AGREEMENT AND PLAN OF MERGER
AMONG
GIANT GROUP, LTD.,
A DELAWARE CORPORATION,
GIANT PS/ACQ CORPORATION
A DELAWARE CORPORATION,
AND
PERISCOPE SPORTSWEAR, INC.,
A DELAWARE CORPORATION
TABLE OF CONTENTS
PAGE
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ARTICLE I
ADOPTION OF AGREEMENT AND PLAN OF MERGER . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date of the Merger . . . . . . . . . . . 2
1.3 Surviving Corporation; Certificate of Incorporation
of Surviving Corporation . . . . . . . . . . . . . 2
1.4 Merger Consideration; Conversion of Periscope
Common Stock; Cancellation of Acquisition Corp.
Common Stock. . . . . . . . . . . . . . . . . . . 2
1.5 Exchange of Certificates . . . . . . . . . . . . . 3
1.6 No Fractional Shares . . . . . . . . . . . . . . . 4
1.7 Certificates in Other Names . . . . . . . . . . . 4
1.8 Additional Merger Consideration . . . . . . . . . 4
ARTICLE II
CLOSING . . . . . . . . . . . . 5
2.1 Closing Date . . . . . . . . . . . . . . . . . . . 5
2.2 Deliveries at the Closing . . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PERISCOPE . . . 6
3.1 Due Incorporation . . . . . . . . . . . . . . . . 6
3.2 Due Authorization . . . . . . . . . . . . . . . . 6
3.3 Non-Contravention; Consents and Approvals . . . . 6
3.4 Capitalization . . . . . . . . . . . . . . . . . . 7
3.5 Financial Statements; Undisclosed Liabilities;
Other Documents . . . . . . . . . . . . . . . . . 7
3.6 No Material Adverse Effects or Changes . . . . . . 8
3.7 Tax Returns and Audits . . . . . . . . . . . . . . 9
3.8 Litigation . . . . . . . . . . . . . . . . . . . . 10
3.9 Compliance with Applicable Laws . . . . . . . . . 10
3.10 Contracts . . . . . . . . . . . . . . . . . . . . 11
3.11 Real Property . . . . . . . . . . . . . . . . . . 12
3.12 Personal Property . . . . . . . . . . . . . . . . 12
3.13 Employees . . . . . . . . . . . . . . . . . . . . 12
3.14 Insurance . . . . . . . . . . . . . . . . . . . . 13
3.15 Inventories . . . . . . . . . . . . . . . . . . . 13
3.16 Accounts Receivable. Schedule 3.16 . . . . . . . . 13
3.17 Employee Benefits . . . . . . . . . . . . . . . . 13
3.18 Intellectual Property . . . . . . . . . . . . . . 13
3.19 Environmental Matters . . . . . . . . . . . . . . 14
3.20 Books and Records . . . . . . . . . . . . . . . . 14
3.21 Related Party Transactions . . . . . . . . . . . . 14
3.22 Fees of Brokers, Consultants and Financial
Advisors . . . . . . . . . . . . . . . . . . . . . 15
3.23 Required Vote . . . . . . . . . . . . . . . . . . 15
3.24 General Representation and Warranty . . . . . . . 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ACQUISITION CORP. AND GIANT . . . . . . . 15
4.1 Due Incorporation . . . . . . . . . . . . . . . . 15
4.2 Due Authorization . . . . . . . . . . . . . . . . 15
4.3 Non-Contravention; Consents and Approvals . . . . 16
4.4 Capitalization . . . . . . . . . . . . . . . . . . 17
4.5 Financial Statements; Undisclosed Liabilities;
Other Documents . . . . . . . . . . . . . . . . . 17
4.6 Securities Law Filings . . . . . . . . . . . . . . 18
4.7 No Material Adverse Effects or Changes . . . . . . 18
4.8 Insurance . . . . . . . . . . . . . . . . . . . . 18
4.9 Labor Matters . . . . . . . . . . . . . . . . . . 18
4.10 Tax Returns and Audits . . . . . . . . . . . . . . 19
4.11 Litigation . . . . . . . . . . . . . . . . . . . . 19
4.12 Compliance with Applicable Laws . . . . . . . . . 19
4.13 Contracts; No Defaults . . . . . . . . . . . . . . 20
4.14 Absence of Certain Changes or Events . . . . . . . 20
4.15 Fees of Brokers, Finders and Investment Bankers . 20
4.16 General Representation and Warranty . . . . . . . 20
ARTICLE V
COVENANTS . . . . . . . . . . . . 21
5.1 Implementing Agreement . . . . . . . . . . . . . . 21
5.2 Access to Information and Facilities;
Confidentiality . . . . . . . . . . . . . . . . . 21
5.3 Preservation of Business . . . . . . . . . . . . . 21
5.4 Periscope Stockholder Approval . . . . . . . . . . 22
5.5 Consents and Approvals . . . . . . . . . . . . . . 23
5.6 Periodic Reports . . . . . . . . . . . . . . . . . 23
5.7 Publicity . . . . . . . . . . . . . . . . . . . . 23
5.8 No Negotiation. . . . . . . . . . . . . . . . . . 23
5.9 Tax-Free Status . . . . . . . . . . . . . . . . . 23
5.10 Periscope Working Capital . . . . . . . . . . . . 23
5.11 Discharge of Certain Periscope Indebtedness . . . 24
5.12 Pay-down of Periscope Factoring Line . . . . . . . 24
5.13 Termination of Periscope Initial Public Offering . 24
5.14 Termination of Periscope Initial Public Offering . 24
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF ACQUISITION CORP. AND GIANT . . . . . . 24
6.1 Warranties True as of Closing Date . . . . . . . . 24
6.2 Compliance With Agreements and Covenants . . . . . 24
6.3 Periscope Certificate . . . . . . . . . . . . . . 24
6.4 Secretary's Certificate . . . . . . . . . . . . . 25
6.5 Good Standing Certificates . . . . . . . . . . . . 25
6.6 Employment Agreement . . . . . . . . . . . . . . . 25
6.7 Opinion of Counsel . . . . . . . . . . . . . . . . 25
6.8 Approval of Merger . . . . . . . . . . . . . . . . 25
6.9 BankBoston, N.A. and BancBoston Ventures, Inc . . 25
6.10 Sands Notes . . . . . . . . . . . . . . . . . . . 25
6.11 Registration Statement . . . . . . . . . . . . . . 25
6.12 Consents and Approvals . . . . . . . . . . . . . . 25
6.13 Actions or Proceedings . . . . . . . . . . . . . . 25
6.14 Other Closing Documents . . . . . . . . . . . . . 26
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PERISCOPE . . . . . . 26
7.1 Warranties True as of Closing Date . . . . . . . . 26
7.2 Compliance with Agreements and Covenants . . . . . 26
7.3 GIANT Certificate . . . . . . . . . . . . . . . . 26
7.4 Opinion of Counsel . . . . . . . . . . . . . . . . 26
7.5 Capital Contribution . . . . . . . . . . . . . . . 26
7.6 Periscope Note . . . . . . . . . . . . . . . . . . 26
7.7 Consents and Approvals . . . . . . . . . . . . . . 26
7.8 Actions or Proceedings . . . . . . . . . . . . . . 27
7.9 Other Closing Documents. . . . . . . . . . . . . . 27
ARTICLE VIII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Termination . . . . . . . . . . . . . . . . . . . 27
8.2 Effect of Termination and Abandonment . . . . . . 28
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 No Survival . . . . . . . . . . . . . . . . . . . 28
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . 28
9.3 Amendment . . . . . . . . . . . . . . . . . . . . 28
9.4 Notices . . . . . . . . . . . . . . . . . . . . . 29
9.5 Waivers . . . . . . . . . . . . . . . . . . . . . 30
9.6 Interpretation . . . . . . . . . . . . . . . . . . 30
9.7 Applicable Law . . . . . . . . . . . . . . . . . . 30
9.8 Assignment . . . . . . . . . . . . . . . . . . . . 30
9.9 No Third Party Beneficiaries . . . . . . . . . . . 30
9.10 Enforcement of the Agreement. . . . . . . . . . . 30
9.11 Severability . . . . . . . . . . . . . . . . . . . 30
9.12 Remedies Cumulative . . . . . . . . . . . . . . . 31
9.13 Entire Understanding . . . . . . . . . . . . . . . 31
9.14 Waiver of Jury Trial . . . . . . . . . . . . . . . 31
9.15 Counterparts . . . . . . . . . . . . . . . . . . . 31
SCHEDULES
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NUMBER DESCRIPTION
3.3 Periscope Non-Contravention; Consents and Approvals.
3.6 Changes to Periscope since December 31, 1997.
3.8 Periscope Litigation.
3.9 Periscope Permits.
3.10 Periscope Contracts.
3.12 Periscope Personal Property.
3.13 Periscope Employees.
3.14 Periscope Insurance.
3.16 Periscope Accounts Receivable.
3.17 Periscope Employee Benefits.
3.18 Periscope Intellectual Property.
3.21 Periscope Related Party Transactions.
4.7 Changes to GIANT since January 1, 1998.
4.10 Tax Returns.
4.11 Litigation.
4.14 Absence of Changes.
EXHIBITS
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A. Certificate of Merger
▇. ▇▇▇▇▇ Employment Agreement
▇. ▇▇▇▇▇▇ Employment Agreement
▇. ▇▇▇▇▇▇▇▇▇ Employment Agreement
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 4,
1998, among GIANT GROUP, LTD., a Delaware corporation ("GIANT"),
GIANT PS/ACQ CORPORATION, a Delaware corporation ("Acquisition
Corp."), and PERISCOPE SPORTSWEAR, INC., a Delaware corporation
("Periscope").
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, Acquisition Corp. is a newly-formed wholly-
owned subsidiary of GIANT;
WHEREAS, GIANT desires to acquire all of the issued
and outstanding shares of Periscope Common Stock, par value $.001
per share (the "Periscope Common Stock"), through the merger of
Periscope with and into Acquisition Corp. pursuant to the terms
hereinafter set forth (the "Merger");
WHEREAS, the respective Boards of Directors of GIANT
and Acquisition Corp. deem it advisable and in the best interests
of GIANT and Acquisition Corp. that Periscope be merged with and
into Acquisition Corp. upon the terms and conditions hereinafter
specified;
WHEREAS, the Board of Directors of Periscope deems it
advisable and in the best interests of Periscope that Periscope
be merged with and into Acquisition Corp. upon the terms and
conditions hereinafter specified;
WHEREAS, for Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual
covenants and agreements hereinafter contained, the parties
hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
ADOPTION OF AGREEMENT AND PLAN OF MERGER
1.1 The Merger. At the Effective Time (as defined in
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Section 1.2 herein), in accordance with this Agreement and the
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relevant provisions of the Delaware General Corporation Law (the
"DGCL"), Periscope shall be merged with and into Acquisition
Corp. Acquisition Corp. shall be the surviving corporation of
the Merger and Acquisition Corp shall continue, and be deemed to
continue, for all purposes after the Merger, and the existence of
Periscope shall cease at the Effective Time.
