In addition, in connection with and as contemplated by the Merger Agreement, certain shareholders of Shaw holding in the aggregate 32,263,036 shares of Shaw common stock, representing 24.4% of the issued and outstanding Shaw common stock, entered into a voting agreement with Berkshire Hathaway (the "Voting Agreement"). Pursuant to the terms of the Voting Agreement, the shareholders party thereto are required to vote their shares of Shaw common stock in favor of the merger and against any third party proposal, and such shareholders have granted Berkshire Hathaway an irrevocable proxy to vote their shares of Shaw common stock at the special meeting of shareholders called to consider and vote upon the merger and any other meeting of the Shaw shareholders at which the merger is considered. In addition, pursuant to the terms of the Voting Agreement, the shareholders party to it are restricted from transferring or otherwise disposing of their Shaw shares. In connection with the irrevocable proxy given to Berkshire Hathaway under the Voting Agreement, Berkshire Hathaway has entered into an investor voting agreement with Shaw (the "Investor Voting Agreement") under which Berkshire Hathaway has agreed to vote an aggregate of 13,433,261 shares of Shaw common stock, which are subject to both the Voting Agreement and the Contribution Agreement, in the same proportion as the other shares of Shaw common stock voting on the approval of the merger and the Merger Agreement are voted on such matters. Consummation of the transactions contemplated by the Merger Agreement is subject to the approval of a majority of the outstanding shares of Shaw common stock, the 3 receipt of certain regulatory approvals and other customary conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Copies of the Merger Agreement, the Contribution Agreement, the Voting Agreement and the Investor Voting Agreement are filed herewith as Exhibits and are incorporated herein by reference. The description of such agreements set forth herein is qualified in its entirety by reference to the provisions of such agreements. Item 7. Financial Statements and Exhibits. (c) Exhibits. 99.1 Agreement and Plan of Merger, dated as of October 19, 2000, by and among SII Acquisition, Inc., Shaw Industries, Inc., and Berkshire Hathaway. 99.2 Contribution and Participation Agreement, dated as of October 19, 2000, by and among SII Acquisition, Inc., Berkshire Hathaway and the Continuing Holders. 99.3 Voting Agreement, dated as of October 19, 2000, by and among Berkshire Hathaway, SII Acquisition, Inc. and certain Shaw stockholders named therein. 99.4 Investor Voting Agreement, dated as of October 19, 2000 by and between Berkshire Hathaway Inc. and Shaw Industries, Inc. 99.5 Press Release, dated October 19, 2000, of Berkshire Hathaway.
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. Dated: October 24, 2000 BERKSHIRE HATHAWAY INC. By: /s/ Marc D. Hamburg Marc D. Hamburg Chief Financial Officer 4 EXHIBIT INDEX
Exhibit Description - ------- ----------- 99.1 Agreement and Plan of Merger, dated as of October 19, 2000, by and among SII Acquisition, Inc., Shaw Industries, Inc., and Berkshire Hathaway. 99.2 Contribution and Participation Agreement, dated as of October 19, 2000, by and among SII Acquisition, Inc., Berkshire Hathaway and the Continuing Holders. 99.3 Voting Agreement, dated as of October 19, 2000, by and among Berkshire Hathaway, SII Acquisition, Inc. and certain Shaw stockholders named therein. 99.4 Investor Voting Agreement, dated as of October 19, 2000 by and between Berkshire Hathaway and Shaw Industries, Inc. 99.5 Press Release, dated October 19, 2000, of Berkshire Hathaway.
EX-99.1 2 g64822ex99-1.txt AGREEMENT AND PLAN OF MERGER 1 EXHIBIT 99.1 AGREEMENT AND PLAN OF MERGER DATED AS OF OCTOBER 19, 2000 BY AND AMONG SII ACQUISITION, INC., SHAW INDUSTRIES, INC. AND BERKSHIRE HATHAWAY INC. 2 TABLE OF CONTENTS
PAGE ---- ARTICLE 1 THE MERGER; CLOSING.............................. 1.1 The Merger........................................... 1.2 Closing.............................................. ARTICLE 2 EFFECTS OF THE MERGER............................ 2.1 Effects of the Merger................................ 2.2 Articles of Incorporation; Bylaws.................... 2.3 Directors............................................ 2.4 Officers............................................. ARTICLE 3 EFFECT OF THE MERGER ON SECURITIES OF THE COMPANY AND MERGER SUB............................................ 3.1 Merger Sub Stock..................................... 3.2 Effect on the Common Stock........................... (a) Cancellation of Treasury Stock and Merger Sub-Owned Common Stock.......................................... (b) Conversion of the Common Stock..................... (c) Cancellation and Retirement of the Common Stock.... (d) Stock Option Plans................................. 3.3 Exchange of Certificates............................. (a) Exchange Agent..................................... (b) Exchange Procedures................................ (c) No Further Ownership Rights in Common Stock........ (d) Termination of Exchange Fund....................... (e) No Liability....................................... (f) Investment of Exchange Fund........................ (g) Lost Certificates.................................. 3.4 Dissenting Shares.................................... ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..... 4.1 Corporate Organization............................... 4.2 Capitalization....................................... 4.3 Authority............................................ 4.4 Consents and Approvals; No Violations................ 4.5 SEC Documents; Undisclosed Liabilities............... 4.6 Broker's Fees........................................ 4.7 Absence of Certain Changes or Events................. 4.8 Legal Proceedings.................................... 4.9 Compliance with Applicable Law....................... 4.10 Company Information.................................. 4.11 Opinion of Financial Advisor......................... 4.12 Employee Matters..................................... 4.13 Environmental Matters................................ 4.14 Takeover Statutes.................................... 4.15 Rights Agreement..................................... 4.16 Properties........................................... 4.17 Tax Returns and Tax Payments......................... 4.18 Intellectual Property................................ 4.19 Board and Special Committee Recommendations.......... 4.20 Required Vote........................................
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PAGE ---- ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND INVESTOR.................................................. 5.1 Corporate Organization............................... 5.2 Authority............................................ 5.3 Consents and Approvals; No Violation................. 5.4 Broker's Fees........................................ 5.5 Merger Sub's Operation............................... 5.6 Merger Sub and Investor Information.................. 5.7 Financing............................................ 5.8 Capitalization of Merger Sub......................... 5.9 Stock Ownership...................................... ARTICLE 6 COVENANTS........................................ 6.1 Conduct of Businesses Prior to the Effective Time.... ARTICLE 7 ADDITIONAL AGREEMENTS............................ 7.1 Preparation of the Proxy Statement; Stockholder Meeting................................................ 7.2 Indemnification...................................... 7.3 Expenses............................................. 7.4 No Solicitation...................................... 7.5 Publicity............................................ 7.6 Notification of Certain Matters...................... 7.7 Contribution Agreement............................... 7.8 Access to Information................................ 7.9 Further Assurances................................... 7.10 Additional Agreements................................ 7.11 Takeover Statutes.................................... 7.12 Employee Benefits.................................... ARTICLE 8 CONDITIONS PRECEDENT............................. 8.1 Conditions to Each Party's Obligation To Effect the Merger................................................. (a) Company Stockholder Approval....................... (b) HSR Act............................................ (c) No Injunctions or Restraints....................... (d) Foreign Government Consents........................ 8.2 Conditions to Obligation of Merger Sub............... (a) Representations and Warranties..................... (b) Performance of Obligations of the Company.......... (c) Consents, etc. .................................... (d) Dissenters' Rights................................. (e) Legal Opinion...................................... (f) Contribution Agreement............................. 8.3 Conditions to Obligation of the Company.............. (a) Representations and Warranties..................... (b) Performance of Obligations of Merger Sub and Investor.............................................. (c) Legal Opinion...................................... ARTICLE 9 TERMINATION, AMENDMENT AND WAIVER................ 9.1 Termination.......................................... 9.2 Effect of Termination................................ 9.3 Amendment............................................ 9.4 Extension; Waiver....................................
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PAGE ---- ARTICLE 10 GENERAL PROVISIONS.............................. 10.1 Nonsurvival of Representations and Warranties....... 10.2 Notices............................................. 10.3 Definitions......................................... 10.4 Interpretation...................................... 10.5 Counterparts........................................ 10.6 Entire Agreement; No Third-Party Beneficiaries...... 10.7 Governing Law....................................... 10.8 Assignment.......................................... 10.9 Enforcement......................................... 10.10 Severability........................................
5 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into as of October 19, 2000 by and between Berkshire Hathaway Inc., a Delaware corporation ("Investor"), SII Acquisition, Inc., a Georgia corporation and, at the time of execution of this Agreement, a wholly owned direct subsidiary of Investor ("Merger Sub") and Shaw Industries, Inc., a Georgia corporation (the "Company"). RECITALS WHEREAS, each of the Board of Directors of the Company and the Special Committee (as defined in Section 4.19) has determined that it is in the best interests of the Company and its stockholders for the Company to merge with Merger Sub pursuant to the terms and conditions set forth herein; WHEREAS, the Board of Directors of the Company has heretofore taken the actions referred to in Section 4.14 relating to the Takeover Statutes (as defined in Section 4.14) and the actions referred to in Section 4.15 relating to the Company Rights Agreement (as defined in Section 4.15); WHEREAS, the Board of Directors of each of Merger Sub and the Company has approved, and deems it advisable, that Merger Sub merge with and into the Company, with the result that each holder of a share of Common Stock, no par value per share, of the Company (the "Common Stock"), together with the associated rights (the "Rights") under the Company Rights Agreement (as defined in Section 4.15) (throughout this Agreement, each reference to a share of Common Stock referring to such share of Common Stock together with the associated Rights), issued and outstanding immediately prior to the Effective Time (as defined in Section 1.1(b)) will be entitled to receive a cash payment in exchange for such share, upon the terms and subject to the conditions set forth herein (except for shares of Common Stock owned by the Company or any subsidiary of the Company or by Merger Sub, which, as provided in Section 3.2(a), shall be cancelled without any such payment); WHEREAS, the Merger and this Agreement require the approval thereof by a majority of the votes entitled to be cast thereon by holders of the outstanding shares of Common Stock entitled to vote thereon, voting together as a single class (the "Company Stockholder Approval"); WHEREAS, the Board of Directors of the Company recommends approval and adoption of the Merger and this Agreement by the holders of the outstanding shares of Common Stock entitled to vote thereon; WHEREAS, in order to induce Merger Sub and Investor to enter into this Agreement, as a condition to, and concurrently with the execution of, this Agreement, certain beneficial owners of Common Stock are entering into a voting agreement with Merger Sub and Investor (the "Voting Agreement") in the form attached hereto as Exhibit A; WHEREAS, in order to induce Investor to enter into this Agreement, as a condition to, and concurrently with the execution of, this Agreement, certain beneficial owners of Common Stock and certain holders of Company Stock Options (as defined in Section 3.2(d)) are entering into a Contribution and Participation Agreement (the "Contribution Agreement") with Investor, in the form attached hereto as Exhibit B; and WHEREAS, concurrently with the execution of this Agreement, the Voting Agreement and the Contribution Agreement, Investor is entering into a voting agreement with the Company (the "Investor Voting Agreement"), in the form attached hereto as Exhibit C, with respect to certain shares of Common Stock which are subject to the Contribution Agreement and for which Investor is being granted a proxy pursuant to the Voting Agreement; 1 6 NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties agree as follows: ARTICLE 1 THE MERGER; CLOSING 1.1 The Merger. (a) Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the Georgia Business Corporation Code (the "GBCC"), at the Effective Time, Merger Sub shall be merged with and into the Company (the "Merger") and the Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation") and shall continue its corporate existence under the laws of the State of Georgia. (b) Upon the terms and subject to the conditions of this Agreement, on the Closing Date (as defined below), the Company and Merger Sub shall cause a certificate of merger (the "Certificate of Merger") to be executed and filed with the Secretary of State of the State of Georgia in accordance with the GBCC. The Merger shall become effective at such time as the Certificate of Merger is filed with the Secretary of State of the State of Georgia in accordance with the GBCC, or at such later time as may be agreed to by Merger Sub and the Company and specified in the Certificate of Merger in accordance with applicable law. The date and time when the Merger shall become effective is referred to herein as the "Effective Time." 1.2 Closing. Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 9.1, and subject to the satisfaction or waiver of the conditions set forth in Article 8, the closing (the "Closing") of the Merger will take place at 10:00 a.m. local time on the second business day immediately following the date on which the last of the conditions set forth in Article 8 hereof is satisfied or waived (the "Closing Date"), at the offices of Powell, Goldstein, Frazer & Murphy LLP, Sixteenth Floor, 191 Peachtree, N.E., Atlanta, Georgia 30303, unless another date, time or place is agreed to in writing by the parties hereto. ARTICLE 2 EFFECTS OF THE MERGER 2.1 Effects of the Merger. The Merger shall have the effects set forth in the GBCC. 2.2 Articles of Incorporation; Bylaws. The Articles of Incorporation of the Company as in effect at the Effective Time shall be the Articles of Incorporation of the Surviving Corporation but shall be amended, immediately after the filing of the Certificate of Merger, to conform to the Articles of Incorporation of Merger Sub, and shall be the Articles of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law. The Bylaws of Merger Sub as in effect at the Effective Time shall be the Bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or in the Articles of Incorporation or by applicable law. 2.3 Directors. The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation as of the Effective Time until the earlier of their resignation or removal or until their respective successors are duly appointed or elected in accordance with applicable law. 2.4 Officers. The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation as of the Effective Time until the earlier of their resignation or removal or until their respective successors are duly appointed or elected in accordance with applicable law. 2 7 ARTICLE 3 EFFECT OF THE MERGER ON SECURITIES OF THE COMPANY AND MERGER SUB 3.1 Merger Sub Stock. At the Effective Time, by virtue of the Merger, each share of the common stock of Merger Sub outstanding immediately prior to the Effective Time shall be converted into and shall become one share of common stock of the Surviving Corporation. 3.2 Effect on the Common Stock. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of the Common Stock: (a) Cancellation of Treasury Stock and Merger Sub-Owned Common Stock. Each share of Common Stock that is owned by the Company or any subsidiary of the Company and each share of Common Stock that is owned by Merger Sub shall automatically be canceled and retired and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor. (b) Conversion of the Common Stock. Except as otherwise provided herein and subject to Sections 3.3 and 3.4, at the Effective Time each issued and outstanding share of Common Stock shall be converted into and represent the right to receive cash in the amount of $19.00 (the "Per Share Amount") payable to the holder thereof, without interest. (c) Cancellation and Retirement of the Common Stock. All shares of the Common Stock issued and outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such shares of Common Stock shall cease to have any rights with respect thereto, except, other than for shares referred to in Section 3.2(a) and Section 3.4, the right to receive cash in accordance with Section 3.2(b) to be paid in consideration therefor upon surrender of such certificate in accordance with Section 3.3. (d) Stock Option Plans. (i) The Company shall take all actions necessary to provide that, immediately prior to the Effective Time, (x) each outstanding option to acquire shares of Common Stock (the "Company Stock Options") granted under any of the Company's 1987 Incentive Stock Option Plan, 1992 Incentive Stock Option Plan, 1997 Stock Incentive Plan, or 2000 Stock Incentive Plan (collectively, the "Option Plans"), whether or not then exercisable or vested, shall become fully exercisable and vested, (y) each Company Stock Option which is then outstanding shall be canceled and (z) in consideration of such cancellation, and except to the extent that Merger Sub and the holder of any Company Stock Option otherwise agree in writing, the Company (or, at Merger Sub's election, the Surviving Corporation) shall pay in cash to each holder of Company Stock Options an amount in respect thereof equal to the product of (A) the excess, if any, for each Company Stock Option, of the Per Share Amount over the per share exercise price thereof and (B) the number of shares of Common Stock subject thereto (such payment to be net of applicable withholding taxes). (ii) (A) The Option Plans, the Company Stock Options and any other plan, program, agreement or arrangement providing for the issuance or grant of any interest in respect of the capital stock of the Company or any subsidiary (collectively, the "Stock Plans") shall terminate as of the Effective Time, and (B) the Company shall ensure that following the Effective Time no holder of a Company Stock Option nor any party to or participant in any of the Stock Plans shall have any right thereunder to acquire equity securities of the Company, the Surviving Corporation or any of their respective subsidiaries. 3.3 Exchange of Certificates. (a) Exchange Agent. Prior to the mailing of the Proxy Statement (as defined in Section 7.1(a)) to the Company's stockholders, Merger Sub shall designate and appoint a bank or trust company reasonably satisfactory to the Company to act as exchange agent (the "Exchange Agent") to receive the funds necessary to make the payments contemplated by Section 3.2(b). Immediately following the 8 Effective Time, the Surviving Corporation shall cause the aggregate consideration to which the holders of shares of Common Stock are entitled pursuant to Section 3.2(b) to be deposited (the "Exchange Fund") with the Exchange Agent for the benefit of such holders, for exchange in accordance with this Article 3. The Exchange Agent shall, pursuant to irrevocable instructions, deliver such consideration out of the Exchange Fund to holders of shares of Common Stock in accordance with this Article 3. (b) Exchange Procedures. As soon as practicable but no later than three (3) business days after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each holder of an outstanding certificate or certificates which prior thereto represented shares of Common Stock (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to such certificate shall pass, only upon delivery of such certificates to such Exchange Agent), and (ii) instructions for use in effecting the surrender of the certificates for the aggregate Per Share Amount relating thereto. Upon proper surrender to the Exchange Agent of such certificates for cancellation, the holder of such certificates shall after the Effective Time be entitled only to payment in cash of the aggregate Per Share Amount relating thereto. The Exchange Agent shall accept such certificates upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. After the Effective Time, there shall be no further transfer on the records of the Company or its transfer agent of certificates representing shares of Common Stock and if such certificates are presented to the Company for transfer, they shall be canceled against delivery of cash as provided in Section 3.2(b) and this Section 3.3(b). If a payment of cash pursuant hereto is to be remitted to a name other than that in which the certificate for Common Stock surrendered for exchange is registered, it shall be a condition of such exchange that the certificate so surrendered shall be properly endorsed, with signature guaranteed, or otherwise in proper form for transfer and that the person requesting such exchange shall pay to the Surviving Corporation or its transfer agent any transfer or other taxes required by reason of the remittance of cash in a name other than that of the registered holder of the certificate surrendered, or establish to the satisfaction of the Surviving Corporation or its transfer agent that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 3.3(b), except as provided in Section 3.4 hereof, each certificate for shares of Common Stock shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the aggregate Per Share Amount relating thereto. No interest will be paid or will accrue on the aggregate Per Share Amount payable pursuant to this Agreement. (c) No Further Ownership Rights in Common Stock. All cash paid pursuant to Section 3.3(b) upon the surrender for exchange of certificates representing shares of Common Stock in accordance with the terms of this Article 3 shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Common Stock theretofore represented by such certificates. (d) Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the holders of the certificates representing shares of the Common Stock for twelve months after the Effective Time shall be delivered to the Surviving Corporation, upon demand, and any holders of shares of Common Stock who have not theretofore complied with this Article 3 shall thereafter look only to the Surviving Corporation and only as general creditors thereof for payment of their claim for the applicable Per Share Amount. (e) No Liability. None of Merger Sub, the Company or the Exchange Agent shall be liable to any person in respect of any cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any certificates representing shares of Common Stock shall not have been surrendered prior to five years after the Effective Time (or immediately prior to such earlier date on which any cash payable pursuant to Section 3.2(b) would otherwise escheat to or become the property of any Governmental Entity (as defined in Section 4.4(a)), any such cash in respect of such certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto. 9 (f) Investment of Exchange Fund. The Exchange Agent shall invest the cash included in the Exchange Fund as directed by the Surviving Corporation on a daily basis. Any interest and other income resulting from such investments shall be paid to the Surviving Corporation. (g) Lost Certificates. If any certificate that prior to the Effective Time represented shares of Common Stock shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond in such reasonable amount as the Surviving Corporation may direct as indemnity against any claim that may be made against it with respect to such certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed certificate the applicable Per Share Amount payable pursuant to this Agreement with respect to the shares of Common Stock formerly represented by such certificate. 