1.2 Effective Date of the Merger. This Agreement
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shall be submitted for approval by the stockholders of Periscope
as provided in Section 5.4 hereof as soon as practicable after
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the execution of this Agreement. Subject to the terms and
conditions hereof and the authorization, approval and adoption
hereof by the affirmative vote of GIANT, in its capacity as the
sole stockholder of Acquisition Corp., and of the holders of
Periscope Common Stock entitled to vote thereon holding at least
a majority of the issued and outstanding shares of Periscope
Common Stock as provided by the DGCL, a Certificate of Merger
(the "Certificate of Merger") meeting the requirements of the
DGCL shall be executed and acknowledged as required by the
provisions of Section 103 of the DGCL and shall be delivered to
the Secretary of State of the State of Delaware for filing as
soon as practicable on or after the Closing Date (as defined in
Section 2.1 herein. The time of filing the Certificate of Merger
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shall be the "Effective Time" and the date of such filing shall
be the "Effective Date". The Certificate of Merger shall be in
the form of Exhibit A attached hereto.
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1.3 Surviving Corporation; Certificate of
-------------------------------------
Incorporation of Surviving Corporation. Following the Merger,
--------------------------------------
Acquisition Corp. shall continue to exist under, and be governed
by, the laws of the State of Delaware, and GIANT shall own all of
the issued and outstanding Acquisition Corp. Common Stock. The
Certificate of Incorporation and the By-Laws of Acquisition
Corp., as in effect on the Effective Date, shall continue in full
force and effect as the Certificate of Incorporation and the By-
Laws of Acquisition Corp. except that the Certificate of
Incorporation shall be amended to change the corporate name to
Periscope Sportswear, Inc.
1.4 Merger Consideration; Conversion of Periscope
---------------------------------------------
Common Stock; Cancellation of Acquisition Corp. Common Stock.
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(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Acquisition Corp., Periscope or the
holders of Periscope Common Stock, the holders of Periscope
Common Stock immediately prior to the Effective Time (the
"Periscope Stockholders") shall receive nine hundred fifty-three
thousand and ninety-three (953,093) shares of common stock, $.01
par value, of GIANT ("GIANT Common Stock"). The GIANT Common
Stock shall be the "Merger Consideration" subject to adjustment
as provided in this Section 1.4, and shall be issued from
-----------
treasury shares held by GIANT. Each Periscope Stockholder as of
the Effective Date shall be entitled to receive a number of
shares of GIANT Common Stock equal to the product of (x) a
fraction, the numerator of which shall be the number of shares of
Periscope Common Stock owned of record by such Periscope
Stockholder on the Effective Date and the denominator of which
shall be the total issued and outstanding shares of Periscope
Common Stock on the Effective Date exclusive of shares of
Periscope Common Stock to be cancelled under this Section 1.4
-----------
hereof (such fraction sometimes hereinafter referred to as the
"Fractional Interest"), multiplied by (y) 953,093. Until
surrendered in accordance with the provisions of Section 1.5
-----------
hereof, each certificate of Periscope Common Stock shall
represent, for all purposes, only the right to receive the Merger
Consideration.
(b) If between the date of this Agreement and the
Effective Time the outstanding shares of GIANT Common Stock shall
have been changed into a different number of shares or a
different class by reason of a stock dividend, subdivision,
reclassification, recapitalization, split-up or combination, the
GIANT Common Stock constituting the Merger Consideration shall be
appropriately adjusted.
(c) At the Effective Time, all shares of Periscope
Common Stock which are owned by Periscope as treasury stock shall
be canceled and retired and cease to exist.
(d) At the Effective Time, each share of Acquisition
Corp. Common Stock issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any
action on the part of GIANT, be converted into one share, par
value $.01 per share of the surviving corporation.
1.5 Exchange of Certificates. (a) As of the Effective
------------------------
Time, GIANT shall provide, or shall take all steps necessary to
provide, the aggregate number of shares of GIANT Common Stock
representing the Merger Consideration. GIANT shall, pursuant to
irrevocable instructions, make the deliveries of the Merger
Consideration required in respect of the Merger to the Periscope
Stockholders upon surrender of certificates which immediately
prior to the Effective Time represented outstanding shares of
Periscope Common Stock (the "Certificates").
(b) Promptly after the Effective Time, GIANT or an
exchange agent (the "Exchange Agent") selected by GIANT shall
mail to each record holder of an outstanding Certificate,
determined as of the Effective Date, a form letter of transmittal
(which shall specify that delivery shall be effected, and risk of
loss and title to Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent), advising
such holder of the terms of the exchange effected by the Merger
and the procedure for surrendering to the Exchange Agent such
Certificates in exchange such holder's share of the Merger
Consideration.
(c) Upon surrender of a Certificate to the Exchange
Agent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in
exchange therefor such holder's share of the Merger
Consideration, and the Certificate so surrendered shall forthwith
be canceled. Shares of GIANT Common Stock shall be delivered to
such holder as promptly as practicable and (except as hereinafter
provided) in no event later than ten (10) days after proper
delivery of the applicable Certificates and letters of
transmittal to GIANT or the Exchange Agent.
(d) All shares of GIANT Common Stock issued upon
exchange of the shares of Periscope Common Stock in accordance
with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Periscope
Common Stock, subject to Section 1.8 hereof. The certificates
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for such shares of GIANT Common Stock shall contain legends
thereon referring to restrictions on sale or other transfer by
reason of the registration requirements of the Securities Act of
1933, as amended.
(e) Neither Acquisition Corp., GIANT nor Periscope
shall be liable to any holder of shares of Periscope Common Stock
for any such shares of GIANT Common Stock delivered to a public
official pursuant to any abandoned property, escheat or similar
law. Until surrendered in accordance with the provisions of this
Section 1.5, each Certificate shall represent, for all purposes,
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only the right to receive the Merger Consideration.
1.6 No Fractional Shares. No certificates or scrip
--------------------
for fractional shares of GIANT Common Stock will be issued. In
lieu of issuing any such fractional shares to which a holder of
Periscope Common Stock would otherwise be entitled to receive,
GIANT or the Exchange Agent shall round up or down the Merger
Consideration to the nearest whole share of GIANT Common Stock.
1.7 Certificates in Other Names. If any certificate
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evidencing shares of GIANT Common Stock is to be issued in a name
other than that in which the Certificate surrendered in exchange
therefore is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the
person requesting such exchange pay to the Exchange Agent or to
GIANT acting solely in its corporate capacity, as the case may
be, any transfer or other taxes required by reason of the
issuance of a certificate for shares of GIANT Common Stock or in
any name other than that of the registered holder of the
Certificate surrendered or otherwise required or establish to the
satisfaction of the Exchange Agent or of GIANT acting solely in
its corporate capacity, as the case may be, that such tax has
been paid or is not payable.
1.8 Additional Merger Consideration. (a) In addition
-------------------------------
to the Merger Consideration, the Periscope Stockholders shall be
entitled to receive an aggregate of 225,000 additional shares of
Common Stock (the "Additional GIANT Common Stock" or "Additional
Merger Consideration") based upon the net pre-tax profits of
Periscope for the fiscal year ending December 31, 1999 (the "1999
Periscope Pre-Tax Profits"). The number of shares of Additional
GIANT Common Stock shall be equal to:
Amount of 1999 Number of
Periscope Pre-Tax Profits Shares
------------------------- ---------
less than $13.0 million -0-
from 13.0 million but less than $14.0 million 50,000
from $14.0 million but less than $15.5 million 87,500
from $15.5 million but less than $17.3 million 125,000
in excess of $17.3 million 225,000
If between the date of this Agreement and the date of delivery of
the Additional GIANT Common Stock to the Periscope Stockholders,
the outstanding shares of GIANT Common Stock shall have been
changed into a different number of shares or a different class by
reason of a stock dividend, subdivision, reclassification,
recapitalization, split-up or combination, the Additional GIANT
Common Stock constituting the Additional Merger Consideration
shall be appropriately adjusted.
(b) The accountants then auditing the 1999 financial
statements of GIANT shall calculate the 1999 Periscope Pre-Tax
Profits. For purposes of the foregoing calculation, the
accountants shall follow generally accepted accounting principals
("GAAP") consistent with the 1998 financial statements of
Periscope, subject to the following: (i) no corporate overhead
allocation of GIANT shall be charged to Periscope, (ii) no charge
shall be made for any amortization of goodwill arising from the
Merger, (iii) an interest charge at a rate of ten (10%) percent
per annum shall be charged for advances exceeding $3 million made
by GIANT or any GIANT subsidiary to Periscope, and (iv) no
interest shall be charged with respect to the indebtedness
referred to in Section 5.11 hereof or the funds provided pursuant
------------
to Section 5.12 hereof. Either of GIANT or ▇▇▇▇▇ ▇▇▇▇▇
------------
("Sands"), as representative of the Periscope Stockholders, shall
have the right to discuss with the accountants the calculation of
the 1999 Periscope Pre-Tax Profits. The accountants shall
present their calculation on or before April 30, 1999. The
calculation of the accountants shall be final and binding upon
GIANT and the Periscope Stockholders, absent mathematical error.
(c) The amount of Additional GIANT Common Stock, if
any, issuable to each Periscope Stockholder shall be equal to the
product of (x) his Fractional Interest multiplied by (y) the
aggregate number of shares of Additional GIANT Common Stock as
determined by Subsection (a) above. GIANT shall issue or cause
the issuance of any Additional GIANT Common Stock within ten (10)
days after receipt by GIANT and the Periscope Stockholders of the
accountants' report showing the calculation of the 1999 Periscope
Pre-Tax Profits pursuant to this Section.
ARTICLE II
CLOSING
2.1 Closing Date. The closing of the Merger (the
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"Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇ &
Priest LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, at
11:00 a.m., local time, on that day on which the last of the
conditions set forth in Articles VI and VII shall have been
satisfied or, if permissible, waived (other than those conditions
which by their terms are to occur only at the Closing), or on and
at such other date, time and place as GIANT, Acquisition Corp.
and Periscope may agree (the date of the Closing hereinafter
being referred to as the "Closing Date").
2.2 Deliveries at the Closing. At the Closing
-------------------------
Periscope will deliver to GIANT the various certificates,
instruments and document referred to in Article VI, and GIANT and
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Acquisition Corp. will deliver to Periscope the various
certificates, instruments and documents referred to in Article
-------
VII.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PERISCOPE
Periscope hereby represents and warrants to GIANT and
Acquisition Corp. as follows:
3.1 Due Incorporation. Periscope is a corporation
-----------------
duly organized, validly existing and in good standing under the
laws of the State of Delaware with all requisite power and
authority to own, lease and operate its properties and to conduct
its business as it is now being owned, leased, operated and
conducted. Periscope is qualified to do business and is in good
standing as a foreign corporation in the States of New Jersey and
New York, which are the only jurisdictions where the nature of
the properties owned, leased or operated by it and the business
transacted by it require such qualification. Periscope has no
direct or indirect subsidiaries, either wholly or partially
owned, and Periscope does not hold any voting or management
interest in any corporation, proprietorship, firm, partnership,
limited partnership, limited liability company, trust,
association, individual or other entity (a "Person") or own any
security issued by any Person. For purposes of information
provided in this ARTICLE III and the Schedules furnished
hereunder, where applicable, Periscope shall include its
predecessors.
3.2 Due Authorization. Periscope has full power and
-----------------
authority to enter into this Agreement and the Certificate of
Merger and, subject to obtaining the necessary approval of this
Agreement and the Merger by the stockholders of Periscope, to
consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Periscope of this
Agreement and the Certificate of Merger have been duly and
validly approved and authorized by the Board of Directors of
Periscope, and, subject to obtaining the necessary approval of
the Merger by the Periscope stockholders, the Certificate of
Merger and the transactions contemplated hereby and thereby,
Periscope has duly and validly executed and delivered this
Agreement and will duly and validly execute and deliver the
Certificate of Merger. Subject to obtaining the necessary
approval of the Periscope stockholders, this Agreement
constitutes the legal, valid and binding obligation of Periscope
and the Certificate of Merger, upon execution thereof by
Periscope, constitutes the legal, valid and binding obligation of
Periscope, in each case enforceable against Periscope in
accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, moratorium, reorganization or
other laws from time to time in effect which affect creditors'
rights generally and by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law).
3.3 Non-Contravention; Consents and Approvals.
-----------------------------------------
(a) Except to the extent set forth on Schedule 3.3, the
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execution and delivery of this Agreement by Periscope does not,
and the performance by Periscope of its obligations hereunder and
the consummation of the transactions contemplated hereby will
not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a
default under, result in or give to any person any right of
payment or reimbursement, termination, cancellation, modification
or acceleration of, or result in the creation or imposition of
any lien upon any of the assets or properties of Periscope under,
any of the terms, conditions or provisions of (i) the Certificate
of Incorporation or By-Laws of Periscope, or (ii) subject to
obtaining the necessary approval of this Agreement and the Merger
by the Periscope stockholders and the taking of the actions
described in paragraph (b) of this Section 3.3, (x) any statute,
-----------
law, rule, regulation or ordinance (together, "Laws"), or any
judgment, decree, order, writ, permit or license, of any
Governmental Entity (as defined in paragraph (b) below),
applicable to Periscope or any of its assets or properties, or
(y) any contract, agreement or commitment to which Periscope is a
party or by which Periscope or any of its assets or properties is
bound.
(b) No consent, approval, order or authorization of,
or registration, declaration or filing with any court, admini-
strative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"),
or any other Person, is required by Periscope in connection with
the execution and delivery of this Agreement and the Certificate
of Merger or the consummation by Periscope of the transactions
contemplated hereby and thereby, except for the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the requirements of the DGCL.
(c) For purposes of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvement Act of 1976, as amended (the "HSR Act"), the
"ultimate parent entity" of Periscope does not have annual net
sales or total assets of $100 million or more.
3.4 Capitalization. (a) The authorized capital stock
--------------
of Periscope consists of 30,000,000 shares of Periscope Common
Stock and 5,000,000 shares of Periscope Preferred Stock, $.001
par value. On the date hereof, there are issued and outstanding
5,059,200 shares of Periscope Common Stock, and no shares of
Periscope Preferred Stock are issued and outstanding. All of the
issued and outstanding shares of Periscope Common Stock are
validly issued, fully paid and nonassessable and the issuance
thereof was not subject to preemptive rights.
(b) Other than the 5,059,200 shares of Periscope
Common Stock mentioned in Subsection (a) above, there are no
shares of Periscope Common Stock or other equity securities
(whether or not such securities have voting rights) of Periscope
issued or outstanding or any subscriptions, options, warrants,
calls, rights, convertible securities or other agreements or
commitments of any character obligating Periscope to issue,
transfer or sell any shares of capital stock or other securities
(whether or not such securities have voting rights) of Periscope,
or agreements to enter into any of the foregoing.
3.5 Financial Statements; Undisclosed Liabilities;
-----------------------------------------------
Other Documents. (a) For purposes of this Agreement, "Periscope
---------------
Financial Statements" shall mean (x) the audited financial
statements of Periscope as of December 31, 1997 and December 31,
1996 and the fiscal years then ended (including all notes
thereto), consisting of the balance sheets at such dates and the
related statements of income, stockholders' equity and cash flows
for the years then ended (the "Periscope Audited Financial
Statements"), and (y) the unaudited financial statements of
Periscope as of September 30, 1998 and September 30, 1997
(including all notes thereto), consisting of the balance sheets
at such dates and the results of operations for the nine months
then ended (the "Periscope Interim Financial Statements"). The
Periscope Financial Statements have been prepared in accordance
with GAAP consistently applied (except as may be indicated
therein or in the notes thereto), present fairly in all material
respects the financial position of Periscope as at the dates
thereof and the results of operations, stockholders' equity and
cash flows of Periscope for the periods covered thereby (subject,
in the case of any unaudited interim financial statements, to
normal year-end adjustments), and are substantially in accordance
with the financial books and records of Periscope. The Periscope
Interim Financial Statements are in accordance with the books and
records of Periscope and have been prepared on a consistent basis
with those of prior years. The Periscope Interim Financial
Statements present fairly in all material respects Periscope's
financial position as of the dates of the Periscope Interim
Financial Statements and the results of operations for the
periods covered by these statements.
(b) Periscope does not have any liabilities or
obligations of any nature, whether accrued, absolute, contingent
or otherwise, which individually or in the aggregate could be
reasonably expected to have a Periscope Material Adverse Effect
(as defined below) except (i) as set forth on or reflected in the
balance sheet at September 30, 1998 (the "Periscope Interim
Balance Sheet") included in the Periscope Financial Statements or
(ii) liabilities and obligations incurred since September 30,
1998 in the ordinary and usual course of its business.
3.6 No Material Adverse Effects or Changes. Periscope
--------------------------------------
has not suffered any damage, destruction or Loss to any of its
assets or properties (whether or not covered by insurance) which
is having or could reasonably be expected to have a Periscope
Material Adverse Effect. "Loss" shall mean liabilities, losses,
costs, claims, damages (including consequential damages),
penalties and expenses (including attorneys' fees and expenses
and costs of investigation and litigation). A "Periscope
Material Adverse Effect" shall mean an effect on or circumstance
involving the business, operations, assets, liabilities, results
of operations, cash flows or condition (financial or otherwise)
of Periscope which is materially adverse to Periscope. Except to
the extent set forth on Schedule 3.6, since December 31, 1997,
------------
Periscope has not (i) declared, set aside or paid any dividend or
other distribution in respect of its capital stock; (ii) made any
direct or indirect redemption, purchase or other acquisition of
any shares of its capital stock or made any payment (other than
dividends) to any of its stockholders (in their capacity as
stockholders); (iii) issued or sold any shares of its capital
stock or any options, warrants or other rights to purchase any
such shares or any securities convertible into or exchangeable
for such shares or taken any action to reclassify or recapitalize
or split up its capital stock; (iv) mortgaged, pledged or
subjected to any lien, lease, security interest, encumbrance or
other restriction, any of its material properties or assets
except in the ordinary and usual course of its business and
consistent with past practice; (v) entered into any acquisition
or merger agreement or commitment; (vi) except in the ordinary
and usual course of its business and consistent with its past
practices forgiven or canceled any material debt or claim, waived
any material right; or (vii) adopted or amended any plan or
arrangement (other than amendments that are not material or that
were made to comply with laws or regulations) for the benefit of
any director, officer or employee or changed the compensation
(including bonuses) to be paid to any director, officer or
employee, except for changes made consistent with the prior
practice of Periscope.
3.7 Tax Returns and Audits. "Taxes", as used in this
---------------------- -----
Agreement, means any federal, state, county, local or foreign
taxes, charges, fees, levies, or other assessments, including all
net income, gross income, sales and use, ad valorem, transfer,
gains, profits, excise, franchise, real and personal property,
gross receipt, capital stock, production, business and
occupation, disability, employment, payroll, license, estimated,
stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes
and any expenses incurred in connection with the determination,
settlement or litigation of any tax liability. "Tax Return", as
----------
used in this Agreement, means a report, return or other
information required to be supplied to a governmental entity with
respect to Taxes, including where permitted or required, combined
or consolidated returns for any group or entities.
(a) Filing of Timely Tax Returns. Periscope has duly
----------------------------
filed all Tax Returns required to be filed by it under applicable
law and will file all Tax Returns required to be filed by it at
or prior to the Effective Date under applicable law. All Tax
Returns were in all material respects (and, as to Tax Returns not
filed as of the date hereof, will be) complete and correct and
filed on a timely basis. Periscope has not requested any
extension of time within which to file any Tax Return, which Tax
Return has not since been filed.
(b) Payment of Taxes. Periscope has, within the time
----------------
and in the manner prescribed by law, paid (and until the
Effective Date will pay within the time and in the manner
prescribed by law) all Taxes that are currently due and payable
except for those contested in good faith and for which adequate
reserves have been taken.
(c) Tax Liens. There are no Tax liens upon the assets
---------
of Periscope except liens for Taxes not yet due.