3.4 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, shares of Common Stock which are issued and outstanding immediately prior to the Effective Time and which are held by holders of such shares of Common Stock who have properly exercised dissenter's rights with respect thereto ("Dissenting Common Stock") in accordance with Sections 14-2-1321 and 14-2-1323 of the GBCC, shall not be exchangeable for the right to receive cash pursuant to Section 3.2(b), and holders of such shares of Dissenting Common Stock shall be entitled to receive payment of the fair value of such shares of Dissenting Common Stock in accordance with the provisions of Article 13 of the GBCC unless and until such holders fail to perfect or effectively withdraw or otherwise lose their rights to demand payment under the GBCC. If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses such right, such shares of Dissenting Common Stock shall thereupon be treated as if they had been converted into and have become exchangeable for, at the Effective Time, the right to receive the aggregate Per Share Amount relating thereto, without any interest thereon. Notwithstanding anything to the contrary contained in this Section 3.4, if the Merger is rescinded or abandoned, then the right of any stockholder to be paid the fair value of such stockholder's Dissenting Common Stock pursuant to Article 13 of the GBCC shall cease. The Company shall give Investor prompt notice of any demands received by the Company for payment for shares of Dissenting Common Stock. The Company shall not, except with the prior written consent of Investor, make any payment with respect to any demands for appraisals or offer to settle or settle any such demands. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Merger Sub and Investor as follows: 4.1 Corporate Organization. Each of the Company and its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted. Each of the Company and its Significant Subsidiaries (as defined below) is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not reasonably be expected to have, when aggregated with all other such failures, a Material Adverse Effect (as defined below) on the Company ("Company Material Adverse Effect"). As used in this Agreement, the term "Material Adverse Effect" means, a material adverse effect on the business, operations or financial condition of such party and its subsidiaries taken as a whole or a material adverse effect on the party's ability to consummate the transactions contemplated hereby; provided, however, that a "Material Adverse Effect" shall not include any of the following or any combination of the following: any change or effect resulting from or attributable to (A) general national, international or regional economic or financial conditions, (B) other developments which are not unique to such party and its subsidiaries, but also affect other persons who engage in the lines of business in which such party or its subsidiaries are engaged, or (C) the announcement or pendency of this Agreement or the transactions contemplated hereby (including, if resulting therefrom, employee attrition and delay, reduction or cancellation or change in the terms of orders or purchases from or other transactions with 10 the Company or its subsidiaries). As used in this Agreement, (i) the word "subsidiary" when used with respect to any party means any corporation, partnership or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or other interests having by their terms 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 beneficially 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, and (ii) "Significant Subsidiary" has the meaning given such term in Rule 405 of the Securities Act of 1933, as amended (the "Securities Act"). The copies of the Articles of Incorporation and Bylaws of the Company (the "Company Articles" and "Company Bylaws"), as most recently filed with the Company's SEC Documents (as hereinafter defined), are true, complete and correct copies of such documents as in effect as of the date of this Agreement. 4.2 Capitalization. (a) The authorized capital stock of the Company consists of 500,000,000 shares of Common Stock and 250,000 shares of preferred stock, no par value per share ("Preferred Stock"), of which 200,000 shares are designated Series A Participating Preferred Stock. At the close of business on September 30, 2000, there were 123,983,208 shares of Common Stock issued and outstanding, no shares of Preferred Stock issued and outstanding, and 5,728,866 shares of Company Common Stock issuable upon the exercise of outstanding Company Stock Options pursuant to the Option Plans. Except as set forth in Section 4.2(a) of the disclosure schedule of the Company delivered to Merger Sub concurrently herewith (the "Company Disclosure Schedule"), all of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. Except as set forth in Section 4.2(a) of the Company Disclosure Schedule or pursuant to the Company's Outside Directors Stock Plan, since December 31, 1999, the Company has not issued any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock, other than pursuant to the exercise of Company Stock Options pursuant to the Option Plans. Except as set forth above or in Section 4.2(a) of the Company Disclosure Schedule, as of the date of this Agreement there are not and, as of the Effective Time there will not be, any shares of capital stock issued and outstanding or any subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any securities of the Company, including any securities representing the right to purchase or otherwise receive any Common Stock (other than the Rights). (b) Except as set forth in Section 4.2(b) of the Company Disclosure Schedule, the Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock of each of its Significant Subsidiaries, free and clear of any liens, charges, encumbrances, adverse rights or claims and security interests whatsoever ("Liens") which would reasonably be expected to have, in the aggregate, a Company Material Adverse Effect, and all of such shares are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. None of the Company's Significant Subsidiaries has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any security of such Significant Subsidiary, including any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Significant Subsidiary. 4.3 Authority. (a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and, subject to the Company Stockholder Approval with respect to consummation of the Merger, to consummate the transactions contemplated hereby. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the transactions contemplated hereby, have been duly authorized by its Board of Directors and the Special Committee and, except for obtaining the Company Stockholder Approval with respect to the consummation of the Merger, no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the consummation by it of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming due and valid authorization, 11 execution and delivery hereof by the other parties thereto, constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. (b) Each of the Board of Directors of the Company and the Special Committee has approved and taken all corporate action required to be taken by the Board of Directors or the Special Committee for the consummation by the Company of the transactions contemplated by this Agreement. 4.4 Consents and Approvals; No Violations. (a) Except for (i) the consents and approvals set forth in Section 4.4(a) of the Company Disclosure Schedule, (ii) the filing with the Securities and Exchange Commission (the "SEC") of the Proxy Statement, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Georgia pursuant to the GBCC, and (iv) filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any similar requirements of foreign jurisdictions, no consents or approvals of, or filings, declarations or registrations with, any federal, state or local court, administrative or regulatory agency or commission or other governmental authority or instrumentality, domestic or foreign (each a "Governmental Entity"), are necessary for the consummation by the Company of the transactions contemplated hereby, other than such other consents, approvals, filings, declarations or registrations that, if not obtained, made or given, would not reasonably be expected to have, in the aggregate, a Company Material Adverse Effect. (b) Except as set forth in Section 4.4(b) of the Company Disclosure Schedule, neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby, nor compliance by the Company with any of the terms or provisions hereof, will (i) conflict with or violate any provision of the Company Articles or Company Bylaws or any of the organizational documents of any of its Significant Subsidiaries or (ii) assuming that the authorizations, consents and approvals referred to in Section 4.4(a) and the Company Stockholder Approval are duly obtained in accordance with the GBCC, (x) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Company or any of its subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in the loss of any material benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of the Company or any of its subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any of its subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected, except, in the case of clause (ii) above, for such violations, conflicts, breaches, defaults, losses, terminations of rights thereof, accelerations or Lien creations which, in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. 4.5 SEC Documents; Undisclosed Liabilities. The Company has filed all required reports, schedules, forms and registration statements with the SEC since January 1, 1998 (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and none of the SEC Documents (including any and all financial statements included therein) as of such dates contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of the Company included in the SEC Documents comply as to form in all 12 material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited consolidated quarterly statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments). Except as set forth on Section 4.5 of the Company Disclosure Schedule, since December 31, 1999, neither the Company nor any of its subsidiaries, has incurred any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required, if known, to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP except (i) as and to the extent set forth or reflected on the audited balance sheet of the Company and its subsidiaries as of December 31, 1999 (including the notes thereto), (ii) as incurred in connection with the transactions contemplated by this Agreement, (iii) as incurred after December 31, 1999 in the ordinary course of business and consistent with past practice, (iv) as described in the SEC Documents filed since December 31, 1999 (the "Recent SEC Documents"), or (v) as would not, individually or in the aggregate, have a Company Material Adverse Effect. 4.6 Broker's Fees. Neither the Company nor any subsidiary of the Company nor any of their respective officers or directors on behalf of the Company or such subsidiaries, including the Special Committee, has employed any financial advisor, broker or finder or incurred any liability for any broker's fees, commissions or finder's fees in connection with any of the transactions contemplated hereby, other than Merrill Lynch & Co., the fees and expenses of which will be paid by the Company (pursuant to an engagement letter, a copy of which has been furnished to Merger Sub and Investor). 4.7 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date hereof or as set forth in Section 4.7 of the Company Disclosure Schedule, since December 31, 1999, (a) no events have occurred which would reasonably be expected to have, in the aggregate, a Company Material Adverse Effect and (b) the Company and its subsidiaries have carried on and operated their respective businesses in all material respects in the ordinary course of business consistent with past practice, except for such deviations of the Company's business from the ordinary course of business which would not reasonably be expected to have, in the aggregate, a Company Material Adverse Effect. 4.8 Legal Proceedings. (a) Except as disclosed in the SEC Documents or in Section 4.8 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries is a party to any, and there are no pending legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against the Company or any of its subsidiaries or challenging the validity or propriety of the transactions contemplated hereby, which proceedings, claims, actions, or investigations, in the aggregate, would reasonably be expected to have a Company Material Adverse Effect. (b) Except as set forth in the SEC Documents or in Section 4.8 of the Company Disclosure Schedule, there is no injunction, order, judgment, decree or regulatory restriction imposed upon the Company, any of its subsidiaries or the assets of the Company or any of its subsidiaries which, when aggregated with all other such injunctions, orders, judgments, decrees and restrictions, would reasonably be expected to have a Company Material Adverse Effect. 4.9 Compliance with Applicable Law. Except as disclosed in Section 4.9 of the Company Disclosure Schedule, the Company and each of its subsidiaries hold all material licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses as presently conducted and are in compliance with the terms thereof, except where the failure to hold such license, franchise, permit or authorization or such noncompliance would not, when aggregated with all other such failures or noncompliance, reasonably be expected to have a Company Material Adverse Effect, and neither the Company nor any of its subsidiaries knows of, or has received notice of, any material violations of any applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to the Company or any of 13 its subsidiaries, which, in the aggregate, would reasonably be expected to have a Company Material Adverse Effect. 4.10 Company Information. None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in the Proxy Statement or in any other document filed with any other Governmental Entity in connection herewith at the respective times filed with the SEC or such other Governmental Entity and first published, sent or given to stockholders of the Company and, in addition, in the case of the Proxy Statement, at the date it or any amendment or supplement is mailed to holders of the shares of Common Stock, and at the time of the Company Stockholders Meeting (as defined in Section 7.1(d) hereof), will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading. No representation is made by the Company with respect to statements made or incorporated by reference therein based on information supplied in writing by Merger Sub or Investor for inclusion or incorporation by reference in the Proxy Statement. The Proxy Statement will comply as to form in all material respects with the provisions of applicable federal securities law. 4.11 Opinion of Financial Advisor. The Special Committee has obtained the opinion of Merrill Lynch & Co., dated as of the date of this Agreement and a copy of which has been provided to Merger Sub and Investor, to the effect that, as of the date hereof, the Per Share Amount to be paid to holders of Common Stock (other than holders who are a party to the Contribution Agreement) pursuant to this Agreement is fair from a financial point of view to such holders. 4.12 Employee Matters. The Company has delivered or made available to Merger Sub full and complete copies or descriptions of each material employment, severance, bonus, change-in-control, profit sharing, compensation, termination, stock option, stock appreciation right, restricted stock, phantom stock, performance unit, pension, retirement, deferred compensation, welfare or other employee benefit agreement, trust fund or other arrangement and any union, guild or collective bargaining agreement maintained or contributed to or required to be contributed to by the Company or any of its ERISA Affiliates (as defined below), for the benefit or welfare of any director, officer, employee or former employee of the Company or any of its ERISA Affiliates (such plans and arrangements being collectively the "Company Benefit Plans"). Each of the Company Benefit Plans is in material compliance with all applicable laws including ERISA and the Code except where such noncompliance would not reasonably be expected to have a Company Material Adverse Effect. The Internal Revenue Service has determined that each Company Benefit Plan that is intended to be a qualified plan under Section 401(a) of the Code is so qualified and the Company is aware of no event occurring after the date of such determination that would adversely affect such determination. The liabilities accrued under each such plan are reflected on the latest balance sheet of the Company included in the Recent SEC Documents in accordance with generally accepted accounting principles applied on a consistent basis. No condition exists that is reasonably likely to subject the Company or any of its subsidiaries to any direct or indirect liability under Title IV of ERISA or to a civil penalty under Section 502(j) of ERISA or liability under Section 4069 of ERISA or 4975, 4976, or 4980B of the Code or the loss of a federal tax deduction under Section 280G of the Code or other liability with respect to the Company Benefit Plans that would have a Company Material Adverse Effect and that is not reflected on such balance sheet. There are no pending or to the Company's knowledge, threatened, claims (other than routine claims for benefits or immaterial claims) by, on behalf of or against any of the Company Benefit Plans or any trusts related thereto except where such claims would not reasonably be expected to have a Company Material Adverse Effect. "ERISA Affiliate" means, with respect to any person, any trade or business, whether or not incorporated, that together with such person would be deemed a "single employer" within the meaning of Section 4001(a)(15) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 4.13 Environmental Matters. Except as set forth on Section 4.13 of the Company Disclosure Schedule, to the knowledge of the Company (a) there are no legal, administrative, arbitral or other proceedings, claims, actions, causes of action, required environmental remediation activities, governmental investigations of any nature seeking to impose, or that reasonably could be expected to result in the imposition, on the Company or any of its subsidiaries of any liability or obligations arising under common law standards relating to environmental protection, human health or safety, or under any local, state, provincial, federal or national 14 environmental statute, regulation or ordinance, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and Mexico's Ley General del Equilibrium Ecologico y la Proteccion al Ambiente (General Law of Ecological Equilibrium and Environmental Protection) (collectively, "Environmental Laws"), pending or threatened, against the Company or any of its subsidiaries, which liability or obligation would have or would reasonably be expected to have a Company Material Adverse Effect; (b) during or prior to the period of (i) its or any of its subsidiaries' ownership or operation of any of their respective current properties, (ii) its or any of its subsidiaries' participation in the management of any property, or (iii) its or any of its subsidiaries' holding of a security interest or other interest in any property, there was no release or threatened release of hazardous, toxic, radioactive or dangerous materials or other materials regulated under Environmental Laws in, on, under or affecting any such property which would reasonably be expected to have a Company Material Adverse Effect; and (c) neither the Company nor any of its subsidiaries is subject to any agreement, order, judgment, decree, letter or memorandum by or with any court, governmental authority, regulatory agency or third party imposing any material liability or obligations pursuant to or under any Environmental Law that would have or would reasonably be expected to have a Company Material Adverse Effect. 4.14 Takeover Statutes. The Company has taken all actions necessary such that no restrictive provision of any "fair price," "moratorium," "control share acquisition," "interested shareholder" or other similar anti-takeover statute or regulation known to the Company (after consultation with legal counsel) to apply to the Merger or any other transaction contemplated by this Agreement (including, without limitation, Section 14-2-1111 and Section 14-2-1132 of the GBCC) (collectively, "Takeover Statutes") or restrictive provision of any applicable anti-takeover provision in the governing documents of the Company is, or at the Effective Time will be, applicable to the Company, Merger Sub, Investor, the shares of Common Stock, the Merger or any other transaction contemplated by this Agreement. 4.15 Rights Agreement. The Company has taken all action required so that the entering into of this Agreement, the Voting Agreement, the Contribution Agreement, the Investor Voting Agreement, and the consummation of the transactions contemplated hereby and thereby do not and will not enable or require the Rights to be separated from the shares of Common Stock with which the Rights are associated, or to be distributed, exercisable, exercised, or nonredeemable or result in the Rights associated with any Common Stock beneficially owned by Investor or Merger Sub or any of their respective affiliates or associates (as defined in that certain Amended and Restated Rights Agreement, dated as of April 10, 1999, as amended, between the Company and EquiServ Trust Company, N.A. (the "Company Rights Agreement")) to be void or voidable. The Company has delivered to Merger Sub a true and correct copy of the Company Rights Agreement, as amended in accordance with its terms as necessary to render it inapplicable to this Agreement, the Voting Agreement, the Contribution Agreement, the Investor Voting Agreement, the Merger and the other transactions contemplated by this Agreement, the Voting Agreement, the Contribution Agreement and the Investor Voting Agreement. 4.16 Properties. Except as set forth in Section 4.16 of the Company Disclosure Schedule or disclosed in the Recent SEC Documents and for such matters which would not have a Company Material Adverse Effect, each of the Company and its subsidiaries (i) has good and indefeasible title to all the properties and assets reflected on the latest audited balance sheet included in such Recent SEC Documents as being owned by the Company or one of its subsidiaries or acquired after the date thereof which are, individually or in the aggregate, material to the Company's business on a consolidated basis (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business), free and clear of (A) all Liens except (1) statutory liens securing payments not yet due and (2) such imperfections or irregularities of title or other Liens (other than real property mortgages or deeds of trust) as do not materially affect the use of the properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties, and (B) all real property mortgages and deeds of trust except such secured indebtedness as is properly reflected in the latest audited balance sheet included in such Recent SEC Documents, and (ii) is the lessee of all leasehold estates reflected in the latest audited financial statements included in such Recent SEC Documents or acquired after the date thereof which are material to its business on a consolidated basis and is 15 in possession of the properties purported to be leased thereunder, and each such lease is valid without material default thereunder by the lessee or, to the Company's knowledge, the lessor. 