(d) Withholding Taxes. Periscope has complied (and
-----------------
until the Effective Date will comply) in all respects with the
provisions of the Code relating to the payment and withholding of
Taxes, including, without limitation, the withholding and
reporting requirements under Sections 1441 through 1464, 3401
through 3606, and 6041 and 6049 of the Code, as well as similar
provisions under any other laws, and has, within the time and in
the manner prescribed by law, withheld from employee wages and
paid over to the proper governmental authorities all amounts
required.
(e) Statute of Limitations. Periscope has not
----------------------
executed any outstanding waivers or comparable consents regarding
the application of the statute of limitations with respect to any
Taxes or Tax Returns. The statute of limitations for the
assessment of all Taxes has expired for all applicable Tax
Returns of Periscope or those Tax Returns have been examined by
the appropriate taxing authorities for all periods through the
date hereof, and no deficiency for any Taxes has been proposed,
asserted or assessed against Periscope that has not been resolved
and paid in full.
(f) Audit, Administrative and Court Proceedings. No
-------------------------------------------
audits or other administrative proceedings or court proceedings
are presently pending or, to the knowledge of Periscope,
threatened with regard to any Taxes or Tax Returns of Periscope.
No power of attorney currently in force has been granted by
Periscope concerning any Tax matter. To the knowledge of
Periscope, no facts exist or have existed which would constitute
grounds for the assessment of Taxes on Periscope with respect to
periods which have not been audited by the Internal Revenue
Service (the "IRS") or other taxing authorities and which
assessment would have a Periscope Material Adverse Effect.
(g) Code Section 341(f). Periscope has not filed (and
-------------------
will not file prior to the Closing) a consent pursuant to Code
Section 341(f) and has not agreed to have Code Section 341(f)(2)
apply to any disposition of a subsection (f) asset (as that term
is defined in Code Section 341(f)(4)) owned by Periscope.
(h) Code Section 168. No property of Periscope is
----------------
property that Periscope or any party to this transaction is or
will be required to treat as being owned by another person
pursuant to the provisions of Code Section 168(f)(8) (as in
effect prior to its amendment by the Tax Reform Act of 1986) or
is "tax-exempt use property" within the meaning of Code Section
168.
(i) U.S. Real Property Holding Corporation. Periscope
---------------------------------------
is not, and has not been, a United States real property holding
corporation (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.
3.8 Litigation. Except as described on Schedule 3.8,
---------- ------------
there are no actions, suits, arbitrations, regulatory proceedings
or other litigation, proceedings or governmental investigations
pending or, to Periscope's knowledge, threatened against or
affecting Periscope or any of its officers or directors in their
capacity as such, or any of its property or business which could
reasonably be expected to have a Periscope Material Adverse
Effect. No event has occurred or circumstance exists that may
give rise or serve as a basis for the commencement of any such
proceeding. Periscope is not subject to any order, judgment,
decree, injunction, stipulation or consent order of or with any
court or other Governmental Entity, other than orders of general
applicability.
3.9 Compliance with Applicable Laws. Periscope holds
-------------------------------
all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are required in the
operation of its business (the "Periscope Permits"), and is in
compliance with the terms of the Periscope Permits, except where
the failure so to comply would not have an Periscope Material
Adverse Effect. Schedule 3.9 is a complete and correct list of
------------
all material Periscope Permits. The entry into and consummation
of this Agreement and the Merger will not require any
modification, re-application, approval or other consent as to any
Periscope Permit. Periscope is not in violation of any law,
ordinance or regulation of any Governmental Authority, including
environmental and labor laws and regulations, except for possible
violations which individually and in the aggregate do not, and,
insofar as reasonably can be foreseen by Periscope, will not in
the future have an Periscope Material Adverse Effect. Periscope
has not at any time during the past five years (i) made any
unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or
(ii) made any payments to any foreign or United States federal,
state or local governmental officer or official, or other person
charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States
or any jurisdictions thereof.
3.10 Contracts. (a) Except for the contracts,
---------
agreements, commitments, instruments, bids and proposals to which
Periscope is a party listed on Schedule 3.10, Periscope is not a
-------------
party to or otherwise bound by any written or oral (i) mortgage,
indenture, note, installment obligation or other instrument
relating to the borrowing of money, (ii) guarantee of any
obligation (excluding endorsements of instruments for collection
in the ordinary course of business of Periscope), (iii) letter of
credit, bond or other indemnity, (iv) joint venture, partnership
or other agreement involving the sharing of profits and losses,
(v) performance of services or delivery of goods in an amount
exceeding $50,000 or which would not be completed within three
(3) months, other than purchase orders or sales orders entered
into in the ordinary course of business and consistent with prior
practices, (vi) agreement for the sale or lease by Periscope to
any person of any material amount of its assets other than the
retirement or other disposition of assets no longer useful to
Periscope or the sale of assets in the ordinary course of the
operation of Periscope, (vii) agreement requiring the payment by
Periscope of more than $50,000 in any 12-month period for the
purchase or lease of any machinery, equipment or other capital
assets, (viii) agreement providing for the lease or sublease by
Periscope (as lessor, sublessor, lessee or sublessee) of any real
property, (ix) distributor, sales representative, broker or agent
agreement, (x) collective bargaining agreement, employment or
consulting agreement or agreement providing for severance
payments or other additional rights or benefits (whether or not
optional) in the event of the sale of Periscope, (xi) agreement
requiring the payment by Periscope to any person of more than
$50,000 in any 12-month period for the purchase of services,
(xii) material warranties relating to products distributed or
services provided by Periscope, (xiii) license or sublicense
agreement (whether as licensor, licensee, sublicensor or
sublicensee) with respect to any material item of Intellectual
Property owned or licensed by Periscope, and (xiv) agreement
imposing non-competition, confidentiality or exclusive dealing
obligations on Periscope.
(b) Periscope has delivered or made available to GIANT
complete and correct copies of each written agreement listed on
Schedule 3.10 each as amended to date and a summary of the terms
-------------
of each oral agreement listed on Schedule 3.10. Each agreement
-------------
listed on Schedule 3.10 is a valid, binding and enforceable
-------------
obligation of Periscope and, to Periscope's knowledge, the other
party or parties thereto (subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar Laws affecting creditors' rights and remedies generally
and subject as to enforceability to general principles of equity,
including principles of commercial reasonableness, good faith and
fair dealing) and is in full force and effect. Except as set
forth on Schedule 3.10, (i) neither Periscope nor, to Periscope's
-------------
knowledge, any other party thereto is in material breach of any
material term of any such agreement or has repudiated any
material term of any such agreement, (ii) no event, occurrence or
condition exists (including the transactions contemplated under
this Agreement) which, with the lapse of time or the giving of
notice or both, would become a default under any such agreement
by Periscope or, to Periscope's knowledge, any other party
thereto, and (iii) Periscope has not released or waived any
material right under any contract. Periscope is not required to
give any notice to any other person who is a party to an
agreement listed on Schedule 3.10 regarding this Agreement or the
-------------
Merger.
(c) Schedule 3.10 sets forth a correct and complete
-------------
list of the ten largest customers of Periscope in terms of net
revenues during each of the 1997 fiscal year and the first nine
months of fiscal 1998, showing the approximate total net revenue
received in each such period from each such customer. Except to
the extent set forth on Schedule 3.10, since December 31, 1997,
-------------
there has not been any adverse change in the business
relationship between Periscope and any customer listed on such
Schedule.
3.11 Real Property. Periscope does not own, nor have
-------------
any right to acquire, any real property.
3.12 Personal Property. Schedule 3.12 sets forth a
----------------- -------------
complete and correct list of all personal property of Periscope
(other than inventory) not reflected on any other Schedule hereto
and having a book value exceeding $50,000. Except as set forth
on Schedule 3.12, Periscope now has and on the Closing Date will
-------------
have good and marketable title to all personal property purported
to be owned by it, free and clear of all Liens. The material
tangible assets of Periscope taken as a whole, including all
machinery and equipment, are, in all material respects, in good
condition and repair, reasonable wear and tear excepted and have
been well maintained.
3.13 Employees. Schedule 3.13 sets forth a complete and
--------- -------------
correct list of (i) all full-time and part-time employees of
Periscope, including their respective salaries, dates of hire,
positions and last salary adjustment and (ii) all bonus, deferred
compensation, severance or termination pay, insurance, medical,
dental, drug, profit sharing, pension, retirement, stock option,
stock purchase, hospitalization insurance or other material plans
or arrangements providing employee benefits to any current or
former director, officer, employee or consultant of Periscope and
all relevant vacation policies. Periscope is not a party to any
union, collective bargaining or similar agreement, and there are
no controversies pending or, to Periscope's knowledge, threatened
between Periscope and any current or former employee or any labor
or other collective bargaining unit representing any current or
former employee of Periscope that could reasonably be expected to
result in a material labor strike, dispute, slow-down or work
stoppage or otherwise have a Periscope Material Adverse Effect.
Periscope is not aware of any organizational effort presently
being made or threatened by or on behalf of any labor union with
respect to employees of Periscope. Periscope has paid or accrued
in full all wages, salaries, commissions, bonuses and other
compensation (including severance pay and vacation benefits) for
all services performed by its employees and former employees, and
has withheld such amounts as were required to be withheld
therefrom and has paid the withheld amounts to the proper tax and
other receiving officers within the time required under
applicable law.
3.14 Insurance. Schedule 3.14 sets forth a complete and
--------- -------------
correct schedule of coverage and list of all policies of
insurance owned by Periscope under which Periscope assets,
properties, operations or employees are insured (including amount
of coverage, type of insurance, amount of deductible, if any, the
policy number and expiration date), and all claims made under any
of such policies or prior policies since January 1, 1997. Since
January 1, 1997, Periscope has given due and timely notice of any
material claim and of any material occurrence known to Periscope
which may be covered by any of such policies or prior policies.
All scheduled policies are in full force and effect and are in
amounts and coverage sufficient for compliance by Periscope with
all applicable requirements of Law and all agreements to which
Periscope is a party or subject and customary in its industry.
All premiums in connection with such policies are fully paid. No
event has occurred which, with notice or lapse of time, would
constitute a breach or default thereunder or permit termination,
modification or acceleration of any policy, and no party to any
policy has repudiated any provisions thereof.
3.15 Inventories. The amounts at which the inventories
-----------
are carried on the Periscope Interim Balance Sheet and on the
books of Periscope reflect the normal valuation policy of
Periscope in accordance with GAAP. The reserves estimated for
obsolescence as of the Closing Date will be adequate to cover the
diminution in value of inventories due to obsolescence.
3.16 Accounts Receivable. Schedule 3.16 sets forth a
------------------- -------------
complete and correct list of the work-in-process and accounts
receivable of Periscope as set forth on the Periscope Interim
Balance Sheet. All accounts receivable, either shown on the
Periscope Interim Balance Sheet or which have arisen subsequent
to the Periscope Interim Balance Sheet represent sales made in
the ordinary course of business, are current and collectible and,
to Periscope's knowledge, the same will be collected in full (net
of reserve for bad debts) in the ordinary course of business and
are not subject to any claims, offsets, allowances or
adjustments.
3.17 Employee Benefits. Schedule 3.17 sets forth a
----------------- -------------
complete and correct list of each employee benefit plan that
Periscope maintains with respect to its current or former
employees or to which Periscope contributes or is obligated to
contribute with respect to any of its current or former
employees. Schedule 3.17 also identifies each benefit plan of
-------------
Periscope (the "Periscope Plans") subject to the reporting
requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), the Code and other applicable Laws.
None of the Periscope Plans is a multi-employer plan, as defined
in ERISA. Each Periscope Plan is in compliance with ERISA, the
Code and other applicable laws, including the filing of all
reports to have been filed thereunder.
3.18 Intellectual Property. Schedule 3.18 sets forth a
--------------------- -------------
complete and correct list of all of the trademarks, tradenames,
service marks, and patents (including any registrations of or
pending applications for any of the foregoing), know-how, data
bases, trade secrets and confidentiality information
(collectively, "Intellectual Property") used by Periscope in the
conduct of its business. Except as disclosed on Schedule 3.18:
-------------
(a) all of such Intellectual Property is owned by
Periscope free and clear of all liens, and is not subject to any
license, royalty or other agreement;
(b) none of such Intellectual Property has been or is
the subject of any pending or, to the best of Periscope's
knowledge, threatened litigation or claim of infringement;
(c) no license or royalty agreement to which Periscope
is a party is in breach or default by any party thereto except
where such breach or default would not have a Periscope Material
Adverse Effect or is the subject of any notice of termination
given or, to Periscope's knowledge, threatened;
(d) to Periscope's knowledge, Periscope is not
breaching or infringing any Intellectual Property of third
parties; and
(e) the Intellectual Property is sufficient for the
conduct of the business of Periscope as presently conducted.
3.19 Environmental Matters. The business and
---------------------
operations of Periscope, including the transportation, treatment,
storage, handling, transfer, disposition, recycling or receipt of
materials, complies with all applicable environmental statutes,
regulations and decrees, whether federal, state or municipal (the
"Environmental Laws"). Periscope has not received any notices to
the effect that the business carried on by Periscope or the
operation of any equipment or facilities of Periscope (including
the transportation, handling, treatment or storage of hazardous
materials thereon) is not in compliance with the requirements of
applicable Environmental Laws or is subject to any remedial
control or action or any investigation or evaluation as to
whether any remedial action is required to respond to a release
or threatened which forms part of or is adjacent to any premises
at which Periscope's business is conducted. Periscope has
performed its services for customers in material compliance with
all applicable Environmental Laws.
3.20 Books and Records. Periscope has maintained and
-----------------
preserved complete and accurate books and records for its
material transactions. The minute books of Periscope include
complete and correct minutes of all meetings of its directors,
committees and stockholders. The Periscope Certificate of
Incorporation and By-Laws previously delivered to GIANT are
current and complete. At the Closing Date, all of those books
and records will be in the possession of Periscope.
3.21 Related Party Transactions. Schedule 3.21 sets
-------------------------- -------------
forth a complete and correct list of all transactions, loans,
claims or agreements between or involving Periscope and an
officer, director, employee, consultant or stockholder of
Periscope (or any affiliate of any such person) since January 1,
1997 (excluding employment agreements included on another
Periscope Schedule to this Agreement and benefits given to all
employees of Periscope). All transactions and agreements listed
on Schedule 3.21 were on terms to Periscope no less favorable
-------------
than what Periscope would have had with unrelated third parties.
3.22 Fees of Brokers, Consultants and Financial
------------------------------------------
Advisors. Neither Periscope, nor any officer, director or
--------
employee of Periscope, has employed any broker, finder,
consultant or investment banker or incurred any liability for any
brokerage or investment banking fees, commissions or finders'
fees in connection with the transactions contemplated by this
Agreement, except to L.H. Friend, Weinress, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
Inc. ("L.H. Friend").
3.23 Required Vote. The affirmative vote of the
-------------
holders of a majority of the outstanding shares of Periscope
Common Stock, voting together as one class, is the only vote of
the Periscope stockholders required to approve this Agreement,
the Merger and the transactions contemplated herein. The
Periscope stockholders do not have appraisal rights under Section
262 of the DGCL with respect to the Merger as the Merger
Consideration consists of shares listed on a national securities
exchange.
3.24 General Representation and Warranty. Neither this
-----------------------------------
Agreement nor any schedule attached hereto or other documents and
written information furnished by or on behalf of Periscope, its
attorneys, auditors or insurance agents to GIANT in connection
with this Agreement contains any untrue statement of material
fact or omits to state any material fact necessary to make the
statements contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ACQUISITION CORP. AND GIANT
Acquisition Corp. and GIANT, jointly and severally,
hereby represent and warrant to Periscope as follows:
4.1 Due Incorporation. Each of GIANT and Acquisition
-----------------
Corp. is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with all
requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
GIANT is qualified to do business and is in good standing as a
foreign corporation in the State of California. For purposes of
information provided in this ARTICLE IV and the Schedules
furnished hereunder, where applicable GIANT shall include its
wholly-owned subsidiaries other than Acquisition Corp.
4.2 Due Authorization. Each of GIANT and Acquisition
-----------------
Corp. has full power and authority to enter into this Agreement
and the Certificate of Merger and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and
performance by GIANT of this Agreement has been duly and validly
approved by the Board of Directors of GIANT, and no other actions
or proceedings on the part of GIANT are necessary to authorize
this Agreement. The execution, delivery and performance by
Acquisition Corp. of this Agreement and the Certificate of Merger
have been duly and validly approved by the Board of Directors and
the sole stockholder of Acquisition Corp., and no other actions
or proceedings on the part of Acquisition Corp. or its
stockholder are necessary to authorize this Agreement and the
Certificate of Merger. Each of GIANT and Acquisition Corp. has
duly and validly executed and delivered this Agreement and
Acquisition Corp. will duly and validly execute and deliver on or
prior to the Closing Date) the Certificate of Merger. This
Agreement constitutes the legal, valid and binding obligations of
each of GIANT and Acquisition Corp., and the Certificate of
Merger will, upon execution, constitute the legal, valid and
binding obligation of Acquisition Corp., in each case enforceable
in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, moratorium, reorganization or
other laws from time to time in effect which affect creditors'
rights generally and by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 Non-Contravention; Consents and Approvals. (a)
-----------------------------------------
The execution and delivery of this Agreement by GIANT and
Acquisition Corp. does not, and the performance by GIANT and
Acquisition Corp. of their obligations hereunder and the
consummation of the transactions contemplated hereby will not,
conflict with, result in a violation or breach of, constitute
(with or without notice or lapse of time or both) a default
under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any
lien upon any of the assets or properties of GIANT under, any of
the terms, conditions or provisions of (i) the charter documents
or bylaws of GIANT or Acquisition Corp., or (ii) subject to the
taking of the actions described in Subsection (b) below, (x) any
Laws, or any judgment, decree, order, writ, permit or license, of
any Governmental Entity, or (y) any contract, agreement or
commitment to which GIANT is a party or by which GIANT or any of
its assets or properties is bound.
(b) No consent, approval, order or authorization of,
or registration, declaration or filing with any Governmental
Entity is required by GIANT or Acquisition Corp. in connection
with the execution and delivery of this Agreement and the
Certificate of Merger or the consummation by each of GIANT and
Acquisition Corp. of the transactions contemplated hereby and
thereby, except for:
(i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in accordance
with the requirements of the DGCL; and
(ii) filings with various state securities "blue sky"
authorities.
(c) For purposes of the HSR Act, GIANT does not have
an "ultimate parent entity."
4.4 Capitalization. (a) The authorized capital stock
--------------
of GIANT consists of (i) 12,500,000 shares of Common Stock, of
which as of the date hereof 7,265,726 shares are issued, which
consist of 2,974,055 shares outstanding and 4,291,671 shares held
in GIANT's treasury; (ii) 5,000,000 shares of Class A Common
Stock, $.01 par value per share, none of which is outstanding as
of the date hereof; and (iii) 2,000,000 shares of Preferred
Stock, none of which is outstanding as of the date hereof. The
authorized capital stock of Acquisition Corp. consists of 1,000
shares of Acquisition Corp. Common Stock, of which there are 100
shares issued and outstanding on the date hereof. All of the
issued and outstanding shares of GIANT and Acquisition Corp.
Common Stock are, and all shares of GIANT Common Stock
constituting the Merger Consideration and Additional Merger
Consideration to be issued to Periscope stockholders in the
Merger will be validly issued, fully paid and nonassessable and
the issuances thereof were not and will not be subject to
preemptive rights. As of September 30, 1998, there were
2,105,952 shares of GIANT Common Stock reserved for issuance
under outstanding stock options granted under GIANT stock option
plans (the "GIANT Derivative Securities").
(b) Except for the GIANT Derivative Securities and as
provided for in this Agreement, there are no shares of GIANT
Common Stock and Acquisition Corp. Common Stock or other equity
securities (whether or not such securities have voting rights) of
GIANT and Acquisition Corp. issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character
obligating GIANT or Acquisition Corp. to issue, transfer or sell
any shares of capital stock or other securities (whether or not
such securities have voting rights) of GIANT and Acquisition
Corp. Except to the extent provided for in this Agreement, there
are no outstanding contractual obligations of GIANT or
Acquisition Corp. which relate to the purchase, sale, issuance,
repurchase, redemption, acquisition, transfer, disposition,
holding or voting of any shares of capital stock or other
securities of each of GIANT and Acquisition Corp.