4.17 Tax Returns and Tax Payments. The Company and its subsidiaries have timely filed (or, as to subsidiaries, the Company has filed on behalf of such subsidiaries) all material Tax Returns (as defined below) required to be filed by it, except for such failure that would not result in a Company Material Adverse Effect. The Company and its subsidiaries have paid (or, as to subsidiaries, the Company has paid on behalf of such subsidiaries) all Taxes (as defined below) shown to be due on such Tax Returns and has provided (or, as to Subsidiaries, the Company has made provision on behalf of such Subsidiaries) reserves in its financial statements for any Taxes that have not been paid, whether or not shown as being due on any Tax Returns, except for such Taxes which, if unpaid or unreserved, would not result in a Company Material Adverse Effect. Except as set forth in Section 4.17 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries has granted any request that remains in effect for waivers of the time to assess any Taxes. Except as disclosed in Section 4.17 of the Company Disclosure Schedule, no claim for unpaid Taxes has been asserted against the Company or any of its Subsidiaries in writing by a Tax authority which, if resolved in a manner unfavorable to the Company or any of its Subsidiaries, as the case may be, would result, individually or in the aggregate, in a Company Material Adverse Effect. There are no Liens for Taxes upon the assets of the Company or any Subsidiary, except for Liens for Taxes not yet due and payable or for Taxes that are being disputed in good faith by appropriate proceedings and with respect to which adequate reserves have been taken, that could result in a Company Material Adverse Effect. Except as discussed in Section 4.17 of the Company Disclosure Schedule, no audit of any material Tax Return of the Company or any of its subsidiaries is being conducted by a Tax authority. None of the Company or any of its subsidiaries has made an election under Section 341(f) of the Code. Except as disclosed in Section 4.17 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries has any liability for Taxes of any person (other than the Company and its subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable provision of state, local or foreign law), by contract or otherwise. As used herein, "Taxes" shall mean all taxes of any kind, including, without limitation, those on or measured by or referred to as income, gross receipts, sales, use, ad valorem, franchise, profits, license, employment, withholding, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority, domestic or foreign. As used herein, "Tax Return" shall mean any return, report or statement required to be filed with any governmental authority with respect to Taxes. As used herein, "Code" shall mean the Code and the Treasury Regulations promulgated thereunder. 4.18 Intellectual Property. Except as set forth in Section 4.18 of the Company Disclosure Schedule, the Company or its subsidiaries own, or are licensed or otherwise possess legally enforceable rights to use all patents, trademarks, trade names, service marks, copyrights and any applications therefor, technology, know-how, trade secrets, computer software programs or applications, domain names and tangible or intangible proprietary information or materials that are used in the respective businesses of the Company and its subsidiaries as currently conducted, except for any such failures to own, be licensed or possess that, individually or in the aggregate, have not had and are not reasonably likely in the future to have a Company Material Adverse Effect. All patents, registered trademarks and service marks and registered copyrights held by the Company or its subsidiaries are subsisting and in force except where failure to be subsisting and in force would not likely cause a Company Material Adverse Effect. 4.19 Board and Special Committee Recommendations. The Board of Directors of the Company, at a meeting duly called and held, has by unanimous vote of those directors present (who constituted all of the directors then in office), (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable and are fair to and in the best interests of the stockholders of the Company, and (ii) resolved to recommend that the holders of the Common Stock approve this Agreement and the transactions contemplated herein, including the Merger. The special committee of independent directors of the Board of Directors of the Company (the "Special Committee") has, by unanimous vote, determined that this Agreement and the transactions contemplated hereby, including the Merger, are 16 advisable and are fair to and in the best interests of the stockholders and approved this Agreement and the transactions contemplated hereby, including the Merger. 4.20 Required Vote. The Company Stockholder Approval, being the affirmative vote of a majority of the votes entitled to be cast by holders of the outstanding shares of Common Stock, is the only vote of the holders of any class or series of the Company's securities necessary to approve this Agreement and the Merger and the other transactions contemplated hereby. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND INVESTOR Merger Sub and Investor jointly and severally represent and warrant to the Company as follows: 5.1 Corporate Organization. Each of Merger Sub and Investor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted. Each of Merger Sub and Investor is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not reasonably be expected to have, when aggregated with all other such failures, a Material Adverse Effect on Merger Sub or Investor, as applicable. 5.2 Authority. Each of Merger Sub and Investor has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by Merger Sub and Investor of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized and approved by their Boards of Directors and by Investor as the sole stockholder of Merger Sub and no other corporate action on the part of Merger Sub or Investor is necessary to authorize the execution and delivery by Merger Sub and Investor of this Agreement and the consummation by them of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Merger Sub and Investor, and, assuming due and valid authorization, execution and delivery hereof by the Company, is a valid and binding obligation of each of Merger Sub and Investor, enforceable against each of them in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. 5.3 Consents and Approvals; No Violation. (a) Except for (i) the filing with the SEC of the Proxy Statement, (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Georgia pursuant to the GBCC, and (iii) filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the HSR Act and any similar requirements of foreign jurisdictions, and the Securities Act, no consents or approvals of, or filings, declarations or registrations with, any Governmental Entity are necessary for the consummation by each of Merger Sub and Investor of the transactions contemplated hereby, other than such other consents, approvals, filings, declarations or registrations that, if not obtained, made or given, would not reasonably be expected to have, in the aggregate, a Material Adverse Effect on Merger Sub or Investor, respectively. (b) Neither the execution and delivery of this Agreement by Merger Sub or Investor, nor the consummation by Merger Sub or Investor of the transactions contemplated hereby, nor compliance by Merger Sub or Investor with any of the terms or provisions hereof, will (i) conflict with or violate any provision of the Articles of Incorporation or Bylaws of Merger Sub or Investor, or (ii) assuming that the authorizations, consents and approvals referred to in Section 5.3(a) are obtained, (x) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Merger Sub or Investor or any of their respective subsidiaries, properties or assets, or (y) violate, conflict with, result in 17 the loss of any material benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Merger Sub or Investor or any of their respective subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Merger Sub or Investor or any of their respective subsidiaries is a party, or by which Merger Sub or Investor or any of their respective properties or assets may be bound or affected, except, in the case of clause (ii) above, for such violations, conflicts, breaches, defaults, losses, terminations of rights thereof, accelerations or Lien creations which, in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Merger Sub or Investor, respectively. 5.4 Broker's Fees. Neither Investor nor any subsidiary of Investor nor any of their respective officers or directors on behalf of Investor or such subsidiaries has employed any financial advisor, broker or finder in a manner that would result in any liability of the Company for any broker's fees, commissions or finder's fees in connection with any of the transactions contemplated hereby. 5.5 Merger Sub's Operation. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated hereby and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby. 5.6 Merger Sub and Investor Information. None of the information supplied or to be supplied by Merger Sub or Investor for inclusion or incorporation by reference in the Proxy Statement or in any other document filed with any other Governmental Entity in connection herewith, at the respective time filed with the SEC or such other Governmental Entity and, in addition, in the case of the Proxy Statement, at the date it or any amendment or supplement is mailed to holders of the Common Stock and at the time of the Company Stockholders Meeting, will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading. 5.7 Financing. Merger Sub and Investor have each entered into the Contribution Agreement with the other investors named therein, dated as of the date of this Agreement, pursuant to which the Investor and such other investors have agreed, on the terms and subject to the conditions contained therein, to provide consideration sufficient to pay pursuant to the Merger for all outstanding shares of Common Stock other than shares of Common Stock to be cancelled pursuant to Section 3.2(a). A true and correct copy of the Contribution Agreement has been provided to the Company. Investor has sufficient funds to enable it to perform its obligations under the Contribution Agreement. 5.8 Capitalization of Merger Sub. As of the date of this Agreement, the authorized capital stock of Merger Sub consists of 100 shares of common stock, $0.01 par value per share, of which 100 shares are issued and outstanding and owned beneficially and of record by Investor free and clear of any liens. All of the issued and outstanding shares of capital stock of Merger Sub have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. 5.9 Stock Ownership. As of the date of this Agreement, except (i) for shares of Common Stock that Merger Sub may be deemed to own pursuant to the Contribution Agreement and (ii) as set forth in Section 5.9 of the disclosure schedule of Merger Sub and Investor delivered to the Company concurrently herewith, neither Merger Sub nor Investor beneficially owns any shares of Common Stock. ARTICLE 6 COVENANTS 6.1 Conduct of Businesses Prior to the Effective Time. Except as set forth in Section 6.1 of the Company Disclosure Schedule, as expressly contemplated or permitted by this Agreement, or as required by applicable law, rule or regulation, during the period from the date of this Agreement to the Effective Time, 18 unless Investor otherwise agrees in writing, the Company shall, and shall cause its subsidiaries to, in all material respects, (i) conduct its business in the usual, regular and ordinary course consistent with past practice and (ii) use all reasonable efforts to maintain and preserve intact its business organization and the good will of those having business relationships with it and retain the services of its present officers and key employees. Without limiting the generality of the foregoing, and except as set forth in Section 6.1 of the Company Disclosure Schedule, as expressly contemplated or permitted by this Agreement, or as required by applicable law, rule or regulation, during the period from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any of its subsidiaries to, without the prior written consent of Investor: (a) (i) issue, sell, grant, dispose of, pledge or otherwise encumber, or authorize or propose the issuance, sale, disposition or pledge or other encumbrance of (A) any additional shares of its capital stock or any securities or rights convertible into, exchangeable for, or evidencing the right to subscribe for any shares of its capital stock, or any rights, warrants, option, calls, commitments or any other agreements of any character to purchase or acquire any shares of its capital stock or any securities or rights convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of its capital stock or (B) any other securities in respect of, in lieu of, or in substitution for, any shares of its capital stock outstanding on the date hereof, other than pursuant to the exercise of Company Stock Options outstanding as of the date hereof; (ii) redeem, purchase or otherwise acquire, or propose to redeem, purchase or otherwise acquire, any of its outstanding shares of capital stock; or (iii) split, combine, subdivide or reclassify any shares of its capital stock or declare, except for quarterly cash dividends in the amount of $0.05 per share, consistent with past practice, set aside for payment or pay any dividend, or make any other actual, constructive or deemed distribution, in respect of any shares of its capital stock or otherwise make any payments to its stockholders in their capacity as such; (b) other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money or guarantee any such indebtedness or make any loans, advances or capital contributions to, or investments in, any other person other than the Company or its subsidiaries; (c) sell, transfer, mortgage, encumber or otherwise dispose of any of its properties or assets that are material, individually or in the aggregate, to the Company and its subsidiaries, taken as a whole, to any individual, corporation or other entity other than a direct or indirect wholly owned subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person that is material to the Company and its subsidiaries, taken as a whole, except in each case (i) in the ordinary course of business consistent with past practice, or (ii) pursuant to contracts or agreements in force at the date of this Agreement; (d) make any material acquisition or investment in a business either by purchase of stock or securities, merger or consolidation, contributions to capital, property transfers, or purchases of any property or assets of any other individual, corporation or other entity other than a wholly owned subsidiary thereof, or, other than in the ordinary course of business consistent with past practice, purchase or enter into any agreement to purchase equipment, materials, supplies, or services for an amount that is material to the Company and its subsidiaries, taken as a whole; (e) increase in any manner the compensation of any of its directors, officers or employees or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, other employee, agent, consultant or affiliate other than (i) as required pursuant to the terms of agreements in effect on the date of this Agreement, and (ii) increases in salaries, wages and benefits of employees who are not directors or officers of the Company made in the ordinary course of business and in a manner consistent with past practice; (f) amend the Company Articles or the Company Bylaws or similar governing documents; 19 (g) change any material accounting principle used by it, except for such changes as may be required to be implemented following the date of this Agreement pursuant to generally accepted accounting principles or rules or regulations of the SEC promulgated following the date hereof; (h) take any action that would, or is reasonably likely to, result in any of its representations and warranties in this Agreement becoming untrue, or in any of the conditions to the Merger set forth in Article 8 not being satisfied; (i) except in the ordinary course of business and consistent with past practice, make any tax election or settle or compromise any federal, state, local or foreign income tax liability; (j) waive or fail to enforce any provision of any confidentiality or standstill agreement to which it is a party; or (k) make any commitment to take any of the actions prohibited by this Section 6.1. ARTICLE 7 ADDITIONAL AGREEMENTS 7.1 Preparation of the Proxy Statement; Stockholder Meeting. (a) Promptly following the date of this Agreement, the Company shall prepare, in consultation with Investor, and file with the SEC a Proxy Statement on Schedule 14A (the "Proxy Statement"). The Company shall use all reasonable efforts to respond to comments from the SEC and to cause the Proxy Statement to be mailed to the Company's stockholders at the earliest practicable time. The Company shall not mail, amend, or supplement the Proxy Statement unless the Proxy Statement or any amendment or supplement thereof is satisfactory in content to Investor in the exercise of its reasonable judgment. The Proxy Statement shall comply with Rule 13e-3 of the Exchange Act. (b) Promptly following the date of this Agreement, Investor and the Company shall file with the SEC, and shall use all reasonable efforts to cause any of their respective affiliates engaging in this transaction to file with the SEC, a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3 Transaction Statement") with respect to the Merger. Each of the parties hereto agrees to use all reasonable efforts to cooperate and to provide each other with such information as any of such parties may reasonably request in connection with the preparation of the Proxy Statement and the Schedule 13E-3 Transaction Statement. The Schedule 13E-3 Transaction Statement shall be filed with the SEC concurrently with the filing of the Proxy Statement. (c) Each party hereto agrees promptly to supplement, update and correct any information provided by it for use in the Proxy Statement or the Schedule 13E-3 Transaction Statement if and to the extent that such information is or shall have become incomplete, false or misleading. (d) The Company will, as promptly as practicable following the date of this Agreement, duly call, give notice of, convene and hold a meeting of its stockholders (the "Company Stockholders Meeting") for the purpose of approving this Agreement and the transactions contemplated by this Agreement. The Company will, through its Board of Directors and the Special Committee, recommend to its stockholders approval of the foregoing matters, as set forth in Section 4.19. Such recommendation, together with a copy of the opinion referred to in Section 4.11, shall be included in the Proxy Statement. The Company will use reasonable efforts to hold such meeting as soon as practicable after the date hereof. (e) The Company will cause its transfer agent to make stock transfer records relating to the Company available to Investor, Merger Sub and the Exchange Agent to the extent reasonably necessary to effectuate the intent of this Agreement. 7.2 Indemnification. (a) The Surviving Corporation shall indemnify, defend, protect and hold harmless each person who is now, or has been at any time prior to the date of this Agreement or who becomes such prior to the 20 Effective Time, an officer or director of the Company or any of its subsidiaries (the "Indemnified Parties") against (i) all losses, claims, damages, costs, expenses, liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party (which approval shall not be unreasonably withheld) of or in connection with any claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director or officer of the Company or any of its subsidiaries, whether pertaining to any matter existing or occurring at or prior to the Effective Time and whether asserted or claimed prior to, or at or after, the Effective Time ("Indemnified Liabilities"), and (ii) all Indemnified Liabilities based in whole or in part on, or arising in whole or in part out of, or pertaining to this Agreement or the transactions contemplated hereby; provided, however, that such indemnification shall only be to the fullest extent a corporation is permitted under the GBCC to indemnify its own directors and officers. To the extent the Surviving Corporation is unable to satisfy such obligation to indemnify the Indemnified Parties or is restricted from indemnifying the Indemnified Parties pursuant to the foregoing proviso, Investor shall indemnify, defend, protect and hold harmless each of the Indemnified Parties against all Indemnified Liabilities on the same basis set forth in the foregoing clauses (i) and (ii), provided, however, that such indemnification shall not be applicable to any claims made against the Indemnified Parties (A) arising out of, based upon or attributable to the gaining in fact of any personal profit or advantage to which they were not legally entitled or (B) arising out of, based upon or attributable to the committing in fact of any criminal or deliberate fraudulent act. (b) Without limiting the foregoing, in the event any such claim, action, suit, proceeding or investigation is brought against any Indemnified Party (whether arising before or after the Effective Time), (i) the Indemnified Parties may retain counsel satisfactory to them and the Surviving Corporation and Investor, (ii) the Surviving Corporation (and, if applicable, Investor) shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as such statements therefor are received; and (iii) the Surviving Corporation (and, if applicable, Investor) will use all reasonable efforts to assist in the vigorous defense of any such matter, provided that the Surviving Corporation (and, if applicable, Investor) shall not be liable for any settlement of any claim effected without its written consent, which consent, however, shall not be unreasonably withheld or delayed. Any Indemnified Party wishing to claim indemnification under this Section 7.2, upon learning of any such claim, action, suit, proceeding or investigation, shall notify the Surviving Corporation and Investor (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 7.2 except to the extent such failure materially prejudices such party), and shall deliver to the Surviving Corporation and Investor the undertaking contemplated by Section 14-2-853(a)(2) of the GBCC. The Indemnified Parties as a group may retain only one law firm to represent them with respect to each such matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties. (c) Subject to applicable law, the Company Articles and Company Bylaws shall not be amended, including by operation of Section 2.2, in a manner which adversely affects the rights of the Indemnified Parties under any provisions regarding indemnification or exculpation from liability set forth therein or in this Section 7.2. All rights to indemnification and/or advancement of expenses contained in any agreement with any Indemnified Parties as in effect on the date hereof with respect to matters occurring at or prior to the Effective Time (including the transactions contemplated by this Agreement) shall survive the Merger and continue in full force and effect. (d) If the Surviving Corporation or any of its successors or assigns (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 or conveys all or substantially all of its properties and assets to any person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of the Surviving Corporation shall assume the obligations set forth in this Section 7.2. (e) The provisions of this Section 7.2 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party, his or her heirs and representatives. 