4.5 Financial Statements; Undisclosed Liabilities;
----------------------------------------------
Other Documents. (a) For purposes of this Agreement, "GIANT
---------------
Financial Statements" shall mean (x) the audited consolidated
financial statements of GIANT as of December 31, 1996 and
December 31, 1997 and for the fiscal years then ended (including
all notes thereto) which are included in the GIANT SEC Documents
(as defined in Section 4.6), and (y) the unaudited consolidated
------------
financial statements of GIANT as of September 30, 1998 and
September 30, 1997 and for the nine months then ended consisting
of the consolidated balance sheets at such dates and the related
consolidated statements of operations, stockholders' equity and
cash flows for the periods then ended. The GIANT Financial
Statements have been prepared in accordance with GAAP
consistently applied, present fairly in all material respects the
financial position, of GIANT as at the dates thereof and the
results of operations and cash flows of GIANT for the periods
covered thereby (subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments), and are
substantially in accordance with the financial books and records
of GIANT.
(b) GIANT does not have any liabilities or obligations
of any nature, whether accrued, contingent, absolute or
otherwise, which individually or in the aggregate could be
reasonably expected to have a GIANT Material Adverse Effect (as
defined below) except (i) as set forth in the balance sheet at
September 30, 1998 (the "GIANT Interim Balance Sheet") of GIANT
or (ii) liabilities or obligations incurred since September 30,
1998 in the ordinary and usual course of its business.
4.6 Securities Law Filings. The issued Common Stock
----------------------
of GIANT is listed on the New York Stock Exchange (the "NYSE").
GIANT has filed all required forms, reports and other documents
with the U.S. Securities and Exchange Commission (the "SEC")
since January 1, 1996 pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), all of
which complied when filed, in all material respects, with all
applicable requirements of the Exchange Act. GIANT has
heretofore delivered to Periscope complete and correct copies of
(i) its Annual Report on Form 10-K for the year ended December
31, 1997, (ii) its Annual Report to Stockholders for the 1997
fiscal year, (iii) Form 10-Q for the fiscal quarter ended
September 30, 1998; (iv) Forms 8-K filed since January 1, 1998
and (v) Proxy Statement, dated April 30, 1998, as filed with the
SEC (together, the "GIANT SEC Documents").
4.7 No Material Adverse Effects or Changes. Except as
--------------------------------------
listed on Schedule 4.7, or as disclosed in or reflected in the
------------
GIANT Financial Statements included in the GIANT SEC Documents,
or as contemplated by this Agreement, since January 1, 1998,
neither GIANT nor any of its wholly-owned subsidiaries (GIANT and
such subsidiaries sometimes collectively, the "GIANT Companies")
has suffered any damage, destruction or Loss to any of its assets
or properties (whether or not covered by insurance) which is
having or could be expected to have a GIANT Material Adverse
Effect. A "GIANT Material Adverse Effect" shall mean an effect
on or circumstances involving the business, operations, assets,
liabilities, results of operations, cash flows or condition
(financial or otherwise) which is materially adverse to the GIANT
Companies, taken as a whole.
4.8 Insurance. The GIANT Companies are insured with
---------
reputable insurers against all risks and in such amounts normally
insured against by companies of the same type and in the same
line of business as the GIANT Companies.
4.9 Labor Matters. Each of the GIANT Companies has
-------------
conducted and currently is conducting, its respective business in
full compliance with all laws relating to employment and
employment practices, terms and conditions of employment, wages
and hours and nondiscrimination in employment except where such
failure to be in compliance would not have a GIANT Material
Adverse Effect. The relationship of the GIANT Companies with its
respective employees is generally satisfactory, and there is, and
during the past three years there has been, no labor strike,
dispute, slow-down, work stoppage or other labor difficulty
pending or, to GIANT's knowledge, threatened against or involving
the GIANT Companies. None of the employees of the GIANT
Companies are covered by any collective bargaining agreement, no
collective bargaining agreement is currently being negotiated by
the GIANT Companies and to GIANT's knowledge, no attempt is
currently being made or during the past three years has been made
to organize any employees of the GIANT Companies to form or enter
a labor union or similar organization.
4.10 Tax Returns and Audits. Except as set forth in
----------------------
Schedule 4.10, each of the GIANT Companies has duly filed all
-------------
United States, state, local and foreign Tax Returns required to
be filed by it, except where the failure to so file would not
have a GIANT Material Adverse Effect. GIANT has duly paid
(except for Taxes being contested in good faith) or made adequate
provisions on its books in accordance with GAAP for the payment
of all Taxes which have been incurred or are due and payable, by
the GIANT Companies, and GIANT will on or before the Effective
Time of the Merger make adequate provision on its books in
accordance with GAAP for all Taxes payable for any period through
the Effective Time of the Merger for which no return is required
to be filed prior to the Effective Time. Except as set forth in
Schedule 4.10, since January 1, 1996 the Tax Returns of the GIANT
-------------
Companies have not been examined by the IRS or other taxing
authority, nor has any of the GIANT Companies granted or given
any extensions or waivers of the statute of limitations with
respect to any such federal and state income tax returns since
January 1, 1996. GIANT is not aware of any basis for the
assertion of any deficiency against any of the GIANT Companies
for Taxes, which, if adversely determined, would have a GIANT
Material Adverse Effect.
4.11 Litigation. (a) Except as disclosed in
----------
Schedule 4.11 or in the GIANT SEC Documents, there are no
-------------
actions, suits, arbitrations, regulatory proceedings or other
litigation, proceedings or governmental investigations pending
or, to GIANT's knowledge, threatened against or affecting any of
the GIANT Companies or any of their respective officers or
directors in their capacity as such, or any of their respective
properties or businesses which could reasonably be expected to
have a GIANT Material Adverse Effect. No GIANT Company is
subject to any order, judgment, decree, injunction, stipulation
or consent order of or with any court or other Governmental
Entity, other than orders of general applicability. Except as
set forth on Section 4.11, since January 1, 1997, none of the
------------
GIANT Companies has entered into any agreement to settle or
compromise any proceeding pending or threatened against it which
has involved any obligation other than the payment of money or
for which it has any continuing obligation.
(b) There are no claims, actions, suits, proceedings,
or investigations pending or, to GIANT's knowledge, threatened by
or against any of the GIANT Companies with respect to this
Agreement or the Certificate of Merger, or in connection with the
transactions contemplated hereby or thereby.
4.12 Compliance with Applicable Laws. Each of the
-------------------------------
GIANT Companies holds all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities
which are required in the operation of its respective business
(the "GIANT Permits") except for those the failure of which to
hold would not have a GIANT Material Adverse Effect. The GIANT
Companies are in compliance with the terms of the GIANT Permits,
except where the failure to comply would not have a GIANT
Material Adverse Effect. To GIANT's knowledge, none of the GIANT
Companies is in violation of any law, ordinance or regulation of
any Governmental Authority, including environmental laws and
regulations, except for possible violations which individually
and in the aggregate do not, and, insofar as reasonably can be
foreseen by GIANT, will not in the future have a GIANT Material
Adverse Effect.
4.13 Contracts; No Defaults. Neither any GIANT Company
----------------------
nor to GIANT's knowledge any other party thereto, is in breach or
violation of, or in default in the performance or observance of
any term or provision of, and no event has occurred or by reason
of this Agreement or the Merger would occur which, with notice or
lapse of time or both, could be reasonably expected to result in
a default under, any contract, agreement or commitment to which
any GIANT Company is a party or by which any GIANT Company or any
of its assets or properties is bound, except for breaches,
violations and defaults which are not having and could not be
reasonably expected to have a GIANT Material Adverse Effect.
None of the GIANT Companies is required to give any notice to any
person regarding this Agreement or the Certificate of Merger or
the transactions contemplated hereby or thereby.
4.14 Absence of Certain Changes or Events. Except as
------------------------------------
disclosed in the GIANT SEC Documents filed prior to the date of
this Agreement or in Schedule 4.14 hereto, since January 1, 1998,
-------------
GIANT has not (i) declared, set aside or paid any dividend or
other distribution in respect of its capital stock; (ii) made any
direct or indirect redemption, purchase or other acquisition of
any shares (other than purchases in connection with the exercise
of options) of its capital stock or made any payment (other than
dividends) to any of its stockholders (in their capacity as
stockholders); (iii) issued or sold any shares of its capital
stock or any options, warrants or other rights to purchase any
such shares or any securities convertible into or exchangeable
for such shares or taken any action to reclassify or recapitalize
or split up its capital stock; (iv) mortgaged, pledged or
subjected to any lien, lease, security interest, encumbrance or
other restriction, any of its material properties or assets
except in the ordinary and usual course of its business and
consistent with past practice; (v) entered into any acquisition
or merger agreement or commitment, (vi) except in the ordinary
and usual course of its business and consistent with its past
practices forgiven or canceled any material debt or claim, waived
any material right; or (vii) adopted or amended any plan or
arrangement (other than amendments that are not material or that
were made to comply with laws or regulations) for the benefit of
any director, officer or employee or changed the compensation
(including bonuses) to be paid to any director, officer or
employee, except for changes made consistent with the prior
practice of GIANT.
4.15 Fees of Brokers, Finders and Investment Bankers.
-----------------------------------------------
Neither GIANT nor any officer, director or employee of GIANT has
employed any broker, finder or investment banker or incurred any
liability for any brokerage or investment banking fees,
commissions or finders' fees in connection with the transactions
contemplated by this Agreement, except to L.H. Friend.
4.16 General Representation and Warranty. Neither this
-----------------------------------
Agreement nor any schedule attached hereto or other documents and
written information furnished by or on behalf of GIANT, its
attorneys, auditors or insurance agents to Periscope in
connection with this Agreement contains any untrue statement of
material fact or omits to state any material fact necessary to
make the statements contained herein or therein not misleading.
ARTICLE V
COVENANTS
5.1 Implementing Agreement. Subject to the terms and
----------------------
conditions hereof, each party hereto shall use its best efforts
to take all action required of it to fulfill its obligations
under the terms of this Agreement and to facilitate the
consummation of the transactions contemplated hereby.
5.2 Access to Information and Facilities;
-------------------------------------
Confidentiality. (a) From and after the date of this
---------------
Agreement, Periscope shall give GIANT and Acquisition Corp. and
their representatives access during normal business hours and
upon reasonable notice to all of the facilities, properties,
books, contracts, commitments and records of Periscope and shall
make the officers and employees of Periscope available to GIANT
and Acquisition Corp. and their representatives as GIANT or
Acquisition Corp. or their representatives shall from time to
time reasonably request. GIANT and Acquisition Corp. and their
representatives will be furnished with any and all information
concerning Periscope which GIANT or Acquisition Corp. or their
representatives reasonably request. The obligations set forth in
this Section 5.2 shall also apply to GIANT and Acquisition Corp.,
-----------
mutatis mutandis. The investigation by and knowledge of
------- --------
Periscope or GIANT and the furnishing of information to each
other shall not affect the right of such party to rely on the
representations, warranties, covenants and agreements of the
other party hereto.