21 7.3 Expenses. Except as specifically contemplated herein, whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses. 7.4 No Solicitation. (a) The Company shall immediately cease any discussions or negotiations with any parties that may be ongoing with respect to a Takeover Proposal (as hereinafter defined) and shall seek to have returned to the Company any confidential information that has been provided in any such discussions or negotiations. From the date hereof, the Company shall not, nor shall it permit any of its subsidiaries to, nor shall it authorize or permit any of its officers, directors or employees or any affiliate, investment banker, financial advisor, attorney, accountant or other representative retained by it or any of its subsidiaries to, directly or indirectly, (i) solicit, initiate or knowingly encourage (including by way of furnishing information which has not been previously publicly disseminated), or take any other action designed to facilitate, any inquiries or the making of any proposal which constitutes, or may reasonably be expected to lead to, any Takeover Proposal or (ii) participate in any discussions or negotiations regarding any Takeover Proposal; provided, however, that if, prior to obtaining the Company Stockholder Approval and following the receipt of a Superior Proposal (as hereinafter defined), or a proposal which is reasonably expected to lead to a Superior Proposal, that was made (and not solicited) after the date hereof in circumstances not otherwise involving a breach of this Agreement, the Board of Directors of the Company (or any special committee thereof to which such responsibility shall have been properly delegated in accordance with the requirements of applicable law) determines in good faith, after considering applicable provisions of state law and after consultation with outside counsel, that a failure to do so would constitute a breach of its fiduciary duties to the Company's stockholders under applicable law, the Company may, in response to such Takeover Proposal and subject to compliance with Section 7.4(c), (x) furnish information with respect to the Company to the party making such Takeover Proposal pursuant to a customary confidentiality agreement, provided that (i) such confidentiality agreement must include a provision prohibiting solicitation of key employees of the Company or its subsidiaries, such provision lasting at least one year, and may not include any provision calling for an exclusive right to negotiate with the Company and (ii) the Company advises Investor of all such nonpublic information delivered to such person concurrently with its delivery to the requesting party, and (y) participate in negotiations with such party regarding such Takeover Proposal. It is agreed that any violation of the restrictions set forth in the preceding sentence by any executive officer of the Company or any of its subsidiaries or any affiliate, director or investment banker, attorney or other advisor or representative of the Company or any of its subsidiaries shall be deemed to be a breach of this Section 7.4(a) by the Company. (b) Except as expressly permitted in this Section 7.4, neither the Board of Directors of the Company nor any committee thereof shall (i) withdraw or modify, or propose publicly to withdraw or modify, in a manner adverse to Merger Sub and/or Investor, the approval, determination of advisability, or recommendation by such Board of Directors or such committee of this Agreement and the transactions contemplated hereby, including the Merger, (ii) approve, determine to be advisable, or recommend, or propose publicly to approve, determine to be advisable, or recommend, any Takeover Proposal or (iii) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Takeover Proposal. Notwithstanding the foregoing, in the event that prior to obtaining the Company Stockholder Approval the Board of Directors of the Company (or any special committee thereof to which such responsibility shall have been properly delegated in accordance with the requirements of applicable law) determines in good faith, in response to a Superior Proposal that was made (and not solicited) after the date hereof in circumstances not otherwise involving a breach of this Agreement, after considering applicable provisions of state law and after consultation with outside counsel, that the failure to do so would constitute a breach of its fiduciary duties to the Company's stockholders under applicable law, the Board of Directors of the Company and the Special Committee may (subject to this and the following sentences and to compliance with Section 7.4(a)) (x) withdraw or modify its approval, determination, or recommendation of this Agreement and the 22 transactions contemplated hereby, including the Merger, or (y) approve, determine to be advisable, or recommend a Superior Proposal, provided, however, that any actions described in clause (y) may be taken only at a time that is after the second business day following Investor's receipt of written notice from the Company advising Investor that the Board of Directors of the Company has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal, identifying the person making such Superior Proposal and providing notice of the determination of the Board of Directors of the Company (or special committee thereof, if applicable) of what action referred to in clause (y) the Board of Directors of the Company (or special committee thereof, if applicable) has determined to take. (c) In addition to the obligations of the Company set forth in paragraphs (a) and (b) of this Section 7.4, the Company shall promptly advise Investor orally and in writing of any request for confidential information or of any Takeover Proposal, the material terms and conditions of such request or the Takeover Proposal and the identity of the person making such request or Takeover Proposal and shall keep Investor reasonably informed of the status and details of any such request or Takeover Proposal. (d) Nothing contained in this Section 7.4 shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to the Company's stockholders; provided, however, neither the Company nor its Board of Directors nor any committee thereof shall, except as in accordance with Section 7.4(b), withdraw or modify, or propose publicly to withdraw or modify, its approval, determination or recommendation with respect to the Merger and the other transactions contemplated by this Agreement or approve, determine to be advisable, or recommend, or propose publicly to approve, determine to be advisable, or recommend, a Takeover Proposal. (e) For purposes of this Agreement: (i) "Takeover Proposal" means any inquiry, proposal or offer from any person (other than Investor and its subsidiaries, affiliates, and representatives) relating to any direct or indirect acquisition or purchase of 15% or more of the assets of the Company and its subsidiaries or 15% or more of any class of equity securities of the Company or any of its Significant Subsidiaries, any tender offer or exchange offer that if consummated would result in any person beneficially owning 15% or more of any class of equity securities of the Company or any of its Significant Subsidiaries, or any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Significant Subsidiaries, other than the transactions contemplated by this Agreement. (ii) For purposes of this Agreement, a "Superior Proposal" means a bona fide written offer from any person (other than Investor and its subsidiaries, affiliates and representatives) for a direct or indirect acquisition or purchase of 50% or more of the assets of the Company or any of its Significant Subsidiaries or 50% or more of any class of equity securities of the Company or any of its Significant Subsidiaries, any tender offer or exchange offer that if consummated would result in any person (other than Investor and its subsidiaries, affiliates and representatives) beneficially owning 50% or more of any class of equity securities of the Company or any of its Significant Subsidiaries, or any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Significant Subsidiaries, other than the transactions contemplated by this Agreement, (A) which provides for consideration on a per share basis to the stockholders of the Company with a value (taking into account, among other things, the likelihood of such offer resulting in a consummated transaction) exceeding the Per Share Amount, (B) which, considering all relevant factors, is more favorable to the Company and its stockholders than the Merger, and (C) for which the third party has demonstrated that financing is likely to be obtained, in each case as determined by the Board of Directors in its good faith judgment (based on the advice of independent financial advisors and outside counsel). Any Superior Proposal is a Takeover Proposal. 23 7.5 Publicity. The initial press release with respect to the execution of this Agreement shall be a joint press release reasonably acceptable to Investor and the Company. Thereafter, so long as this Agreement is in effect, none of the Company, Investor or Merger Sub nor any of their respective affiliates shall issue or cause the publication of any press release or other announcement with respect to the Merger, this Agreement or the other transactions contemplated hereby without the prior consultation of the other party, except as may be required by law or by any listing agreement with a national securities exchange as determined in the good faith judgment of the party wanting to make such release. 7.6 Notification of Certain Matters. The Company shall give prompt notice to Investor, and Investor shall give prompt notice to the Company, of (i) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Effective Time and (ii) any material failure of the Company, on the one hand, or Merger Sub or Investor, on the other hand, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 7.6 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. 7.7 Contribution Agreement. Merger Sub and Investor agree that they will not, without the prior consent of the Company, enter into any amendment to, or modification or waiver of, the Contribution Agreement if such amendment, modification or waiver would (i) reduce the value of the consideration (cash and shares of Common Stock with such shares valued for this purpose at $19.00 per share) committed under the Contribution Agreement, (ii) add additional conditions to the consummation of the transactions contemplated by the Contribution Agreement or (iii) have a material adverse effect on the consummation of the Merger. Merger Sub and Investor shall enforce to the fullest extent permitted under applicable law, the provisions of the Contribution Agreement, including but not limited to obtaining injunctions to enforce specifically the terms and provisions thereof in any court having jurisdiction. Merger Sub and Investor shall use all reasonable efforts to fulfill all of their obligations under the Contribution Agreement and to cause all conditions to funding under the Contribution Agreement (other than conditions to funding that are conditions to consummation of the Merger under this Agreement) to be fulfilled as promptly as reasonably practicable. Merger Sub and Investor shall give the Company prompt written notice of (i) any material breach or threatened material breach by any party of the terms or provisions of the Contribution Agreement, or (ii) any termination or threatened termination of the Contribution Agreement. Investor agrees that, subject to the fulfillment of the conditions set forth in Sections 8.1 and 8.3 of the Contribution Agreement (including, without limitation, the satisfaction of the Minimum Contribution Requirement, as such term is defined in the Contribution Agreement), Investor shall contribute to Merger Sub the amount of cash and shares of Common Stock specified on Schedule A to the Contribution Agreement. 7.8 Access to Information. (a) Upon reasonable notice and subject to applicable laws relating to the exchange of information, the Company shall, and shall cause each of its subsidiaries to, afford to the officers, employees, accountants, counsel and other representatives of Merger Sub and Investor, during normal business hours during the period prior to the Effective Time, reasonable access to all its properties, books, contracts, commitments and records, and to its officers, employees, accountants, counsel and other representatives and, during such period, the Company shall, and shall cause its subsidiaries to, make available to Merger Sub and Investor (i) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws and (ii) all other information concerning its business, properties and personnel as such other party may reasonably request. (b) No investigation by any of the parties or their respective representatives shall affect the representations, warranties, covenants or agreements of the other set forth herein. (c) The information provided pursuant to Section 7.8(a) will be used solely for the purpose of the transactions contemplated hereby, and unless and until the Merger is consummated, such information will be kept secret and confidential by Merger Sub and Investor, except that the information provided pursuant to Section 7.8(a) or portions thereof may be disclosed to those of Merger Sub's and Investor's 24 or their affiliates' directors, officers, employees, agents and advisors (collectively, the "Representatives") who (a) need to know such information for the purpose of the transactions contemplated hereby, (b) shall be advised by Merger Sub or Investor, as the case may be, of this provision, (c) agree to hold the information provided pursuant to Section 7.8(a) as secret and confidential and (d) agree with Merger Sub and Investor to be bound by the provisions hereof. Merger Sub and Investor jointly agree to be responsible for any breach of this section by any of their Representatives. If this Agreement is terminated, Investor shall, and shall cause Merger Sub and each of their Representatives to, return or destroy (and certify destruction of) all information provided pursuant to Section 7.8(a). 7.9 Further Assurances. (a) Subject to the terms and conditions of this Agreement, each of Investor and the Company shall, and shall cause its subsidiaries to, use all reasonable efforts (i) to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements which may be imposed on such party or its subsidiaries with respect to the Merger and, subject to the conditions set forth in Article 8 hereof, to consummate the transactions contemplated by this Agreement, including, without limitation, the Merger, as promptly as practicable and (ii) to obtain (and to cooperate with the other party to obtain) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity and any other third party which is required to be obtained by the Company or Investor or any of their respective subsidiaries in connection with the Merger and the other transactions contemplated by this Agreement, and to comply with the terms and conditions of any such consent, authorization, order or approval. (b) Subject to the terms and conditions of this Agreement, each of Investor and the Company shall use all 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, as soon as practicable after the date of this Agreement, the transactions contemplated hereby, including, without limitation, using all reasonable efforts to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby and using all reasonable efforts to defend any litigation seeking to enjoin, prevent or delay the consummation of the transactions contemplated hereby or seeking material damages. 7.10 Additional Agreements. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals, immunities and franchises of any of the parties to the Merger, the proper officers and directors of each party to this Agreement and their respective subsidiaries shall take all such necessary action as may be reasonably requested by, and at the sole expense of, the Surviving Corporation. 7.11 Takeover Statutes. If any "fair price," "moratorium," "control share acquisition" or other form of antitakeover statute or regulation shall become applicable to the transactions contemplated hereby, the parties hereto and the members of their respective Boards of Directors shall grant such approvals and take such actions as are reasonably necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such statute or regulation on the transactions contemplated hereby. 7.12 Employee Benefits. Merger Sub agrees that, for a minimum period of two (2) years following the Effective Time, the employees of the Surviving Corporation will continue to be provided with employee benefit plans (other than stock option or other plans involving the potential issuance of securities of the Surviving Corporation) which in the aggregate are substantially comparable to those currently provided by the Company to such employees. 25 ARTICLE 8 CONDITIONS PRECEDENT 8.1 Conditions to Each Party's Obligation To Effect the Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) Company Stockholder Approval. The Company Stockholder Approval shall have been obtained. (b) HSR Act. The waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired. (c) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect; provided, however, that the parties hereto shall use their best efforts to have any such injunction, order, restraint or prohibition vacated. (d) Foreign Government Consents. If required to be obtained under applicable law prior to the consummation of the Merger, the consent or approval of any Government Entity in any foreign jurisdiction shall have been received. 8.2 Conditions to Obligation of Merger Sub. The obligation of Merger Sub to effect the Merger is further subject to the following conditions: (a) Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct, unless the failure of such representations and warranties to be so true and correct, in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect (ignoring, for purposes of this Section 8.2(a), any materiality standard expressly included in such representations or warranties) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date. Investor and Merger Sub shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to such effect. (b) Performance of Obligations of the Company. The Company shall have performed in all material respects the obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Merger Sub and Investor shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to such effect. (c) Consents, etc. Investor and Merger Sub shall have received evidence, in form and substance reasonably satisfactory to them, that such licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and other third parties as are necessary in connection with the transactions contemplated hereby have been obtained, other than where the failure to so obtain any such licenses, permits, consents, approvals, authorizations, qualifications or orders would not reasonably be expected to have, in the aggregate, a Company Material Adverse Effect. (d) Dissenters' Rights. The aggregate number of shares of Dissenting Common Stock at the Effective Time of the Merger shall not equal 10% or more of the shares of Common Stock outstanding as of the record date for the meeting of stockholders of the Company to vote on the Merger. (e) Legal Opinion. Investor and Merger Sub shall have received the opinion of Powell, Goldstein, Frazer & Murphy LLP, counsel to the Company, in form and substance customary for transactions of this type and reasonably satisfactory to Investor and Merger Sub, dated as of the Closing Date, as to the authorization, validity and enforceability of this Agreement with respect to the Company. (f) Contribution Agreement. The closing of the transactions under the Contribution Agreement shall have occurred. 26 8.3 Conditions to Obligation of the Company. The obligation of the Company to effect the Merger is further subject to the following conditions: (a) Representations and Warranties. The representations and warranties of each of Merger Sub and Investor set forth in this Agreement shall be true and correct, unless the failure of such representations and warranties to be so true and correct, in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on Merger Sub or Investor, respectively (ignoring, for purposes of this Section 8.3(a), any materiality standard expressly included in such representations or warranties), as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except for such representations and warranties which are made as of a particular date, which shall be true and correct (subject to the above qualification) as of such date). The Company shall have received a certificates signed on behalf of each of Merger Sub and Investor by the chief executive officer and the chief financial officer of each of Merger Sub and Investor to such effect. (b) Performance of Obligations of Merger Sub and Investor. Each of Merger Sub and Investor shall have performed in all material respects the obligations required to be performed by it under this Agreement at or prior to the Closing Date, and the Company shall have received certificates signed on behalf of each of Merger Sub and Investor by the chief executive officer and the chief financial officer of each of Merger Sub and Investor to such effect. (c) Legal Opinion. The Company shall have received the opinion of Munger Tolles & Olson LLP, counsel to Merger Sub and Investor, in form and substance customary for transactions of this type and reasonably satisfactory to the Company, dated as of the Closing Date, as to the authorization, validity and enforceability of this Agreement with respect to Merger Sub and Investor. ARTICLE 9 TERMINATION, AMENDMENT AND WAIVER 9.1 Termination. This Agreement may be terminated and abandoned at any time prior to the Effective Time, whether before or after obtaining the Company Stockholder Approval: (a) by mutual written consent of Investor and the Company; or (b) by either Investor or the Company if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and nonappealable; or (c) by either Investor or the Company if the Merger shall not have been consummated on or before March 31, 2001 (other than due to the failure of the party seeking to terminate this Agreement to perform its obligations under this Agreement required to be performed at or prior to the Effective Time); or (d) by either Investor or the Company, if the Company Stockholder Approval shall not have been obtained by reason of the failure to obtain the required vote upon a vote held at a duly held meeting of stockholders or at any adjournment thereof; or (e) by Investor, if (i) the Board of Directors of the Company shall have (A) withdrawn, modified or amended, or proposed publicly to withdraw, modify or amend, in a manner adverse to Investor or Merger Sub, its approval or recommendation of this Agreement or the Merger, or failed to reconfirm its recommendation within five (5) business days after a written request to do so, (B) failed to include in the Proxy Statement such recommendation, or (C) approved or recommended, or proposed publicly to approve or recommend, any Takeover Proposal from a person other than Merger Sub or Investor, (ii) the Company shall have failed as soon as practicable (after receipt of all necessary information from Merger Sub and Investor) to mail the Proxy Statement, containing the recommendation by the Board of Directors of the Company of this Agreement and the Merger, to its stockholders, (iii) the Special 27 Committee shall have withdrawn, or proposed publicly to withdraw, in a manner adverse to Merger Sub or Investor, its approval of this Agreement or the Merger; or (iv) (x) a Takeover Proposal that is publicly disclosed shall have been commenced, publicly proposed or communicated to the Company which contains a proposal as to price (without regard to whether such proposal specifies a specific price or a range of potential prices) and (y) the Company shall not have rejected such proposal within 10 business days of the earlier of its receipt or the date its existence first becomes publicly disclosed; or (f) by the Company, if it concurrently enters into a definitive agreement providing for a Superior Proposal entered into in accordance with Section 7.4(b); or (g) by Investor, if any of the conditions set forth in Section 8.2 shall fail to be met and any such failure that is reasonably capable of being cured has not been cured by the date specified in Section 9.1(c); or (h) by the Company, if any of the conditions set forth in Section 8.3 shall fail to be met and any such failure that is reasonably capable of being cured has not been cured by the date specified in Section 9.1(c). 9.2 Effect of Termination. In the event of termination of this Agreement by either the Company or Investor as provided in Section 9.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Investor, Merger Sub or the Company, other than pursuant to the provisions of Section 7.3. Nothing contained in this Section shall, however, relieve any party of liability for any breach of the representations, warranties, covenants or agreements set forth in this Agreement prior to any such termination. 9.3 Amendment. This Agreement may be amended by the parties at any time before or after the Company Stockholder Approval; provided, however, that after such approval, there shall be made no amendment that by law requires further approval by such stockholders without the further approval of such stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. 9.4 Extension; Waiver. At any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement or (c) subject to the proviso of Section 9.3, waive compliance with any of the agreements or conditions contained in this Agreement. Any agreement on the part of a party 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 any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. ARTICLE 10 GENERAL PROVISIONS 10.1 Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 10.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time. 10.2 Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given when received if delivered personally, on the next business day if sent by overnight courier for next business day delivery (providing proof of delivery), when confirmation is received, if sent by facsimile or in 5 business days if sent by U.S. registered or certified mail, postage prepaid 28 (return receipt requested) to the other parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Investor or Merger Sub, to: Berkshire Hathaway Inc. 1440 Kiewit Plaza Omaha, Nebraska 68131 Attn: Warren E. Buffett Facsimile No. (402) 346-3375 with a copy to: Munger, Tolles & Olson LLP 355 South Grand Avenue Los Angeles, California 90071 Attn: Robert E. Denham Facsimile No. (213) 687-3702 (b) if to the Company, to: Shaw Industries, Inc. 616 East Walnut Avenue Dalton, Georgia 30722 Attn: Robert E. Shaw Facsimile No. (706) 275-1985 and Special Committee of the Board of Directors c/o Shaw Industries, Inc. 616 East Walnut Avenue Dalton, Georgia 30722 Facsimile No. (706) 275-1985 with copies to: Shaw Industries, Inc. 616 East Walnut Avenue Dalton, Georgia 30722 Attn: General Counsel Facsimile No. (706) 275-1985 Powell, Goldstein, Frazer & Murphy LLP Sixteenth Floor 191 Peachtree Street, N.E. Atlanta, Georgia 30303 Attn: G. William Speer Facsimile No. (404) 572-6999 and Winston & Strawn 35 West Wacker Drive Chicago, Illinois 60601 Attn: Terrence R. Brady Facsimile No. (312) 558-5626 29 10.3 Definitions. For purposes of this Agreement: (a) an "affiliate" of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person; and (b) "person" means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity. 10.4 Interpretation. A reference made in this Agreement to an Article, Section, Exhibit or Schedule, shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." 10.5 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 10.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. Except as provided in Section 7.2, this Agreement is not intended to confer upon any person other than the parties hereto any rights or remedies. 10.7 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. 10.8 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by any of the parties without the prior written consent of the other parties. Any assignment in violation of the preceding sentence shall be void. Subject to the preceding two sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. 10.9 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the State of Georgia or of the United States located in the State of Georgia in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, and each party agrees (a) it will not attempt to deny or defeat personal jurisdiction or venue in any such court by motion or other request for leave from any such court and (b) it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than any such court. 10.10 Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein, so long as the economic and legal substance of the transactions contemplated hereby are not affected in a manner materially adverse to any party hereto. EX-99.2 3 g64822ex99-2.txt CONTRIBUTION AND PARTICIPATION AGREEMENT 1 EXHIBIT 99.2 CONTRIBUTION AND PARTICIPATION AGREEMENT DATED AS OF OCTOBER 19, 2000 AMONG SII ACQUISITION, INC., THE INVESTOR STOCKHOLDER LISTED HEREIN AND THE CONTINUING HOLDERS LISTED HEREIN 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I DEFINITIONS...................................... Section 1.1 Definitions.................................. ARTICLE II EXCHANGE OF PROPERTY FOR CAPITAL STOCK.......... Section 2.1 Issuance To Investor Stockholder............. Section 2.2 Exchange With Continuing Holders............. Section 2.3 Closing...................................... Section 2.4 Failure By Continuing Holder................. ARTICLE III COVENANTS OF SII AND INVESTOR STOCKHOLDER...... Section 3.1 Best Efforts................................. Section 3.2 Consent to Certain Business Combinations..... Section 3.3 Participation in Certain Transactions........ ARTICLE IV COVENANTS OF THE CONTINUING HOLDERS............. Section 4.1 Best Efforts................................. Section 4.2 No Sale, Etc................................. Section 4.3 Custodial Arrangements....................... ARTICLE V PUTS AND CALLS................................... Section 5.1 Puts and Calls............................... Section 5.2 Wills........................................ ARTICLE VI RESTRICTIONS ON CONTINUING HOLDER TRANSFERS..... Section 6.1 General Restriction On Transfers By Continuing Holders..................................... Section 6.2 Permitted Transfers By Continuing Holders.... ARTICLE VII REPRESENTATIONS AND WARRANTIES................. Section 7.1 Representations and Warranties by SII........ Section 7.2 Representations and Warranties by All Stockholders........................................... Section 7.3 Additional Representations and Warranties by Continuing Holders..................................... ARTICLE VIII CONDITIONS TO CLOSING......................... Section 8.1 Conditions To Obligations Of All Parties..... Section 8.2 Additional Conditions To Obligations Of Continuing Holders..................................... Section 8.3 Additional Conditions To Obligations Of Investor Stockholder and SII........................... ARTICLE IX GENERAL PROVISIONS.............................. Section 9.1 Termination.................................. Section 9.2 Restrictive Legends.......................... Section 9.3 Notices...................................... Section 9.4 Additional Parties........................... Section 9.5 Expenses..................................... Section 9.6 Amendments and Waivers....................... Section 9.7 Successors and Assigns....................... Section 9.8 Georgia Law.................................. Section 9.9 Counterparts; Effectiveness.................. Section 9.10 Captions..................................... Section 9.11 No Rights As Employee........................ Section 9.12 Genders and Plurals.......................... Section 9.13 Severability................................. SCHEDULE A -- INVESTOR STOCKHOLDER SCHEDULE B -- CONTINUING HOLDERS
3 CONTRIBUTION AND PARTICIPATION AGREEMENT THIS CONTRIBUTION AND PARTICIPATION AGREEMENT ("Agreement") is entered into as of October 19, 2000 among SII ACQUISITION, INC., a Georgia corporation ("SII"), the INVESTOR STOCKHOLDER listed on Schedule A hereto and the CONTINUING HOLDERS listed on Schedule B hereto. WITNESSETH: WHEREAS, SII intends to enter into an Agreement and Plan of Merger with Shaw Industries, Inc. (the "Company") of even date herewith (the "Merger Agreement") pursuant to which SII will be merged with and into the Company (the "Merger") with the Company as the surviving corporation in the Merger (the "Surviving Corporation") and, among other things, each share of common stock, $.01 par value per share, of SII ("SII Common Stock") will, by virtue of the Merger, be converted into and become one share of common stock of the Surviving Corporation ("Surviving Corporation Common Stock"); WHEREAS, the Investor Stockholder wishes to contribute shares of common stock, no par value per share, of the Company ("Company Common Stock") owned by it and cash in an amount necessary to consummate the Merger to SII in exchange for shares of SII Common Stock as indicated on Schedule A hereto; WHEREAS, each Continuing Holder owns or has the right to acquire the number of shares of Company Common Stock as is indicated on Schedule B hereto and wishes to contribute such shares to SII in exchange for shares of SII Common Stock, as indicated on Schedule B hereto; WHEREAS, the parties hereto intend that the aforementioned contributions and exchanges by the Investor Stockholder and the Continuing Holders contemplated by this Agreement will be treated for income tax purposes as transfers pursuant to Section 351 of the Code and any corresponding provisions of applicable state income tax statutes; WHEREAS, SII, the Investor Stockholder and the Continuing Holders desire to provide herein for certain matters relating to the authorization and issuance of such shares of SII Common Stock and certain restrictions on the transfer of shares of SII Common Stock and Surviving Corporation Common Stock; NOW, THEREFORE, in consideration of the foregoing and the covenants set forth herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. The following terms, as used herein, shall have the following meanings: "Additional Contribution Shares" means (i) the shares of SII Common Stock (which shall be converted into shares of Surviving Corporation Common Stock upon the Merger) to be issued to the Family Group Stockholders pursuant to Section 2.2 and designated as "Additional Contribution Shares" on Schedule B hereto, (ii) any shares of Capital Stock of the Surviving Corporation issued to the Family Group Stockholders with respect to such shares pursuant to any exchange or right to purchase Capital Stock or as a result of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or similar transaction, and (iii) any other shares of Capital Stock otherwise acquired by a Family Group Stockholder. "Annual Put" has the meaning set forth in Section 5.1(a)(iii). "Annual Put Exercise Date" has the meaning set forth in Section 5.1(a)(i). "Attorneys" has the meaning set forth in Section 4.3. "Base Book Value" means the Book Value as of December 31, 2000. 1 4 "Book Value" means the total net equity of the Company or the Surviving Corporation, as applicable, as of a particular date, divided by the total number of shares of Company Common Stock or Surviving Corporation Common Stock, as applicable, which are outstanding as of such date or which are issuable upon exercise of any then-outstanding Company Stock Options. Total net equity shall be calculated in accordance with generally accepted accounting principles but without taking into account any Merger-related adjustments thereto, with the result, among others, that the amount of goodwill reflected in total net equity shall be limited to the amount of goodwill that would have been so included had the Merger not occurred. "Call Recipient" has the meaning set forth in Section 5.1(b)(ii). "Capital Stock" means authorized and issued capital stock of the Surviving Corporation. "Closing" means the contribution of cash and shares of Company Common Stock to SII contemplated hereby and the issuance of SII Common Stock in exchange therefor. "Closing Date" means the date of the Closing. "Commission" means the Securities and Exchange Commission. "Company" has the meaning set forth in the recitals to this Agreement. "Company Common Stock" means common stock, no par value per share, of the Company to be exchanged by a Stockholder hereunder for shares of SII Common Stock. "Company Stock Options" means options to acquire shares of Company Common Stock which were issued by the Company pursuant to any of the Option Plans. "Company Joinder Agreement" means a form of joinder agreement reasonably acceptable to the Surviving Corporation pursuant to which a transferee of a Continuing Holder agrees to be bound by the terms hereof. "Company Stockholder Approval" has the meaning given to such term in the Merger Agreement. "Continuing Holder" means each Family Group Stockholder and each Management Holder, provided, however, that, at any time, the term "Continuing Holder" does not include any Person who, following the Merger, holds no shares of Capital Stock at such time. "Custodian" has the meaning set forth in Section 2.2. "Custody Agreement" means the Custody Agreement among SII, each of the Continuing Holders and the Custodian to be mutually agreed upon by the parties hereto and the Custodian and entered into pursuant to Section 4.3. "Designated Individual" means, with respect to a particular Family Group Entity or Management Holder Entity, the individual whose name is referenced as such next to the name of such Family Group Entity or Management Holder Entity on Schedule B hereto. "Effective Time" means the Effective Time specified in the Merger Agreement. "Elected Year End Book Value" has the meaning set forth in Section 5.1(c). "Employed Family Group Stockholder" means each of Robert E. Shaw and Julian Saul. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Family Group Stockholder" means each of the individuals and each Family Group Entity listed under the heading "Family Group Stockholders" on Schedule B hereto, provided, however, that, at any time, the term "Family Group Stockholder" does not include any Person who, following the Merger, holds no shares of Capital Stock at such time. "Family Group Entity" means each trust or partnership which is listed under the subheading "Family Group Entities" under the heading "Family Group Stockholders" on Schedule B hereto. 2 5 "Government Entity" has the meaning given to such term in the Merger Agreement. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended to the date hereof. "Immediate Family Members" of a Person means the spouse, children and grandchildren (including legally adopted children and grandchildren) of such Person. "Initial Exercise Date" has the meaning set forth in Section 5.1(a)(i). "Investor Stockholder Joinder Agreement" means a form of joinder agreement reasonably acceptable to SII pursuant to which a transferee of the Investor Stockholder agrees to be bound by the terms hereof. "Investor Stockholder" means (i) the Investor Stockholder listed on Schedule A hereto and its successors, and (ii) upon execution of an Investor Stockholder Joinder Agreement, any transferee of an Investor Stockholder acquiring shares of Surviving Corporation Common Stock; provided, however, that, at any time, the term "Investor Stockholder" does not include any Person who, following the Merger, holds no shares of Capital Stock at such time. "Management Contribution Shares" means (i) the shares of SII Common Stock (which shall be converted into shares of Surviving Corporation Common Stock upon the Merger) to be issued to the Management Holders pursuant to Section 2.2, (ii) any shares of Capital Stock of the Surviving Corporation issued to the Management Holders with respect to such shares pursuant to any exchange or right to purchase capital stock or as a result of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or similar transaction, and (iii) any other shares of Capital Stock otherwise acquired by a Management Holder. "Management Holder" means each of the individuals and each Management Holder Entity listed under the heading "Management Holders" on Schedule B hereto, provided, however, that, at any time, the term "Management Holder" does not include any Person who, following the Merger, holds no shares of Capital Stock at such time. "Management Holder Entity" means each trust or partnership which is listed under the subheading "Management Holder Entities" under the heading "Management Holders" on Schedule B hereto. "Merger" means the merger of SII with and into the Company as contemplated by the Merger Agreement. "Merger Agreement" means the Agreement and Plan of Merger, dated as of October 19, 2000, among the Company, SII and the Investor Stockholder. "Minimum Contribution Requirement" means (i) the contribution by Robert E. Shaw, his Immediate Family Members and any entities listed on Schedule B which are controlled by or established for the benefit of Robert E. Shaw, or his Immediate Family Members, of a minimum of 6,485,604 shares of Company Common Stock in exchange for shares of SII Common Stock, and (ii) the contribution by Julian D. Saul, his Immediate Family Members and any entities listed on Schedule B which are controlled by or established for the benefit of Julian D. Saul or his Immediate Family Members, of a minimum of 6,485,604 shares of Company Common Stock in exchange for shares of SII Common Stock, in each case pursuant to the provisions of this Agreement. "Minimum Contribution Shares" means (i) the shares of SII Common Stock (which shall become shares of Surviving Corporation Common Stock upon the Merger) to be issued hereunder to the Family Group Stockholders and designated as "Minimum Contribution Shares" on Schedule B hereto, as well as (ii) any shares of Capital Stock of SII issued to the Family Group Stockholders with respect to such shares pursuant to any exchange or right to purchase capital stock or as a result of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or similar transaction. 3 6 "Option Plans" has the meaning given to such term in the Merger Agreement. "Per Share Amount" means $19.00, as such amount may be appropriately adjusted to reflect any changes to the Surviving Corporation's capitalization following the Effective Time. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Power of Attorney" has the meaning set forth in Section 4.3. "Purchase Price" has the meaning set forth in Section 5.1(c). "Securities Act" means the Securities Act of 1933, as amended. "SII" has the meaning set forth in the preamble to this Agreement. "SII Common Stock" has the meaning set forth in the recitals to this Agreement. "Stockholders" means the Investor Stockholder and the Continuing Holders. "Surviving Corporation" has the meaning set forth in the recitals to this Agreement. "Surviving Corporation Common Stock" has the meaning set forth in the recitals to this Agreement. "Triggered Call" has the meaning set forth in Section 5.1(b)(ii). "Triggered Put" has the meaning set forth in Section 5.1(b)(i). "Triggering Continuing Holder" has the meaning set forth in Section 5.1(b)(i). "Triggering Event" has the meaning set forth in Section 5.1(b)(i). "Year End Book Value" means the Book Value as of December 31st of any year, beginning December 31, 2001, which shall be (a) calculated after adding back any costs of the Merger not accrued as of December 31, 2000, and (b) appropriately adjusted to reflect the Company's (or the Surviving Corporation's) capitalization as of December 31, 2000 and any subsequent changes thereto. ARTICLE II EXCHANGE OF PROPERTY FOR CAPITAL STOCK Section 2.1 Issuance to Investor Stockholder. Subject to the terms of this Agreement, and on the basis of the representations, warranties and covenants contained herein, at the Closing and concurrently with the exchange contemplated by Section 2.2 below, (i) SII will issue to the Investor Stockholder the number of shares of SII Common Stock set forth opposite such Investor Stockholder's name under the column labeled "Number of Shares of SII Common Stock" on Schedule A hereto, and (ii) the Investor Stockholder, in exchange therefor, will contribute to SII (a) by wire transfer of funds, the amount of cash set forth opposite the Investor Stockholder's name under the column labeled "Cash Contribution" on Schedule A hereto and (b) such number of shares of Company Common Stock held of record and beneficially by the Investor Stockholder as is set forth opposite the Investor Stockholder's name under the column labeled "Company Shares" on Schedule A hereto, together with appropriate powers to transfer such shares of Company Common Stock to SII and irrevocable powers coupled with an interest with respect to such shares of Company Common Stock, provided, however, that the amount of cash to be contributed by the Investor Stockholder pursuant to this Section 2.1 is subject to increase by up to $98,468,754, and the number of shares of SII Common Stock to be issued to the Investor Stockholder in exchange for such contribution pursuant to this Section 2.1 is subject to increase by up to 5,182,566 shares (at a rate of one share of SII Common Stock for each additional $19.00 to be so contributed), to the extent that additional shares of Company Common Stock are issued after the date of this Agreement and prior to the Closing pursuant to the exercise of any Company Stock Options held by any individuals other than the Continuing Holders. 4 7 Section 2.2 Exchange with Continuing Holders. Subject to the terms of this Agreement, and on the basis of the representations, warranties and covenants contained herein, at the Closing and concurrently with the contribution contemplated by Section 2.1 above, (i) each Continuing Holder, severally and not jointly, will contribute, convey, transfer, assign and deliver to SII, through a custodian to be mutually agreed upon by the parties hereto (the "Custodian") and pursuant to the Custody Agreement, a certificate or certificates representing such number of shares of Company Common Stock held of record and beneficially by the Continuing Holder as is set forth opposite the Continuing Holder's name under the column labeled "Company Shares" on Schedule B hereto, together with appropriate powers to transfer such shares of Company Common Stock to SII and irrevocable powers coupled with an interest with respect to such shares of Company Common Stock, and (ii) in exchange therefor, SII shall issue to the Continuing Holder the number of shares of SII Common Stock set forth opposite such Continuing Holder's name under the column labeled "Number of Shares of SII Common Stock" (which, with respect to Family Group Stockholders, shall be designated on Schedule B as either "Minimum Contribution Shares" or "Additional Contribution Shares") on Schedule B hereto, which shares shall be delivered to the Custodian on behalf of such Continuing Holder and held by the Custodian pursuant to the Custody Agreement. Section 2.3 Closing. The Closing shall occur at the offices of Powell, Goldstein, Frazer & Murphy LLP, Sixteenth Floor, 191 Peachtree Street, N.E., Atlanta, Georgia 30303, at such time and date determined by SII that is within two (2) business days following satisfaction of the conditions to Closing set forth in Article VIII, provided that the Closing shall occur prior to consummation of the Merger. Section 2.4 Failure by Continuing Holder. If any Continuing Holder shall default in the performance of any of his or its obligations hereunder, including without limitation such Continuing Holder's failure or refusal to deliver or cause to be delivered to SII any of the Continuing Holder's shares of Company Common Stock required to be delivered to SII hereunder, or otherwise fail to meet any of SII's conditions to Closing set forth herein, or if this Agreement shall be terminated with respect to such Continuing Holder in accordance with the terms hereof, then such default or failure of condition or termination shall not relieve any of the other Continuing Holders of any obligation hereunder, and, to the extent such failure or refusal by a Continuing Holder results in a failure by the Continuing Holders to satisfy the Minimum Contribution Requirement, each of SII and the Investor Stockholder, at its sole option, and without prejudice to any rights against any such Continuing Holder with whom it does not complete the transactions contemplated hereby, may either complete the transactions contemplated hereby with the other Continuing Holders on the terms provided herein, or refuse, without liability, to consummate such transactions and thereby terminate all of its obligations hereunder; provided that if any Continuing Holder fails or refuses to comply with its obligations hereunder, or if this Agreement is otherwise terminated with respect to a Continuing Holder in accordance with its terms, but neither SII nor the Investor Stockholder elects (to the extent permitted by this Section 2.4) to terminate its obligations hereunder, then SII shall, in exchange for the purchase price therefor (which shall be equal to the additional consideration which is required to be paid pursuant to the Merger for the outstanding shares of Company Common Stock held by such Continuing Holder with whom SII does not complete the transactions contemplated hereby), issue to the Investor Stockholder at the Closing an additional number of shares of SII Common Stock as is equal to the number of shares of SII Common Stock that would have otherwise been issued to such Continuing Holder, and the Investor Stockholder shall purchase such additional shares of SII Common Stock for such purchase price at the Closing. ARTICLE III COVENANTS AND AGREEMENTS OF SII AND INVESTOR STOCKHOLDER Section 3.1 Best Efforts. SII and the Investor Stockholder, severally and not jointly, agree with each Continuing Holder that SII and the Investor Stockholder will, (i) throughout the period prior to the Effective Time, exercise its reasonable best efforts to consummate the Merger, including without limitation voting shares of Company Common Stock which it owns, if any, and shares of Company Common Stock for which it has a proxy, if any, in favor of the Merger, or executing a written consent with respect thereto, and causing the conditions to the Company's obligation to consummate the Merger set forth in Section 8.3 of the Merger 5 8 Agreement to be met and satisfied as quickly as reasonably possible, and (ii) throughout the period prior to the Closing, exercise its reasonable best efforts to cause the conditions to the Continuing Holders' obligations under this Agreement set forth in Section 8.2 hereof to be met and satisfied as quickly as reasonably possible; provided, however, that the provisions of this Section 3.1 shall not require SII or the Investor Stockholder to waive any closing conditions set forth in any agreements to which such Person is a party. Section 3.2 Consent to Certain Business Combinations. Until such time as the Investor Stockholder, together with its direct and indirect wholly owned subsidiaries, owns more than 95% of the outstanding shares of Surviving Corporation Common Stock, the Company shall not merge or consolidate with or into any other company which is not engaged in the manufacture, distribution and/or sale of floor coverings (meaning that such company does not derive at least 90% of its revenues from Standard Industrial Classification 2273), or acquire all or substantially all of the assets or 50% or more of the outstanding securities of any such company, without obtaining the prior written consent of Continuing Holders owning more than 50% of the total number of shares of Surviving Corporation Common Stock which are held by the Continuing Holders at the time of such proposed transaction. Section 3.3 Participation in Certain Transactions. If the Investor Stockholder and/or any of its wholly owned subsidiaries which own shares of Surviving Corporation Common Stock propose to enter into a transaction with any unaffiliated third party pursuant to which more than 50% of the total amount of outstanding shares of Surviving Corporation Common Stock will be sold or otherwise transferred by the Investor Stockholder and/or any of its wholly owned subsidiaries to such third party, the Investor Stockholder shall cause such third party to deliver a written offer to each Continuing Holder providing for the purchase of all shares of Surviving Corporation Common Stock owned by such Continuing Holder for the same per share price and on the other terms which apply to the transaction between such third party and the Investor Stockholder or its subsidiary. Upon receipt of any such written offer, each Continuing Holder shall have the right to elect (which election must be set forth in writing and delivered to the Investor Stockholder within ten (10) business days of receipt of such written offer), to either (a) participate in such transaction at the per share price and on the other terms applicable to such transaction, or (b) require the Investor Stockholder (or, at the election of the Investor