(b) Each of Periscope, on one hand, and GIANT and
Acquisition Corp., on the other hand, agrees for itself, and its
respective representatives, to keep confidential all information
furnished to it pursuant to this Section 5.2, except for
-----------
information which is public or which is disclosed other than by a
person subject to this Section 5.2(b).
--------------
5.3 Preservation of Business. (a) From the date of
------------------------
this Agreement until the Closing Date, each of Periscope and
GIANT shall operate only in the ordinary and usual course of
business consistent with past practice, and shall use reasonable
commercial efforts to (i) preserve intact its business
organization, (ii) preserve the good will and advantageous
relationships with customers, suppliers, independent contractors,
employees and other persons material to the operation of its
business, and (iii) not permit any action or omission which would
cause any of the representations or warranties contained herein
to become inaccurate or any of the covenants to be breached in
any material respect.
(b) Periscope further covenants that prior to the
Closing Date Periscope shall not, without the prior written
consent of GIANT (which shall not be unreasonably withheld):
(i) take any action, incur any obligation or enter
into or authorize any contract or transaction other than in the
ordinary course of business;
(ii) issue, sell, deliver or agree or commit to issue,
sell or deliver (whether through the issuance or granting of
options, warrants, convertible or exchangeable securities,
commitments, subscriptions, rights to purchase or otherwise) any
shares of its capital stock or any other securities, or amend any
of the terms of any such securities;
(iii) split, combine, or reclassify any shares of
its capital stock, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem
or otherwise acquire any of its securities;
(iv) make any changes in its accounting systems,
policies, principles or practices except as may be required by
law or GAAP;
(v) make any material Tax election or settle or
compromise any material federal, state, local or foreign income
Tax liability, or waive or extend the statute of limitations in
respect of any such Taxes; or
(vi) terminate, modify, amend or otherwise alter or
change in any material respect, any of the terms or provisions of
any material Contract except in the ordinary course of business
consistent with past practices.
(c) Each of Periscope and GIANT will promptly notify
the other in writing upon becoming aware of any fact or condition
which would constitute a breach or non-compliance of this
covenant.
5.4 Periscope Stockholder Approval. As soon as
------------------------------
practicable after the date hereof, Periscope shall either call a
stockholders meeting (the "Periscope Stockholders Meeting") at
which approval of this Agreement and the Merger will be voted
upon or prepare a written consent (the "Periscope Stockholders
Consent") in accordance with Sections 228 and 251 of the DGCL in
which the holders of at least a majority of the outstanding
Periscope Common Stock would approve this Agreement and the
Merger. Subject to fiduciary obligations of the Periscope Board
of Directors, the Periscope Board of Directors shall recommend
approval to its stockholders of this Agreement and the Merger and
use its best efforts to obtain such approval. At the request of
Periscope, GIANT shall furnish to Periscope such information
regarding GIANT and Acquisition Corp. as may reasonably be
necessary for inclusion in any proxy statement. Periscope agrees
to provide GIANT with drafts of any proxy statement or consent
solicitation material or notice of action taken by Periscope
Stockholders Consent. If Periscope is to act by consent, it shall
send the Periscope Stockholders Consent to all of its
stockholders of record. Simultaneously with the execution of
this Agreement, Periscope has provided GIANT with the agreement
of Sands to vote his shares of Periscope Common Stock in favor of
the Merger or to execute a Periscope Stockholders Consent.
5.5 Consents and Approvals. Subject to the terms and
----------------------
conditions provided herein, each of the parties hereto shall use
reasonable commercial efforts to obtain all consents, approvals,
certificates and other documents required in connection with the
performance by it of this Agreement and the consummation of the
transactions contemplated hereby, in addition to the approval of
Periscope Stockholders. As soon as practicable after the date
hereof, each of the parties hereto shall make all filings,
applications, statements and reports to all Governmental
Authorities and other Persons which are required to be made prior
to the Closing Date pursuant to any applicable law or contract in
connection with this Agreement and the transactions contemplated
hereby.
5.6 Periodic Reports. Until the Effective Time, GIANT
----------------
will furnish to Periscope all filings made with the NYSE and the
SEC after the date hereof, in each case within two (2) business
days after the time of such filings.
5.7 Publicity. Prior to issuing any public
---------
announcement or statement with respect to the transactions
contemplated hereby and prior to making any filing with any
Federal or state governmental or regulatory agency or with the
NYSE with respect thereto, GIANT and Periscope will, subject to
their respective legal obligations, consult with each other and
will allow each other to review the contents of any such public
announcement or statement and any such filing. Subject to the
preceding sentence, GIANT and Periscope each agrees to furnish to
the other copies of all other public announcements they may make
concerning their respective business and operations promptly
after such public announcements are made.
5.8 No Negotiation. Periscope agrees that it shall
--------------
not, after the date hereof and prior to the Effective Time, seek,
directly or through agents, representatives or affiliates (as
defined in the Exchange Act), or permit any of its officers or
directors to seek (whether in their capacities as officers or
directors or in their individual capacities) any person or
persons (other than GIANT or its affiliates), to acquire or
purchase all or substantially all of its assets or to purchase or
otherwise acquire any of its capital stock. Periscope shall not
acquire or purchase in one or more related transactions the
capital stock or related assets of persons (other than GIANT or
its affiliates) or to effect a consolidation or merger (other
than the Merger) or other business combination or
recapitalization, or to enter into any discussions or agreements
with respect to any of the foregoing transactions.
5.9 Tax-Free Status. No party hereto shall, nor shall
---------------
any party permit any of its subsidiaries to, take any actions
which would, or would be reasonably likely to, adversely affect
the status of the Merger as a tax-free transaction under Code
Section 368(a).
5.10 Periscope Working Capital. On the later of ten
-------------------------
(10) days from the Effective Date or December 31, 1998, GIANT
shall provide Periscope with an interest-free cash advance, or
shall make a cash contribution to Periscope, in the amount of
$3.0 million for working capital purposes. Any amounts in excess
of $3.0 million which are advanced or contributed by GIANT to
Periscope for working capital purposes shall, at the option of
GIANT, accrue interest at the rate of ten (10%) percent per
annum.
5.11 Discharge of Certain Periscope Indebtedness.
-------------------------------------------
GIANT shall enter into an agreement with BankBoston, N.A.
("BBNA"), and BancBoston Ventures, Inc. ("BBVI"), pursuant to
which, immediately prior to the Effective Time, (a) BBNA shall
transfer and assign to GIANT Periscope's $13.5 million term loan
to BBNA, and release Periscope and its guarantors from all of
their respective obligations thereunder, for a purchase price of
$13.5 million, plus accrued interest, and (b) BBVI shall transfer
and assign to GIANT Periscope's $3.0 million term loan to BBVI,
and shall release Periscope from all of its obligations
thereunder, for a purchase price of $3.6 million, plus accrued
interest.
5.12 Pay-down of Periscope Factoring Line. On the
------------------------------------
later of ten (10) days following the Effective Date or December
31, 1998, GIANT shall make a cash contribution to Periscope in an
amount sufficient to enable Periscope to repay $9.0 million of
the then outstanding amount under its accounts receivable
factoring line with The CIT Group.
5.13 Termination of Periscope Initial Public Offering.
------------------------------------------------
On or before the Effective Date, Periscope shall take all action
necessary to terminate its SEC registration statement for a
proposed initial public offering of Periscope Common Stock.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF ACQUISITION CORP. AND GIANT
The obligations of Acquisition Corp. and GIANT to
consummate the Merger are subject to the fulfillment or waiver by
Acquisition Corp. and GIANT at or before the Closing of each of
the following conditions:
6.1 Warranties True as of Closing Date. Each of the
----------------------------------
representations and warranties of Periscope contained herein
shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on
and as of the Closing Date.
6.2 Compliance With Agreements and Covenants.
----------------------------------------
Periscope shall have performed and complied with in all material
respects all of its covenants, obligations and agreements
contained in this Agreement to be performed and complied with by
Periscope on or prior to the Closing Date.
6.3 Periscope Certificate. Periscope shall have
---------------------
delivered to GIANT a certificate, dated the Closing Date, from
its Chief Executive Officer and Chief Financial Officer
certifying that each of the conditions specified in Section 6.1
-----------
and Section 6.2 hereof are satisfied in all respects.
-----------
6.4 Secretary's Certificate. Periscope shall have
-----------------------
delivered to GIANT a certificate of the duly authorized Secretary
of Periscope, dated the Closing Date, certifying resolutions of
the Periscope Board of Directors and stockholders authorizing the
execution, delivery and performance of this Agreement, the
Certificate of Merger and the Merger.
6.5 Good Standing Certificates. Periscope shall have
--------------------------
delivered to GIANT at the Closing certificates of good standing
and tax status from the States of Delaware, New York and New
Jersey as to Periscope, which Certificates shall be dated a date
not more than five (5) business days prior to the Closing Date.
6.6 Employment Agreement. Periscope shall have
--------------------
delivered to GIANT fully executed employment agreements between
Periscope and Sands, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
respectively, substantially in the forms of Exhibits B, C, and D.
-------- - - -
attached hereto.
6.7 Opinion of Counsel. Periscope shall have
------------------
delivered to GIANT a legal opinion of Morse, Zelnick, Rose &
Lander, LLP in form and substance reasonably satisfactory to
GIANT and its counsel.
6.8 Approval of Merger. The Periscope Stockholders
------------------
shall have approved this Agreement and the Merger contemplated
hereby in accordance with the Periscope Certificate of
Incorporation and by-laws and the DGCL.
6.9 BankBoston, N.A. and BancBoston Ventures, Inc.
---------------------------------------------
BBNA and BBVI shall have closed their agreement with GIANT as
provided for in Section 5.11 hereof and the consideration
------------
thereunder shall have been duly delivered.
6.10 Sands Notes. Sands shall have delivered to GIANT
-----------
two executed promissory notes, one note in the principal amount
of $1.7 million due on December 31, 1999 and the other note in
the principal amount of $906,000 payable in three annual
installments of $302,000, commencing on December 31, 1999 and
continuing through December 31, 2001, neither note shall be
interest bearing, and which notes shall be in a form and
substance reasonably satisfactory to GIANT.