Stockholder, any of its direct or indirect wholly owned subsidiaries) to purchase all (but not less than all) of his or its shares of Surviving Corporation Common Stock, at the Purchase Price, which shall be calculated applying the Year End Book Value for the year immediately preceding the date of delivery of such third party written offer and as otherwise provided in Section 5.1(e), as if such transaction were a Triggered Put. Any such election shall be binding on the applicable Continuing Holder. If the Continuing Holder elects to participate in such third party transaction, the closing of such transaction will be governed by the terms of such transaction. If the Continuing Holder instead elects to require the Investor Stockholder (or its subsidiary) to purchase his or its shares of Surviving Corporation Common Stock pursuant to clause (b) above, the closing of the purchase by the Investor Stockholder (or, at its election, its subsidiary) of such Continuing Holder's shares of Surviving Corporation Common Stock shall take place on the later of (x) the date of the closing of the Investor Stockholder's (and/or its subsidiary's) sale of its shares of Surviving Corporation Common Stock to the third party purchaser, and (y) the date which is five (5) business days after the date on which the applicable Year End Book Value can first be calculated (which closing date shall be no later than ninety (90) days after the end of the year which is used to calculate such Year End Book Value), and the provisions of Section 5.1(b)(iv) shall otherwise apply to such closing as if such transaction were a Triggered Put. ARTICLE IV COVENANTS OF THE CONTINUING HOLDERS Section 4.1 Best Efforts. Each Continuing Holder, severally and not jointly, agrees with SII and the Investor Stockholder that he or it will, (a) subject to applicable fiduciary duties of such Continuing Holder, if any, throughout the period prior to the Effective Time, cooperate fully with the Company and exercise his or its reasonable best efforts to (i) consummate the Merger, (ii) cause the Company to perform its obligations under the Merger Agreement, and (iii) cause the Company to meet and satisfy the conditions of SII set forth 6 9 in Sections 8.1 and 8.2 of the Merger Agreement as quickly as reasonably possible, and (b) throughout the period prior to the Closing, exercise his or its reasonable best efforts to cause the conditions of SII and the Investor Stockholder set forth in Sections 8.1 and 8.3 hereof to be met and satisfied as quickly as reasonably possible; provided, however, that the provisions of this Section 4.1 shall not prevent any Continuing Holder who is a member of the Board of Directors of the Company, in his capacity as such a director, from taking such actions, if any, as are permitted by Section 7.4 of the Merger Agreement. Section 4.2 No Sale, Etc. Each Continuing Holder hereby covenants and agrees with SII and the Investor Stockholder that, other than as expressly permitted hereby or pursuant to a Voting Agreement of even date herewith between such Continuing Holder, SII and the Investor Stockholder, pending the Closing, such Continuing Holder will not (a) sell, transfer, assign, pledge, hypothecate or otherwise encumber or dispose of any of the Continuing Holder's shares of Company Common Stock or Company Stock Options, other than, with respect to any such Company Stock Options, to the extent such Company Stock Options are transferred to the Company upon the exercise thereof and with respect to shares of Company Common Stock, as payment or withholding on account of the exercise price of Company Stock Options, (b) give a proxy with respect thereto, (c) limit the right to vote any of such shares in any manner, or (d) agree to do any of the foregoing. Section 4.3 Custodial Arrangements. Within ten (10) calendar days following the date hereof, the Continuing Holders will duly execute and deliver a power of attorney in a form reasonably acceptable to SII ("Power of Attorney") appointing and constituting the Persons designated therein, and each of them, with full power of substitution, as the lawful agents and attorneys-in-fact of each Continuing Holder (the "Attorneys") for the purpose of delivering and assigning hereunder the shares of Company Common Stock to be contributed by such Continuing Holder to SII in accordance with the terms hereof. Certificates in negotiable form for such shares of Company Common Stock of such Continuing Holder shall be placed in custody by such date, for the purpose of making delivery of the shares of Company Common Stock under this Agreement, pursuant to the terms of the Custody Agreement which shall be duly executed by such Continuing Holder by such date (other than such shares of Company Common Stock as will be acquired by the Continuing Holders upon the exercise of Company Stock Options, which shall be delivered to the Custodian upon the issuance thereof). In addition, each Continuing Holder's shares of SII Common Stock and, following the Merger, Surviving Corporation Common Stock shall be delivered upon issuance to, and held by, the Custodian pursuant to the Custody Agreement. Each Continuing Holder severally agrees that the shares of Company Common Stock and SII Common Stock (and, following the Merger, Surviving Corporation Common Stock) represented by the certificates to be held in custody for him or it under the Custody Agreement will be held for the benefit of and coupled with and subject to the interest of SII (and, following the Merger, the Surviving Corporation) hereunder, that the arrangements made by such Continuing Holder for such custody and the appointment of the Attorneys by such Continuing Holder will be irrevocable, and that the obligations of such Continuing Holder hereunder and under the Custody Agreement shall not be terminated by operation of law, whether by the death or incapacity of the Continuing Holder or the occurrence of any other event. If the Continuing Holder should die or become incapacitated or if any other such event should occur before the delivery of the shares of Company Common Stock hereunder, certificates for such securities shall be delivered by the Attorneys in accordance with the terms and conditions of this Agreement and the Custody Agreement and actions taken by the Attorneys pursuant to the Power of Attorney or the Custody Agreement shall be as valid as if such death, incapacity or other event had not occurred, regardless of whether or not the Attorneys, or any of them, shall have received notice thereof. 7 10 ARTICLE V PUTS AND CALLS Section 5.1 Puts and Calls. (a) Annual Put. (i) Family Group Stockholder Annual Put. On March 31, 2002 (the "Initial Exercise Date"), each Family Group Stockholder shall have the right to require the Investor Stockholder to purchase, and the Investor Stockholder, following the exercise of any such put, shall be obligated to purchase (or cause any of its direct or indirect wholly owned subsidiaries to purchase) from such Family Group Stockholder, upon the terms and subject to the conditions of this Agreement, (1) up to ten percent (10%) of such Family Group Stockholder's Minimum Contribution Shares, and (2) up to thirty-three and one-third percent (33 1/3%) of such Family Group Stockholder's Additional Contribution Shares, if any, at the Purchase Price. On each anniversary of the Initial Exercise Date (each such date, along with the Initial Exercise Date, referred to herein as an "Annual Put Exercise Date"), each Family Group Stockholder shall have the right to require the Investor Stockholder to purchase, and the Investor Stockholder, following the exercise of any such put, shall be obligated to purchase (or cause any of its direct or indirect wholly owned subsidiaries to purchase) from such Family Group Stockholder, upon the terms and subject to the conditions of this Agreement, (1) up to ten percent (10%) of such Family Group Stockholder's Minimum Contribution Shares, (2) up to thirty-three and one-third percent (33 1/3%) of such Family Group Stockholder's Additional Contribution Shares, if any, and (3) any additional Minimum Contribution Shares or Additional Contribution Shares owned by such Family Group Stockholder which such Family Group Stockholder had the right on any prior Annual Put Exercise Date to, but did not, put to the Investor Stockholder pursuant to this Section 5.1(a)(i), at the Purchase Price, provided that (1) in no event shall any Family Group Stockholder at any time have a right to put more than one hundred percent (100%) of such Family Group Stockholder's Minimum Contribution Shares and Additional Contribution Shares to the Investor Stockholder pursuant hereto, and (2) upon a Triggering Event, the shares of Surviving Corporation Common Stock owned by the Triggering Holder shall no longer be subject to this Section 5.1(a)(i) and may only be put to the Investor Stockholder pursuant to Section 5.1(b)(i). (ii) Management Holder Annual Put. On the Initial Exercise Date, each Management Holder shall have the right to require the Investor Stockholder to purchase, and the Investor Stockholder, following the exercise of any such put, shall be obligated to purchase (or cause any of its direct or indirect wholly owned subsidiaries to purchase) from such Management Holder, upon the terms and subject to the conditions of this Agreement, at the Purchase Price, up to thirty-three and one-third percent (33 1/3%) of such Management Holder's Management Contribution Shares. On each subsequent Put Exercise Date, each Management Holder shall have the right to require the Investor Stockholder to purchase, and the Investor Stockholder, following the exercise of any such put, shall be obligated to purchase (or cause any of its direct or indirect wholly owned subsidiaries to purchase) from such Management Holder, upon the terms and subject to the conditions of this Agreement, (1) up to thirty-three and one third percent (33 1/3%) of such Management Holder's Management Contribution Shares, and (2) any additional Management Contribution Shares which such Management Holder had the right on any prior Put Exercise Date to, but did not, put to the Investor Stockholder pursuant to this Section 5.1(a)(ii), at the Purchase Price, provided that (1) in no event shall any Management Holder at any time have a right to put more than one hundred percent (100%) of such Management Holder's Management Contribution Shares to the Investor Stockholder pursuant hereto, and (2) upon a Triggering Event, the shares of Surviving Corporation Common Stock owned by the Triggering Holder shall no longer be subject to this Section 5.1(a)(ii) and may only be put to the Investor Stockholder pursuant to Section 5.1(b)(i). (iii) Notice of Exercise of Annual Put. If a Family Group Stockholder or Management Holder wishes to exercise a put right pursuant to Section 5.1(a)(i) or (ii), as applicable (any such 8 11 put, an "Annual Put"), such Stockholder shall provide written notice to such effect to the Investor Stockholder (which notice must be received by the Investor Stockholder by no later than the applicable Annual Put Exercise Date) and specifying the number of shares of Surviving Corporation Common Stock to be put to the Investor Stockholder. (iv) Closing of Purchase Pursuant to Annual Put. The closing of the purchase of a Continuing Holder's shares of Surviving Corporation Common Stock by the Investor Stockholder or its wholly owned subsidiary pursuant to Section 5.1(a)(i) or (ii) shall take place on the later of (1) the applicable Annual Put Exercise Date, and (2) the date which is twenty (20) business days after the receipt by the Investor Stockholder of the required notice of exercise of such Annual Put. Such closing shall take place at 11:00 a.m. Eastern Time at the principal offices of the Company, or at such other time or place as the parties to such transaction may agree upon. At such closing, (A) the Continuing Holder shall sell to the Investor Stockholder or its designated subsidiary full right, title and interest in and to the shares of Surviving Corporation Common Stock so purchased, free and clear of all liens, security interests or adverse claims of any kind and nature, and shall deliver to the Investor Stockholder or such subsidiary appropriate stock transfer powers duly endorsed, (B) the Custodian, on such Continuing Holder's behalf, shall deliver to the Investor Stockholder or such subsidiary a certificate or certificates representing the shares of Surviving Corporation Common Stock sold, with all necessary transfer tax stamps affixed thereto at the expense of the Continuing Holder, and (C) the Investor Stockholder or such subsidiary shall wire transfer cash to an account designated in writing by the Continuing Holder in an amount equal to the Purchase Price applicable to the shares of Surviving Corporation Common Stock so purchased. (b) Triggered Put and Call. (i) Triggered Put. At any time after (1) the death of a Continuing Holder or, with respect to a Family Group Entity or Management Holder Entity, its Designated Individual, (2) the termination of employment of an Employed Family Group Stockholder by the Surviving Corporation (or, if he or she is employed by a subsidiary of the Surviving Corporation, by such subsidiary) for any reason (including as a result of such Employed Family Group Stockholder's disability, but not including a voluntary termination of employment (other than as a result of his or her disability) by such Employed Family Group Stockholder), or (3) the termination of a Management Holder's employment by the Surviving Corporation (or, if he or she is employed by a subsidiary of the Surviving Corporation, by such subsidiary) for any reason (whether voluntary or involuntary, and including as a result of such Management Holder's disability) (any such event under clauses (1), (2) or (3), a "Triggering Event"), the estate of such Continuing Holder, the trustee or other duly authorized person on behalf of such Family Group Entity or Management Holder Entity, the terminated Family Group Stockholder or the terminated Management Holder, as applicable (such estate, trustee or other authorized person, Employed Family Group Stockholder or Management Holder, the "Triggering Continuing Holder"), shall have the right to require the Investor Stockholder to purchase, and the Investor Stockholder, following the exercise of any such put, shall be obligated to purchase (or cause any of its wholly owned subsidiaries to purchase) from such Triggering Continuing Holder, upon the terms and subject to the conditions of this Agreement, all, but not less than all, of the shares of Surviving Corporation Common Stock owned by such Triggering Continuing Holder at the Purchase Price. Any such put of shares of Surviving Corporation Common Stock to the Investor Stockholder pursuant to this Section 5.1(b)(i) is referred to herein as a "Triggered Put." (ii) Triggered Call. At any time after the occurrence of a Triggering Event, the Investor Stockholder shall have the right to purchase from the estate of the Continuing Holder, the trustee or other authorized individual on behalf of the applicable Family Group Entity or Management Holder Entity, the terminated Family Group Stockholder or the terminated Management Holder, as applicable, and such estate, trustee, Employed Family Group Stockholder or Management Holder, as applicable (the recipient of any such call, a "Call Recipient"), shall be obligated to sell to the Investor Stockholder (or any of its wholly owned subsidiaries), upon the terms and subject to the 9 12 conditions of this Agreement, all, but not less than all, of the shares of Surviving Corporation Common Stock owned by such Call Recipient, at the Purchase Price (a "Triggered Call"). (iii) Notice of Exercise. A Triggered Put or Triggered Call may be exercised by (1) in the case of a Triggered Put, delivery by the Triggering Continuing Holder to the Investor Stockholder of written notice to such effect, and (2) in the case of a Triggered Call, delivery by the Investor Stockholder to the Call Recipient of written notice to such effect. Any notice of exercise of a Triggered Put must specify which Elected Year End Book Value shall apply to the calculation of the applicable Purchase Price, provided, however, that (A) if a notice of exercise of a Triggered Put, so specifying which Elected Year End Book Value shall apply to the Purchase Price calculation, is not delivered within thirty (30) days of the applicable Triggering Event, the Elected Year End Book Value shall be the Year End Book Value for the year during which such notice is delivered, and (B) notwithstanding the provisions of Section 5.1(c), if the Investor Stockholder delivers a notice of a Triggered Call to the applicable Call Recipient within the first thirty (30) days immediately following the applicable Triggering Event, such Call Recipient may, within ten (10) days of receipt of such notice, deliver a written notice to the Investor Stockholder specifying which Elected Year End Book Value shall apply to the calculation of the applicable Purchase Price, which Elected Year End Book Value shall then be binding for purposes of such calculation. (iv) Closing of Purchase Pursuant to Triggered Put or Triggered Call. The closing of the purchase of a Continuing Holder's shares of Surviving Corporation Common Stock by the Investor Stockholder or its wholly owned subsidiary pursuant to Section 5.1(b)(i) or (ii) shall take place on the later of (1) the date which is twenty (20) business days after the delivery of a notice of exercise to the Investor Stockholder or the Call Recipient, as applicable, pursuant to Section 5.1(b)(iii), and (2) the date which is five (5) business days after the date on which the applicable Elected Year End Book Value can first be calculated (which closing date shall be no later than ninety (90) days after the end of the year which is used to calculate such Elected Year End Book Value). Such closing shall take place at 11:00 a.m. Eastern Time at the principal offices of the Company, or at such other time or place as the parties to such transaction may agree upon. At such closing, (A) the Triggering Continuing Holder shall sell to the Investor Stockholder or its designated subsidiary full right, title and interest in and to the shares of Surviving Corporation Common Stock so purchased, free and clear of all liens, security interests or adverse claims of any kind and nature, and shall deliver to the Investor Stockholder or such subsidiary appropriate stock transfer powers duly endorsed, (B) the Custodian, on such Triggering Continuing Holder's behalf, shall deliver to the Investor Stockholder or such subsidiary a certificate or certificates representing the shares of Surviving Corporation Common Stock sold, with all necessary transfer tax stamps affixed thereto at the expense of the Triggering Continuing Holder, and (C) the Investor Stockholder or such subsidiary shall wire transfer cash to an account designated in writing by the Triggering Continuing Holder in an amount equal to the Purchase Price applicable to the shares of Surviving Corporation Common Stock so purchased. (c) Purchase Price. With respect to any shares of Surviving Corporation Common Stock subject to an Annual Put, Triggered Put or Triggered Call, the purchase price shall equal the product of (i) the number of shares of Surviving Corporation Common Stock subject thereto, and (ii) the purchase price per share, which shall equal the Per Share Amount, plus the amount, if any, by which the applicable Year End Book Value exceeds the Base Book Value, provided that, if the Year End Book Value is less than the Base Book Value, the purchase price per share shall equal the Per Share Amount minus the lesser of (1) the amount by which the Base Book Value exceeds the applicable Year End Book Value, and (2) the sum, calculated on a per share basis, of all cash dividends and other distributions paid by the Surviving Corporation to the Stockholders since the Merger. The applicable Year End Book Value shall be (x) with respect to the exercise of an Annual Put, the Year End Book Value for the year immediately preceding the applicable Annual Put Exercise Date, (y) with respect to the exercise of a Triggered Put (and subject to the provisions of Section 5.1(b)(iii)), at the election of the Triggering Continuing Holder, either (1) the Year End Book Value for the year immediately preceding the date the notice of 10 13 exercise of such Triggered Put is delivered to the Investor Stockholder pursuant to Section 5.1(b)(iii), or (2) the Year End Book Value (upon determination thereof) for the year during which such notice of exercise is so delivered, and (z) with respect to the exercise of a Triggered Call (and subject to the provisions of Section 5.1(b)(iii)), the Year End Book Value (upon determination thereof) for the year during which such notice of exercise is so delivered (whichever Year End Book Value is to be applied to the calculation of the purchase price pursuant to clauses (y) or (z), as applicable, the "Elected Year End Book Value"). The applicable purchase price as determined pursuant to this Section 5.1(c) is referred to herein as the "Purchase Price." (d) Any percentage calculated pursuant to this Section 5.1 shall be based on the total number of Minimum Contribution Shares, Additional Contribution Shares or Management Contribution Shares, as applicable, which were issued to the applicable Stockholder at the Closing. Section 5.2 Wills. Each Continuing Holder which is a natural person agrees to keep in place a valid will and to include in such will a direction and authorization to his executor to comply with the provisions of this Agreement and to sell his shares of Surviving Corporation Common Stock in accordance with this Agreement. Each Continuing Holder which is a Family Group Entity or Management Holder Entity agrees to amend its trust agreement or other governing agreement as necessary (and to keep such amended agreement in place) to permit the provisions of this Agreement to be binding on and enforceable against such Family Group Entity or Management Holder Entity. ARTICLE VI RESTRICTIONS ON CONTINUING HOLDER TRANSFERS Section 6.1 General Restriction on Transfers by Continuing Holders. Except (a) as expressly permitted in Section 6.2 or (b) for transfers to the estate of such Continuing Holder upon his death (which transfer shall be subject to a Triggered Call as set forth in Section 5.1(b)(ii)), no Continuing Holder shall sell, assign, pledge, encumber, transfer, devise or otherwise dispose of any shares of SII Common Stock or Surviving Corporation Common Stock or Company Stock Options which he or it may now or hereafter own or any pecuniary interest in any such shares, grant any option or right to purchase such shares or any beneficial interest therein or engage in any swap, hedge, derivative or other transaction to reduce the risk of ownership thereof. Any such purported transfer, disposition, grant or transaction, except in compliance with this Agreement, shall be null and void. Section 6.2 Permitted Transfers By Continuing Holders. Each Continuing Holder, at any time, may transfer any shares of SII Common Stock or Surviving Corporation Common Stock which he may now or hereafter own (a) to any third Person with the prior written consent of the Investor Stockholder, which consent may be withheld in the Investor Stockholder's absolute discretion but, if given, shall specify the identity of the Person to whom such transfer may be made, the price and terms of such proposed transfer and any conditions which the Investor Stockholder, in its discretion, chooses to impose on such transfer or on the proposed transferee, or (b) to the Investor Stockholder or its designated subsidiary in accordance with Article V; provided, with respect to clause (a), that (x) the transferee of any such shares of SII Common Stock or Surviving Corporation Common Stock shall have executed a Company Joinder Agreement and (y) the Company shall have received an opinion of counsel reasonably satisfactory to it to the effect that registration of such shares with the Commission under the Securities Act is not required. 11 14 ARTICLE VII REPRESENTATIONS AND WARRANTIES Section 7.1 Representations and Warranties by SII. SII hereby represents and warrants to each of the Stockholders as follows: (a) SII is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia, and it has the requisite corporate power to carry on its business as it is now being conducted. (b) SII has all requisite corporate power and authority to enter into the Merger Agreement and this Agreement and to perform its obligations hereunder and thereunder, including the offer, issuance, sale and delivery by it of shares of SII Common Stock pursuant to this Agreement. (c) The execution, delivery and performance by SII of the Merger Agreement and this Agreement, including the offer, issuance, sale and delivery by SII of shares of SII Common Stock pursuant to this Agreement, are within SII's corporate power, and have been duly authorized by all necessary corporate action by SII. (d) Subject to SII's compliance with the requirements of the Exchange Act, and except for compliance with the HSR Act and any similar requirements of foreign jurisdictions, (i) the execution and delivery of the Merger Agreement by SII, (ii) the execution and delivery of this Agreement by SII, (iii) the consummation by SII of the transactions contemplated hereby and thereby, and (iv) the compliance by SII with the terms and provisions of the Merger Agreement and this Agreement, will not conflict with or result in a default under, any law or regulation applicable to SII, the certificate of incorporation or bylaws of SII, or any agreement, judgment, injunction, order, decree or other instrument binding upon SII. (e) This Agreement has been duly and validly executed and delivered by SII and constitutes the valid and binding agreement of SII, enforceable against SII in accordance with its terms, except to the extent limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights. The Merger Agreement, when it is executed and delivered by SII, will have been duly and validly executed and delivered by it and will constitute its valid and binding agreement, enforceable against SII in accordance with its terms, except to the extent limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights. (f) All shares of SII Common Stock, when issued and delivered against payment therefor in accordance with this Agreement, will have been duly authorized, validly issued and fully paid and will be nonassessable and free and clear of any lien, option or preemptive or other right or claim of SII except as set forth in this Agreement. (g) SII is not in violation of or in default under any term or provision of any charter, by-law, mortgage, indenture, agreement, instrument, statute, rule, regulation, judgment, decree, order, writ or injunction applicable to it, such that such violations or defaults in the aggregate might materially and adversely affect the ability of SII to perform its obligations under this Agreement or the Merger Agreement. (h) SII acknowledges that the shares of Company Common Stock to be contributed to SII pursuant hereto may be "restricted securities" within the meaning of Rule 144 of the Commission, that the disposition of the shares of Company Common Stock to be contributed to SII pursuant hereto is subject to compliance with the Securities Act and the regulations thereunder, and that the shares of Company Common Stock to be contributed to SII may be legended accordingly, and SII agrees to acquire such shares of Company Common Stock for investment and not with the intention of engaging in a distribution of such shares within the meaning of the Securities Act. 12 15 Section 7.2 Representations and Warranties by All Stockholders. (a) Each Stockholder which is not an individual, by execution of this Agreement, hereby severally and not jointly represents and warrants to the other Stockholders and to SII as follows: (i) The execution, delivery and performance of this Agreement by such Stockholder have been duly authorized by all requisite corporate or other appropriate action. This Agreement has been duly executed and delivered by such Stockholder and constitutes the valid and binding obligation of such Stockholder enforceable in accordance with its terms, except to the extent limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights; (ii) Subject to compliance with the HSR Act and any similar requirements of foreign jurisdictions, neither the execution nor delivery of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance with the terms and provisions hereof, will conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, the charter or by-laws or agreement or certificate of partnership or limited partnership of such Stockholder, or of any applicable law, or of any order, writ, injunction or decree of any court, administrator or arbitrator, or of any trust agreement or other agreement or instrument which is applicable to such Stockholder under which such Stockholder is obligated or by which any of such Stockholder's property is bound; and (iii) Such Stockholder is acquiring the shares of SII Common Stock acquired hereunder (and the shares of Surviving Corporation Common Stock into which such shares of SII Common Stock will be converted) for its own account, and not with a view to any resale or distribution thereof. Such Stockholder understands that such shares are "restricted securities" within the meaning of Rule 144 of the Commission and that if such Stockholder in the future should decide to dispose of such shares, it may do so only in compliance with the Securities Act and any applicable state blue sky or securities laws and that such shares may be legended accordingly. Such Stockholder further understands that the transferability of such shares is further restricted by the terms of this Agreement. (b) Each Stockholder who is an individual, by execution of this Agreement, hereby severally and not jointly represents and warrants to the other Stockholders and to SII as follows: (i) This Agreement has been duly executed and delivered by such Stockholder and constitutes the valid and binding obligation of such Stockholder enforceable in accordance with its terms, except to the extent limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights. (ii) Subject to compliance with the HSR Act and any similar requirements of foreign jurisdictions, neither the execution nor delivery of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance with the terms and provisions hereof, will conflict with or result in a breach of, the terms, conditions or provisions of, or constitute a default under, any applicable law, or of any order, writ, injunction or decree of any court, administrator or arbitrator or of any agreement or instrument which is applicable to such Stockholder, under which such Stockholder is obligated or by which any of such Stockholder's property is bound. (iii) Such Stockholder is acquiring the shares of SII Common Stock acquired hereunder (and the shares of Surviving Corporation Common Stock into which such shares of SII Common Stock will be converted) for its own account, and not with a view to any resale or distribution thereof. Such Stockholder understands that such shares are "restricted securities" within the meaning of Rule 144 of the Commission and that if such Stockholder in the future should decide to dispose of such shares to a third party, it may do so only in compliance with the Securities Act and any applicable state blue sky or securities laws and that such shares may be legended accordingly. Such Stockholder further understands that the transferability of such shares is further restricted by the terms of this Agreement. 13 16 (c) Each Stockholder, by execution of this Agreement, hereby severally and not jointly represents and warrants to the other Stockholders and to SII as follows: (i) Such Stockholder acknowledges that the offering and sale of the shares of SII Common Stock (and the shares of Surviving Corporation Common Stock into which such shares of SII Common Stock will be converted) pursuant to this Agreement is intended to be exempt from registration under the Securities Act. In furtherance thereof, the Stockholder represents and warrants that: (A) Such Stockholder is an "accredited investor" within the meaning of Rule 501(a) under the Securities Act or has such knowledge and experience in financial and business matters that such Stockholder is capable of evaluating the merits and risks of, and such Stockholder is able to bear the economic risk of, his acquisition of the shares of SII Common Stock (and the shares of Surviving Corporation Common Stock into which such shares of SII Common Stock will be converted). (B) Such Stockholder has been given the opportunity to ask questions of, and receive answers from, SII concerning the terms and conditions of the offering of such shares and other matters pertaining to an investment therein, and has been given the opportunity to obtain such additional information necessary in order for such Stockholder to evaluate the merits and risks of an investment in such shares to the extent SII possesses such information or can acquire it without unreasonable effort or expense. (ii) Such Stockholder acknowledges that SII is entering into this Agreement in reliance upon such Stockholder's representations and warranties in this Agreement. Section 7.3 Additional Representations and Warranties by Continuing Holders. Each Continuing Holder, by execution of this Agreement, hereby severally and not jointly represents and warrants to the other Stockholders and to SII as follows: (a) Such Continuing Holder now has or upon the exercise of Company Stock Options owned by such Continuing Holder will have, and at the Closing will have, good and marketable title to the shares of Company Common Stock shown on Schedule B as being contributed by such Continuing Holder, free and clear of all liens, pledges, encumbrances, equities and claims whatsoever, except those contemplated under this Agreement. Upon the delivery of such shares of Company Common Stock and the exchange of SII Common Stock therefor in accordance with the terms hereof and the Custody Agreement, SII will receive good and marketable title to such shares of Company Common Stock, free and clear of all liens, encumbrances, equities and claims whatsoever, other than such liens, encumbrances, equities and claims created by SII. (b) On the Closing Date, all transfer taxes which are required to be paid by such Continuing Holder in connection with his transfer and contribution of his shares of Company Common Stock to SII will have been fully paid or provided for by him. ARTICLE VIII CONDITIONS TO CLOSING Section 8.1 Conditions to Obligations of All Parties. The respective obligations of each of the parties under this Agreement shall be subject to the fulfillment, at or prior to the Closing, of the following conditions, none of which may be waived: (a) The applicable waiting period under the HSR Act shall have expired and, if required to be obtained under applicable law prior to the consummation of the Merger, the consent or approval of any Government Entity in any foreign jurisdiction shall have been received; (b) The Company Stockholder Approval shall have been obtained; and 14 17 (c) There shall not be any preliminary or permanent injunction in effect or other order by any federal or state court which prohibits the consummation of the transactions contemplated by this Agreement or the Merger Agreement. Section 8.2 Additional Conditions to Obligations of Continuing Holders. The obligations of each Continuing Holder to consummate the transactions contemplated to occur at the Closing shall be subject to the fulfillment, at or prior to the Closing, of the following conditions unless waived by such Continuing Holder: (a) Each of the Investor Stockholder and SII shall have performed in all material respects its agreements contained in this Agreement required to be performed on or prior to the Closing, and each of the Investor Stockholder and SII shall have performed in all material respects its agreements contained in the Merger Agreement required to be performed on or prior to the Effective Time (except for those agreements which are not capable of being performed until after the Closing). (b) The representations and warranties of SII and the Investor Stockholder set forth in this Agreement shall be true in all material respects as of the date of this Agreement and as of the Closing as if made as of such time, and the representations and warranties of the Investor Stockholder and SII set forth in the Merger Agreement shall be true in all material respects as of the date of the Merger Agreement and as of the Closing as if made as of such time. Section 8.3 Additional Conditions to Obligations of Investor Stockholder and SII. The obligations of the Investor Stockholder and SII to consummate the transactions contemplated to occur at the Closing shall be subject to the fulfillment, at or prior to the Closing, of the following conditions unless waived by the Investor Stockholder and SII: (a) The Continuing Holders shall have performed in all material respects their respective agreements contained in this Agreement required to be performed on or prior to the Closing, and the Company shall have performed in all material respects its agreements contained in the Merger Agreement required to be performed on or prior to the Effective Time (except for those agreements which are not capable of being performed until after the Closing). (b) The representations and warranties of the Continuing Holders set forth in this Agreement shall be true in all material respects as of the date of this Agreement and as of the Closing as if made as of such time, and the representations and warranties of the Company set forth in the Merger Agreement shall be true in all material respects as of the date of the Merger Agreement and as of the Closing as if made as of such time. (c) All conditions of SII to the consummation of the Merger at the Effective Time (except for those conditions, if any, which would not be capable of being fulfilled until after the Closing) shall have been fulfilled or waived in writing. ARTICLE IX GENERAL PROVISIONS Section 9.1 Termination. In addition to the rights of SII and Investor Stockholder set forth in Section 2.4, the obligations of the parties to consummate the transactions contemplated to occur at the Closing may be terminated at any time prior to the Closing: (a) By the mutual consent of SII and the Investor Stockholder, on the one hand, and, with respect to any Continuing Holder, by such Continuing Holder, on the other hand, it being agreed that (1) the mutual termination respecting a Continuing Holder shall not, subject to the provisions of Section 2.4, affect the rights of any other Continuing Holder unless so consented to by such other Continuing Holder and (2) SII and the Investor Stockholder shall not consent to any termination respecting a Continuing Holder pursuant to this Section 9.1(a) if such termination would result in a failure of the Continuing Holders to meet the Minimum Contribution Requirement; 15 18 (b) By any Continuing Holder with respect to such Continuing Holder (subject to the provisions of Section 2.4) or by SII or the Investor Stockholder if the Closing shall not have occurred on or before the outside termination date set forth in the Merger Agreement for consummation of the Merger. In the event of any termination under this Section 9.1, this Agreement, as between the terminating parties, shall forthwith become void and there shall be no liability under this Agreement on the part of any of such terminating parties for such termination. Nothing contained herein shall relieve any party from any liability resulting from a breach of this Agreement. Section 9.2 Restrictive Legends. (a) Each certificate evidencing shares of SII Common Stock to be issued to the Continuing Holders (and the shares of Surviving Corporation Common Stock into which such shares of SII Common Stock will be converted) shall contain the following legend: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE; AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT, AND, IF APPLICABLE, THE SECURITIES LAWS OF ANY STATE OR AN EXEMPTION THEREFROM." "BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE REPRESENTS THAT IT IS ACQUIRING THE SHARES REPRESENTED BY THIS CERTIFICATE FOR ITS OWN ACCOUNT AND AGREES TO COMPLY IN ALL RESPECTS WITH APPLICABLE SECURITIES LAWS AND THE PROVISIONS OF THE CONTRIBUTION AND PARTICIPATION AGREEMENT DATED AS OF OCTOBER 19, 2000 (THE "CONTRIBUTION AGREEMENT"), A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY." "THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE, OR OTHER DISPOSITION OF THE SHARES EVIDENCED BY THIS CERTIFICATE, OR ANY INTEREST IN SAID SHARES, IS PROHIBITED EXCEPT AS PERMITTED BY THE TERMS OF THE CONTRIBUTION AGREEMENT. NO SUCH SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION SHALL BE EFFECTIVE UNLESS MADE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE CONTRIBUTION AGREEMENT." Section 9.3 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including wire, telecopy, or similar writing) and shall be given to such party at its address or telecopy number set forth on the signature pages hereof or such other address or telecopy number as such party may hereafter specify for this purpose by notice to the Secretary of SII. Each such notice, request or other communication shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and the appropriate confirmation is received, (ii) if given by mail, three business days after such communication is deposited in the mails registered or certified, return receipt requested, with postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered at the address specified in this Section. Section 9.4 Additional Parties. Any person who executes a Company Joinder Agreement shall be deemed to be a Management Holder and shall be bound by all obligations and, except to the extent limited in said joinder agreement, entitled to all rights and privileges of a Management Holder as if he, she or it had been an original signatory to this Agreement. Any person who executes an Investor Joinder Agreement shall be deemed to be an Investor Stockholder and shall be bound by all obligations and, except to the extent limited in said joinder agreement, entitled to all rights and privileges of an Investor Stockholder as if he, she or it had been an original signatory to this Agreement. 16 19 Section 9.5 Expenses. Whether or not the transactions contemplated to occur at the Closing are consummated, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such expenses (it being understood that the costs and expenses of the Continuing Holders in negotiating this Agreement are to be paid by the Company). Section 9.6 Amendments and Waivers. Any provision of this Agreement may be amended if, but only if, such amendment is in writing and is signed by SII, the Investor Stockholder and any Continuing Holder whose rights or duties are affected thereby. Any provision of this Agreement may be waived if, but only if, such waiver is in writing and is signed by SII, the Investor Stockholder and each Continuing Holder whose rights or duties are affected by such waiver. Section 9.7 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (including any person who acquires any shares of Surviving Corporation Common Stock and agrees to be bound by the provisions hereof as if originally the party hereto who purchased or originally acquired such shares of Surviving Corporation Common Stock). Section 9.8 Georgia Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Georgia. Section 9.9 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto were upon the same instrument. Section 9.10 Captions. The captions in this Agreement are included for convenience of reference only, do not constitute a part hereof and shall be disregarded in the construction hereof. Section 9.11 No Rights As Employee. Nothing in this Agreement shall affect in any manner whatsoever any rights of SII, the Surviving Corporation or their affiliates to terminate a Continuing Holder's employment for any reason, with or without cause, subject to any written employment agreement to which a Continuing Holder may be a party. Section 9.12 Genders and Plurals. Where the context so indicates, the masculine pronoun shall include the feminine pronoun and the singular shall include the plural. Section 9.13 Severability. In case any one or more of the provisions or parts of a provision contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid or illegal or unenforceable provision or part of a provision had never been contained herein and such provision or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction. Section 9.14 Third Party Beneficiary. The parties hereto agree that the Company shall be a third party beneficiary of this Agreement, entitled to enforce its provisions in accordance with its terms. 17 20 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. SII Acquisition, Inc. By: /s/ MARC D. HAMBURG -------------------------------------- Its: Vice President -------------------------------------- Berkshire Hathaway Inc. By: /s/ MARC D. HAMBURG -------------------------------------- Its: Vice President -------------------------------------- /s/ ROBERT E. SHAW -------------------------------------- Robert E. Shaw Robert E. Shaw, L.P. By: /s/ ROBERT E. SHAW -------------------------------------- Its: General Partner -------------------------------------- /s/ ANNA SUE SHAW -------------------------------------- Anna Sue Shaw /s/ ROBERT E. SHAW, JR. -------------------------------------- Robert E. Shaw, Jr. /s/ SUSAN S. YOUNG -------------------------------------- Susan S. Young /s/ THOMAS TRIPP SHAW -------------------------------------- Thomas Tripp Shaw /s/ LEWIS CLAYTON SHAW -------------------------------------- Lewis Clayton Shaw Julian D. Saul Trust By: /s/ JULIAN D. SAUL -------------------------------------- Its: General Partner -------------------------------------- Anita Saul Trust By: /s/ ANITA SAUL -------------------------------------- Its: Trustee -------------------------------------- 18 21 Little Family Limited Partnership By: /s/ NORRIS LITTLE -------------------------------------- Its: General Partner -------------------------------------- /s/ WILLIAM C. LUSK -------------------------------------- William C. Lusk /s/ VANCE D. BELL -------------------------------------- Vance D. Bell /s/ GERALD EMBRY -------------------------------------- Gerald Embry /s/ SPRIGHT D. HOLLAND -------------------------------------- Spright D. Holland /s/ KENNETH G. JACKSON -------------------------------------- Kenneth G. Jackson /s/ JEFFREY TODD MEADOWS -------------------------------------- Jeffrey Todd Meadows /s/ PERCY D. MERRITT -------------------------------------- Percy D. Merritt /s/ HENRY H. LONG -------------------------------------- Henry H. Long /s/ JULIUS C. SHAW, JR. -------------------------------------- Julius C. Shaw, Jr. 19 22 SCHEDULE A INVESTOR STOCKHOLDER
NUMBER OF SHARES OF NAME CASH CONTRIBUTION COMPANY SHARES SII COMMON STOCK - ---- ----------------- -------------- ------------------- Berkshire Hathaway Inc................... $2,016,686,315 2,194,200 108,335,585
23 SCHEDULE B CONTINUING HOLDERS FAMILY GROUP STOCKHOLDERS
NUMBER OF SHARES OF SII COMMON STOCK --------------------------- MINIMUM ADDITIONAL COMPANY CONTRIBUTION CONTRIBUTION NAME SHARES SHARES SHARES - ---- --------- ------------ ------------ Robert E. Shaw.............................................. 6,634,348 6,485,604 148,744 Anna Sue Shaw............................................... 64,652 -- 64,652 Robert E. Shaw, Jr.......................................... 200,000 -- 200,000 Susan S. Young.............................................. 350,000 -- 350,000 Thomas Tripp Shaw........................................... 200,000 -- 200,000 Lewis Clayton Shaw.......................................... 450,000 -- 450,000
FAMILY GROUP ENTITIES
NUMBER OF SHARES OF SII COMMON STOCK --------------------------- MINIMUM ADDITIONAL COMPANY CONTRIBUTION CONTRIBUTION NAME DESIGNATED INDIVIDUAL SHARES SHARES SHARES - ---- --------------------- --------- ------------ ------------ Robert E. Shaw, L.P........................ Robert E. Shaw 100,000 -- 100,000 Julian D. Saul Family Trust................ Julian D. Saul 6,267,883 6,267,883 -- Anita Saul Family Trust.................... Julian D. Saul 217,721 217,721 --
MANAGEMENT HOLDERS
NUMBER OF SHARES COMPANY OF NAME SHARES SII COMMON STOCK - ---- ------- ---------------- William C. Lusk............................................. 300,000 300,000 Vance D. Bell............................................... 112,332 112,332 Gerald Embry................................................ 80,830 80,830 Spright D. Holland.......................................... 23,535 23,535 Kenneth G. Jackson.......................................... 49,748 49,748 Jeffrey Todd Meadows........................................ 14,651 14,651 Percy D. Merritt............................................ 51,532 51,532 Henry H. Long............................................... 30,029 30,029 Julius C. Shaw, Jr. ........................................ 543,045 543,045
MANAGEMENT HOLDER ENTITIES:
NUMBER OF SHARES COMPANY OF NAME DESIGNATED INDIVIDUAL SHARES SII COMMON STOCK - ---- --------------------- ------- ---------------- Little Family Limited Partnership.................. Norris Little 112,332 112,332