6.11 Registration Statement. Periscope shall have
----------------------
delivered to GIANT evidence of the withdrawal of the registration
statement as provided for in Section 5.13 hereof.
------------
6.12 Consents and Approvals. GIANT shall have received
----------------------
written evidence satisfactory to it that all consents and
approvals required for the consummation of the transactions
contemplated hereby have been obtained, and all required filings
have been made, except where the failure to obtain any such
consent or approval or to make any such filing would not have an
Periscope Material Adverse Effect or a GIANT Material Adverse
Effect.
6.13 Actions or Proceedings. No preliminary or
----------------------
permanent injunction or other order by any federal or state court
preventing consummation of the Merger shall have been issued and
shall be continuing in effect, and the Merger and the other
transactions contemplated hereby shall not be prohibited under
any applicable federal or state law or regulation.
6.14 Other Closing Documents. GIANT shall have
-----------------------
received the executed Certificate of Merger and such other
agreements and instruments as GIANT shall reasonably request, in
each case in form and substance reasonably satisfactory to GIANT.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PERISCOPE
The obligations of Periscope to consummate the Merger
are subject to the fulfillment or waiver by Periscope at or
before the Closing of each of the following conditions:
7.1 Warranties True as of Closing Date. Each of the
----------------------------------
representations and warranties of Acquisition Corp. and GIANT
contained herein shall be true and correct in all material
respects on and as of the Closing Date with the same force and
effect as though made by Acquisition Corp. and GIANT on and as of
the Closing Date.
7.2 Compliance with Agreements and Covenants.
----------------------------------------
Acquisition Corp. and GIANT shall have performed and complied
with in all material respects all of their covenants, obligations
and agreements contained in this Agreement, to be performed and
complied with by them on or prior to the Closing Date.
7.3 GIANT Certificate. GIANT shall have delivered to
-----------------
Periscope a certificate, dated the Closing Date, from its Chief
Executive Officer and Chief Financial Officer certifying that
each of the conditions specified in Section 7.1 and Section 7.2
----------- -----------
hereof are satisfied in all respects.
7.4 Opinion of Counsel. GIANT shall have delivered to
------------------
Periscope a legal opinion of ▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP in form and
substance reasonably satisfactory to Periscope and its counsel.
7.5 Capital Contribution. BBVI shall have contributed
--------------------
1,586,000 shares of Periscope Common Stock to the capital of
Periscope.
7.6 Periscope Note. GIANT shall have caused Periscope
--------------
to deliver to Sands a promissory note payable to the order of
Sands in the principal amount of $2.0 million, payable in five
annual installments of $400,000, commencing on December 1, 1999
and continuing through December 1, 2003, without interest, and
which note shall be in a form and substance reasonably
satisfactory to Sands.
7.7 Consents and Approvals. Periscope shall have
----------------------
received written evidence satisfactory to it that all consents
and approvals required for the consummation of the transactions
contemplated hereby have been obtained, and all required filings
have been made, except where the failure to obtain any such
consent or approval or to make any such filing would not have an
Periscope Material Adverse Effect or a GIANT Material Adverse
Effect.
7.8 Actions or Proceedings. No preliminary or
----------------------
permanent injunction or other order by any federal or state court
preventing consummation of the Merger shall have been issued and
shall be continuing in effect, and the Merger and the other
transactions contemplated hereby shall not be prohibited under
any applicable federal or state law or regulation.
7.9 Other Closing Documents. Periscope shall have
-----------------------
received such other agreements and instruments as Periscope shall
reasonably request, in each case in form and substance reasonably
satisfactory to Periscope.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated and
-----------
the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval by the Periscope
stockholders:
(a) by mutual written consent of the Board of
Directors of GIANT and the Board of Directors of Periscope;
(b) by either GIANT or Periscope, by written notice to
the other, if (i) the Effective Time shall not have occurred on
or before January 31, 1999, or (ii) any court of competent
jurisdiction in the United States or any state shall have issued
an order, judgment or decree (other than a temporary restraining
order) restraining, enjoining or otherwise prohibiting the Merger
and such order, judgment or decree shall have become final and
non-appealable; provided, however, that the right to terminate
this Agreement (X) under clause (i) shall not be available to any
party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of
the Effective Time to occur on or before such date or (Y) under
clause (ii) shall not be available to any party unless such party
shall have used all reasonable efforts to remove such order,
judgment or decree;
(c) by GIANT, by written notice to Periscope, if:
(i) there shall have been any breach of any
representation, warranty, covenant or agreement of
Periscope hereunder which, if not remedied prior to the
Closing Date, would have a Periscope Material Adverse
Effect and such breach shall not have been remedied, or
Periscope shall not have provided GIANT with reasonable
assurance that such breach will be remedied prior to
the Closing Date, within five (5) business days after
receipt by Periscope of notice in writing from GIANT,
specifying the nature of such breach and requesting
that it be remedied; or
(ii) the Board of Directors of Periscope shall
withdraw or modify in any manner adverse to GIANT its
approval of this Agreement or the Merger.
(d) by Periscope, by written notice to GIANT, if:
(i) there shall have been any breach of any
representation, warranty, covenant or agreement of
GIANT hereunder which, if not remedied prior to the
Closing Date, would have a GIANT Material Adverse
Effect and such breach shall not have been remedied or
GIANT shall not have provided Periscope with reasonable
assurance that such breach will be remedied prior to
the Closing Date, within five (5) business days after
receipt by GIANT of notice in writing from Periscope,
specifying the nature of such breach and requesting
that it be remedied; or
(ii) the Board of Directors of GIANT shall
withdraw or modify in any manner adverse to Periscope
its approval of this Agreement or the Merger.
8.2 Effect of Termination and Abandonment. In the
-------------------------------------
event of termination of this Agreement and abandonment of the
Merger pursuant to this Article VIII, this Agreement shall
------------
forthwith become void and no party hereto (or any of its
directors, officers or stockholders) shall have any liability or
further obligation to any other party to this Agreement, except
that nothing herein will relieve any party from liability for any
breach of any of its representations or warranties under this
Agreement or its failure to comply with one of its covenants,
agreements or obligations under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 No Survival. The representations and warranties
-----------
made by the parties hereto and contained in this Agreement shall
not survive the Effective Time of the Merger. The covenants and
agreements made by the parties hereto and contained in this
Agreement shall survive in accordance with their terms.
9.2 Expenses. Each party hereto shall bear its own
--------
expenses with respect to the transactions contemplated hereby.
9.3 Amendment. This Agreement may not be amended,
---------
modified or supplemented except by a writing executed by
Acquisition Corp., GIANT and Periscope.
9.4 Notices. Any notice, request, instruction or
-------
other document to be given hereunder by a party hereto shall be
in writing and shall be deemed to have been given, (a) when
received if given in person, (b) on the date of transmission if
sent by telex, facsimile or other wire transmission (with receipt
confirmed) or (c) three business days after being deposited in
the U.S. mail, certified or registered mail, postage prepaid:
(a) If to Periscope:
Periscope Sportswear, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, President and Chief
Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Morse, Zelnick, Rose & Lander, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to GIANT or Acquisition Corp.
GIANT GROUP, LTD.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other individual or address as a party hereto may
designate for itself by notice given as herein provided.
9.5 Waivers. The failure of a party hereto at any
-------
time or times to require performance of any provision hereof
shall in no manner affect its right at a later time to enforce
the same. No waiver by a party of any condition or of any breach
of any term, covenant, representation or warranty contained in
this Agreement shall be effective unless in writing, and no
waiver in any one or more instances shall be deemed to be a
further or continuing waiver of any such condition or breach in
other instances or a waiver of any other condition or breach of
any other term, covenant, representation or warranty.
9.6 Interpretation. The headings preceding the text
--------------
of Articles and Sections included in this Agreement and the
headings to Schedules attached to this Agreement are for
convenience only and shall not be deemed part of this Agreement
or be given any effect in interpreting this Agreement. The use
of the masculine, feminine or neuter gender herein shall not
limit any provision of this Agreement. The use of the terms
"including" or "include" shall in all cases herein mean
"including, without limitation" or "include, without limitation,"
respectively. Underscored references to Articles, Sections,
Subsections, Schedules or Exhibits shall refer to those portions
of this Agreement. Prior drafts of this Agreement shall not be
considered in interpreting the rights and obligations of the
parties hereunder.
9.7 Applicable Law. This Agreement shall be governed
--------------
by and construed and enforced in accordance with the internal
laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
9.8 Assignment. This Agreement shall be binding upon
----------
and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no
assignment of any rights or obligations shall be made by any
party without the prior written consent of all the other parties
hereto.
9.9 No Third Party Beneficiaries. This Agreement is
----------------------------
solely for the benefit of the parties hereto and, to the extent
provided herein, and their respective directors, officers,
employees, agents and representatives, and no provision of this
Agreement shall be deemed to confer upon other third parties any
remedy, claim, liability, reimbursement, cause of action or other
right.
9.10 Enforcement of the Agreement. The parties hereto
----------------------------
agree that irreparable damage would result in the event that any
provision of this Agreement is not performed in accordance with
specific terms or is otherwise breached. It is accordingly
agreed that the parties hereto will be entitled to equitable
relief including an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and
provisions hereof.
9.11 Severability. If any provision of this Agreement
------------
shall be held invalid, illegal or unenforceable, the validity,
legality or enforceability of the other provisions hereof shall
not be affected thereby, and there shall be deemed substituted
for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
9.12 Remedies Cumulative. The remedies provided in
-------------------
this Agreement shall be cumulative and shall not preclude the
assertion or exercise of any other rights or remedies available
by law, in equity or otherwise.
9.13 Entire Understanding. This Agreement and the
--------------------
Certificate of Merger set forth the entire agreement and
understanding of the parties hereto and supersede all prior
agreements, arrangements and understandings among the parties
hereto.
9.14 Waiver of Jury Trial. EACH PARTY HERETO WAIVES
--------------------
THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE
CERTIFICATE OF MERGER, AND AGREES TO TAKE ANY AND ALL ACTION
NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
9.15 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
[SIGNATURE PAGE ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above
written.
GIANT GROUP, LTD.
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
GIANT PS/ACQ CORPORATION
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
PERISCOPE SPORTSWEAR, INC.
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President and Chief
Executive Officer