EX-99.3 4 g64822ex99-3.txt VOTING AGREEMENT 1 EXHIBIT 99.3 VOTING AGREEMENT This VOTING AGREEMENT (this "Agreement"), dated as of October 19, 2000, is made and entered into among Berkshire Hathaway Inc., a Delaware corporation ("Investor"), SII Acquisition, Inc., a Georgia corporation ("Merger Sub") and each party listed under the heading "Stockholders" on the signature page hereof (each a "Stockholder" and collectively, the "Stockholders"); WITNESSETH: WHEREAS, as of the date hereof, each Stockholder owns the number of shares of common stock, no par value per share ("Common Stock"), of Shaw Industries, Inc., a Georgia corporation (the "Company"), set forth opposite the Stockholder's name on Exhibit A hereto (the total number of shares of Common Stock owned by the Stockholders, and any other capital stock of the Company or any stock option for shares of capital stock of the Company that the Stockholders acquire, whether by means of purchase (including through the exercise of any stock option), dividend, distribution, or otherwise, prior to the termination of this Agreement, being collectively referred to as the "Shares"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Company, Investor and Merger Sub are entering into an Agreement and Plan of Merger (the "Merger Agreement") of even date herewith, which (upon the terms and subject to the conditions set forth therein) provides for, among other things, the merger of Merger Sub with and into the Company (the "Merger"); WHEREAS, concurrently with the execution and delivery of this Agreement, Investor and Merger Sub and certain other parties are entering into a Contribution and Participation Agreement (the "Contribution Agreement"), of even date herewith, which (upon the terms and subject to the conditions set forth therein) provides for, among other things, the investment in Merger Sub by Investor and the holders of shares of Common Stock named therein of cash and shares of Common Stock in exchange for an equity interest therein; WHEREAS, as a condition to Investor's and Merger Sub's willingness to enter into the Merger Agreement and the Contribution Agreement, Investor and Merger Sub have requested the Stockholders to agree, and in order to induce Investor and Merger Sub to enter into the Merger Agreement and the Contribution Agreement, the Stockholders have agreed, to enter into this Agreement; and WHEREAS, concurrently with the execution and delivery of this Agreement, Investor is entering into a voting agreement with the Company (the "Investor Voting Agreement"), pursuant to which Investor is agreeing to vote certain shares of Common Stock which are subject to both this Agreement and the Contribution Agreement in the same proportion as the holders of all other shares of Common Stock voting on the approval of the Merger vote their shares of Common Stock on such matter. NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants, and agreements hereinafter set forth, the parties hereto hereby agree as follows: ARTICLE I STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES Each Stockholder hereby represents and warrants to Merger Sub and Investor as follows: 1.1 Due Organization and Authorization. Stockholder, if it is not a natural person, is duly organized and validly existing under the laws of the jurisdiction in which it was formed. Stockholder possesses the requisite power and authority to execute, deliver, and perform this Agreement, to appoint Warren E. Buffett and Marc D. Hamburg (or any other designee of Investor), and each of them, as its Proxy (as defined below), and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this 1 2 Agreement, the appointment of Warren E. Buffett and Marc D. Hamburg (or any other designee of Investor), and each of them, as Stockholder's Proxy, and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action of Stockholder. This Agreement has been duly executed and delivered by or on behalf of Stockholder and constitutes a legal, valid, and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms. There is no beneficial owner of any of the Shares or other beneficiary or holder of any other interest in any of the Shares whose consent is required for the execution and delivery of this Agreement by Stockholder or for the consummation by Stockholder of the transactions contemplated hereby. 1.2 No Conflicts; Required Filings and Consents. (a) The execution and delivery of this Agreement by Stockholder do not, and the performance of this Agreement by Stockholder will not, (i) conflict with or violate the trust agreement or other governing instrument of Stockholder if it is not a natural person, (ii) conflict with or violate any law applicable to Stockholder or by which Stockholder or any of Stockholder's assets is bound or affected, or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, acceleration, or cancellation of, or result in the creation of a lien or encumbrance on any assets of Stockholder, including, without limitation, the Shares, pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise, or other instrument or obligation to which Stockholder is a party or by which Stockholder or any of Stockholder's assets is bound or affected. (b) The execution and delivery of this Agreement by Stockholder does not, and the performance of this Agreement by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, other than (i) filings under the HSR Act and any similar foreign requirements, and (ii) any necessary filing under the Securities Exchange Act of 1934, as amended. 1.3 Title to Shares. Except as set forth on Schedule 1.3 hereto, Stockholder is the sole owner of the shares of Common Stock set forth opposite Stockholder's name on Exhibit A hereto, free and clear of any pledge, lien, security interest, mortgage, claim, proxy, voting restriction or other voting trust, agreement, understanding, or arrangement of any kind, right of first refusal or other limitation on disposition, adverse claim of ownership, or other encumbrance of any kind, other than restrictions imposed by securities laws or pursuant to this Agreement, the Merger Agreement or, if Stockholder is a party thereto, the Contribution Agreement and the Custody Agreement (as such term is defined in the Contribution Agreement). 1.4 Information for Proxy Statement. None of the information relating to Stockholder and its affiliates supplied or to be supplied by or on behalf of Stockholder or its affiliates for inclusion or incorporation by reference in the Proxy Statement or in any other document filed with any other Governmental Entity in connection with the transactions contemplated by this Agreement or the Merger Agreement at the respective times filed with the SEC or such other Governmental Entity and first published, sent or given to stockholders of the Company and, in addition, in the case of the Proxy Statement, at the date it or any amendment or supplement is mailed to the Company's stockholders and at the time of the Company Stockholders Meeting, will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. ARTICLE II STOCKHOLDERS' COVENANTS Each Stockholder hereby covenants to Merger Sub and Investor as follows: 2.1 Voting of Shares. Stockholder hereby agrees that from the date hereof until the termination of the Agreement pursuant to Section 3.2 (the "Term"), at any meeting of the stockholders of the Company however called and in any action by written consent of the stockholders of the Company, Stockholder shall vote its Shares (i) in favor of the Merger and the Merger Agreement, as it may be amended from time to time, (ii) against any Takeover Proposal and against any proposal for action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company 2 3 under the Merger Agreement or which is reasonably likely to result in any of the Company's obligations under the Merger Agreement not being fulfilled, any change in the directors of the Company (except as contemplated by the Merger Agreement), any change in the present capitalization of the Company or any amendment to the Company's corporate structure or business, or any other action which could reasonably be expected to impede, interfere with, delay, postpone or adversely affect the transactions contemplated by this Agreement or the Merger Agreement or the likelihood of such transactions being consummated and (iii) in favor of any other matter necessary for consummation of the transactions contemplated by the Merger Agreement which is considered at any such meeting of shareholders or in such consent, and in connection therewith to execute any documents which are necessary or appropriate in order to effectuate the foregoing, including the ability for Investor or its nominee(s) to vote the Shares directly. 2.2 Proxy. Stockholder hereby revokes all prior proxies or powers of attorney with respect to any of its Shares. Stockholder hereby constitutes and appoints Warren E. Buffett, Chairman and Chief Executive Officer of Investor, and Marc D. Hamburg, Chief Financial Officer of Investor, in their respective capacities as officers of Investor, and any individual who shall succeed to any such office of Investor, and any other designee of Investor, and each of them, with full power of substitution and resubstitution at any time during the Term, as its true and lawful attorney and proxy ("Proxy"), for and in its name, place, and stead, to demand that the Secretary of the Company call a special meeting of the stockholders of the Company for the purpose of considering any matter referred to in Section 2.1 and to vote each Share held by Stockholder as its Proxy in respect of any such matter, at every annual, special, adjourned, or postponed meeting of the stockholders of the Company, including the right to sign its name (as stockholder) to any consent, certificate, or other document relating to the Company that the law of the State of Georgia might permit or require. THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED WITH AN INTEREST THROUGHOUT THE TERM. Stockholder will take such further action and execute such other documents as may be necessary to effectuate the intent of this Section 2.2 2.3 Restrictions on Transfer, Proxies and Non-Interference. Stockholder hereby agrees, while this Agreement is in effect, and except as contemplated hereby (including pursuant to the Contribution Agreement and the Custody Agreement, if Stockholder is a party thereto), not to (i) without Investor's prior written consent, sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, pledge, encumbrance, assignment or other disposition of, any of the Shares, (ii) grant any proxies, deposit any Shares into a voting trust or enter into a voting agreement with respect to any Shares, or (iii) take any action that would make any representation or warranty of Stockholder contained herein untrue or incorrect or have the effect of preventing or disabling Stockholder from performing Stockholder's obligations under this Agreement. Stockholder further agrees that it (a) will tender to the Company, within ten business days of the date of this Agreement, all certificates representing such Stockholder's Shares (other than any certificates which have been delivered to, and held by, the custodian pursuant to the Custody Agreement) for the Company to inscribe thereupon the following legend: "The shares of Common Stock, no par value per share, of Shaw Industries, Inc. (the "Company") represented by this certificate are subject to a Voting Agreement dated as of October 19, 2000, and may not be sold or otherwise transferred, except in accordance therewith. A copy of such Voting Agreement is available for inspection at the principal executive office of the Company", and (b) will, within ten business days of the date of this Agreement, no longer hold any Shares, whether certificated or uncertificated, in "street name" or in the name of any nominee. 2.4 Disclosure. Stockholder hereby authorizes the Company and Merger Sub to publish and disclose in the Proxy Statement (including all documents and schedules filed with the SEC), its identity, its ownership of Common Stock, and the nature of its commitments, arrangements, and understandings under this Agreement. 2.5 No Solicitation. Stockholder covenants and agrees that, during the Term, it shall not, nor shall it authorize or permit any of its representatives or agents to, directly or indirectly, solicit, initiate, knowingly encourage, or take any other action designed to facilitate, any inquiries or the making of any proposal from any person (other than from Merger Sub or Investor) relating to (i) any acquisition of any Shares or (ii) any transaction that constitutes a Takeover Proposal. Stockholder further covenants and agrees that, during the Term, it shall not (and shall not permit its representatives or agents to) participate in any discussions or 3 4 negotiations (except with Merger Sub or Investor) regarding, or furnish to any person (other than Merger Sub or Investor) any information with respect to, or otherwise cooperate in any way with, or assist or participate in or facilitate or encourage, any effort or attempt by any person (other than Merger Sub or Investor) to make, any transaction that may constitute a Takeover Proposal. Stockholder immediately shall cease and cause to be terminated all existing discussions or negotiations of Stockholder and its representatives or agents with any person (other than Merger Sub or Investor) with respect to any of the foregoing. Stockholder shall notify Merger Sub and Investor promptly of any such proposal or offer, or any inquiry or contact with any person with respect thereto, of which it becomes aware and shall, in any such notice to Merger Sub and Investor, indicate in reasonable detail the identity of the person making such proposal, offer, inquiry, or contact and the material terms and conditions of such proposal, offer, inquiry, or contact. Notwithstanding any provision of this Section to the contrary, if Stockholder is a member of the Board of Directors of the Company, Stockholder may, and if any agent or representative of Stockholder is a member of the Board of Directors of the Company, such member of the Board of Directors of the Company may, in his or her capacity as such a director, take such actions, if any, as are permitted by Section 7.4 of the Merger Agreement. ARTICLE III MISCELLANEOUS 3.1 Definitions. Terms used but not otherwise defined in this Agreement, have the meanings assigned to such terms in the Merger Agreement. 3.2 Termination. This Agreement shall terminate and be of no further force and effect (i) by the written mutual consent of the parties hereto or (ii) automatically and without any required action of the parties hereto upon the earlier to occur of (A) the Effective Time or (B) the termination of the Merger Agreement in accordance with Article 8 thereof. The termination of this Agreement shall not relieve any party hereto from any liability for any breach of this Agreement prior to termination. 3.3 Expenses. All costs and expenses incurred in connection with the transactions contemplated by this Agreement shall be paid by the party incurring such costs and expenses. 3.4 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon hand delivery, (ii) upon confirmation of receipt of facsimile transmission, (iii) upon confirmed delivery by a standard overnight courier, or (iv) after five (5) business days if sent by registered or certified mail, postage prepaid, return receipt requested, to the following address or to such other address that a party hereto might later specify by like notice: (a) If to Merger Sub or Investor, to: Berkshire Hathaway Inc. 1440 Kiewit Plaza Omaha, Nebraska 68131 Attn: Warren E. Buffett Facsimile No.: (402) 346-3375 with copies to: Munger, Tolles & Olson LLP 355 South Grand Avenue Los Angeles, California 90071 Attn: Robert E. Denham Facsimile No.: (213) 687-3702 4 5 (b) If to the Stockholders, to: Shaw Industries, Inc. 616 East Walnut Avenue Dalton, Georgia 30720 Attn: Robert E. Shaw Facsimile No.: (706) 275-1985 with copies to: Powell, Goldstein, Frazer & Murphy LLP Sixteenth Floor 191 Peachtree Street, N.E. Atlanta, Georgia 30303 Attn: G. William Speer Facsimile No.: (404) 572-6999 3.5 Severability. In the event that any provision in this Agreement is held invalid, illegal, or unenforceable in a jurisdiction, such provision shall be modified or deleted as to the jurisdiction involved but only to the extent necessary to render the same valid, legal, and enforceable. The validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality, or enforceability of such provision be affected thereby in any other jurisdiction. 3.6 Entire Agreement. This Agreement (along with all Exhibits and Schedules hereto), the Merger Agreement, the Investor Voting Agreement and, if a Stockholder is a party thereto, the Contribution Agreement and the Custody Agreement, as each of the Merger Agreement, the Investor Voting Agreement and, if applicable, the Contribution Agreement and the Custody Agreement, may be amended from time to time, constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect thereto. 3.7 Assignment. No party may assign or delegate this Agreement or any right, interest, or obligation hereunder, provided that Merger Sub or Investor, in its sole discretion, may assign or delegate its rights and obligations hereunder to any direct or indirect wholly-owned subsidiary of such entity. 3.8 No Third-Party Beneficiaries. This Agreement shall be binding upon, inure solely to the benefit of, and be enforceable by only the parties hereto, their respective successors, and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any person, other than the parties hereto, their respective successors, and permitted assigns, any rights, remedies, obligations, or liabilities of any nature whatsoever. 3.9 Waiver of Appraisal Rights. Each Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger. 3.10 Further Assurance. Each party hereto shall execute and deliver such additional documents and take all such further action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 3.11 Certain Events. Each Stockholder agrees that this Agreement and the obligations hereunder shall attach to such Stockholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise. Notwithstanding any transfer of Shares, the transferor shall remain liable for the performance of all obligations under this Agreement. 3.12 No Waiver. The failure of any party hereto to exercise any right, power, or remedy provided under this Agreement or otherwise available at law or in equity, the failure of any party hereto to insist upon compliance by any other party hereto with its obligations hereunder, or the existence of any custom or practice of the parties at variance with the terms hereof shall not constitute a waiver by such party of its right to exercise any such or other right, power, or remedy or to demand such compliance. 5 6 3.13 Specific Performance. The parties hereto acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or otherwise breached. Accordingly, the parties agree that an aggrieved party shall be entitled to injunctive relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law, or in equity. 3.14 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia, without effect to provisions thereof relating to conflicts of law. 3.15 Headings. The descriptive headings in this Agreement were included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 3.16 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed in a manner sufficient to bind them as of the date first written above. Berkshire Hathaway Inc. By: /s/ MARC D. HAMBURG ------------------------------------ Its: Vice President ------------------------------------ SII Acquisition, Inc. By: /s/ MARC D. HAMBURG ------------------------------------ Its: Vice President ------------------------------------ Stockholders Anita Saul Family Trust By: /s/ ANITA SAUL ------------------------------------ Its: Trustee ------------------------------------ By: /s/ ROBERT E. SHAW ------------------------------------ Robert E. Shaw Julian D. Saul Family Trust By: /s/ JULIAN D. SAUL ------------------------------------ Its: Trustee ------------------------------------ By: /s/ J. C. SHAW ------------------------------------ J. C. Shaw 6 7 Linda Saul Schejola Family Trust By: /s/ LINDA SAUL SCHEJOLA ------------------------------------ Its: Trustee ------------------------------------ By: /s/ JULIUS C. SHAW ------------------------------------ Julius C. Shaw By: /s/ R. JULIAN MCCAMY ------------------------------------ R. Julian McCamy By: /s/ ELEANOR SHAW MCCAMY ------------------------------------ Eleanor Shaw McCamy 7 8 EXHIBIT A
STOCKHOLDERS NUMBER OF SHARES OF COMMON STOCK - ------------ -------------------------------- Robert E. Shaw.............................................. 6,634,348 Julian D. Saul Family Trust................................. 6,267,883 J.C. Shaw................................................... 5,370,815 Shaw Family Holdings, LLC................................... 1,054,603 Linda Saul Schejola Family Trust............................ 7,699,808 Julius C. Shaw, Jr.......................................... 531,030 R. Julian McCamy............................................ 1,571,989 Eleanor Shaw McCamy......................................... 1,163,169
EX-99.4 5 g64822ex99-4.txt INVESTOR VOTING AGREEMENT 1 EXHIBIT 99.4 INVESTOR VOTING AGREEMENT October 19, 2000 Shaw Industries, Inc. 616 East Walnut Avenue Dalton, Georgia 30722 This letter memorializes an agreement of the undersigned ("Investor") with Shaw Industries, Inc. (the "Company"). 1. The Subject Shares. Pursuant to that certain Voting Agreement, dated as of the date hereof (the "Voting Agreement"), between Investor and certain holders (the "Holders") of shares of common stock, no par value per share, of the Company ("Common Stock"), each of Warren E. Buffett, Chairman and Chief Executive Officer of Investor, and Marc D. Hamburg, Chief Financial Officer of Investor (the "Designated Officers"), in their respective capacities as such, have been given a proxy to, among other things, vote the shares of Common Stock owned by the Holders at any meeting of the stockholders of the Company called to consider the approval of the Merger and the Merger Agreement (as such terms are defined in the Voting Agreement). Of the shares of Common Stock which are subject to the Voting Agreement, 13,433,261 of such shares (the "Subject Shares") are also subject to that certain Contribution and Participation Agreement, dated as of the date hereof, between Investor, certain of the Holders and SII Acquisition, Inc. 2. Agreement to Vote. Each of the Designated Officers and Investor, through the Designated Officers, agree to vote the Subject Shares in the same proportion as the holders of all other shares of Common Stock or of proxies with respect thereto (including, without limitation, Investor, with respect to shares of Common Stock otherwise subject to the Voting Agreement or which are owned by Investor) voting on the approval of the Merger and the Merger Agreement vote their shares of Common Stock on such matters. For purposes of computing this proportion, shares of Common Stock shall only be counted if such shares are voted for or against the approval of the Merger and the Merger Agreement; shares of Common Stock which abstain or do not vote shall be ignored. 3. Termination. This agreement will terminate automatically upon the termination of the Voting Agreement. 4. Miscellaneous. This agreement, along with the Voting Agreement, constitutes the entire agreement among the parties with respect to this subject, is not intended to confer any rights or remedies 1 2 upon any person other than the parties hereto, and shall be governed and construed in accordance with Georgia law without regard to any applicable conflicts of law principles. Very truly yours, Berkshire Hathaway Inc. /s/ WARREN E. BUFFETT -------------------------------------- Warren E. Buffett Chairman and Chief Executive Officer /s/ MARC D. HAMBURG -------------------------------------- Marc D. Hamburg Chief Financial Officer Accepted and agreed this 19th day of October, 2000 Shaw Industries, Inc. /s/ ROBERT E. SHAW - --------------------------------------------------------- Robert E. Shaw Chairman and Chief Executive Officer 2 EX-99.5 6 g64822ex99-5.txt PRESS RELEASE 1 EXHIBIT 99.5 BERKSHIRE HATHAWAY INC. NEWS RELEASE FOR IMMEDIATE RELEASE October 20, 2000 Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) today announced that it has formally entered into a merger agreement whereby it will acquire approximately 87.3% of Shaw Industries, Inc. (NYSE: SHX) common shares for $19 per share (approximately $2 billion in the aggregate). The closing of the transaction is subject to approval by the shareholders of Shaw Industries and satisfaction of certain regulatory conditions. An investment group consisting, among others, of Robert E. Shaw, Chairman and CEO of Shaw Industries, Julian D. Saul, President of Shaw Industries, members of Mr. Shaw's and Mr. Saul's immediate families, and certain other members of management will acquire the remaining 12.7% of Shaw Industries by contributing common shares of Shaw Industries representing approximately 12.7% of Shaw's current outstanding common stock. Shaw Industries, Inc. is the world's largest manufacturer of tufted broadloom carpet. Headquartered in Dalton, Georgia, Shaw sells carpeting and rugs for residential and commercial applications throughout the United States and exports to most markets worldwide. Shaw markets its residential products under such brand names and trademarks as Cabin Crafts, Couture by Sutton, Cumberland, Expressive Designs, Home Foundations, Philadelphia, Queen, ShawMark, Sutton, TrustMark, Evans & Black, Salem, Tuftex, and Shaw Rugs. Shaw markets its commercial products under the names Shaw Contract, Designweave, Patcraft, and Queen Commercial. Through its network of commercial dealers known as Shaw Contract Flooring Services, Shaw also sells commercial flooring products directly and provides installation and project management services. Shaw also offers laminate flooring through the Decades brand and ceramic tile through Shaw Ceramics, and hardwood flooring through Shaw Hardwoods. Berkshire Hathaway is a holding company owning subsidiaries engaged in a number of diverse business activities. The most important of these is the property and casualty insurance business conducted on both a direct and reinsurance basis through a number of subsidiaries. -----END PRIVACY-ENHANCED MESSAGE-----