AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TROPICAL SPORTSWEAR INT'L CORPORATION,
HB ACQUISITION CORP.
AND
DUCK HEAD APPAREL COMPANY, INC.
Dated as of June 26, 2001
TABLE OF CONTENTS
Page
Article 1. THE OFFER..............................................................................................2
1.1 THE OFFER................................................................................................2
1.2 TARGET ACTION............................................................................................3
1.3 DIRECTORS................................................................................................4
Article 2. TRANSACTIONS AND TERMS OF MERGER.......................................................................5
2.1 MERGER. ................................................................................................ 5
2.2 TIME AND PLACE OF CLOSING................................................................................6
2.3 EFFECTIVE TIME...........................................................................................6
Article 3. TERMS OF MERGER........................................................................................6
3.1 CHARTER..................................................................................................6
3.2 BYLAWS...................................................................................................6
3.3 DIRECTORS AND OFFICERS...................................................................................6
Article 4. MANNER OF CONVERTING SHARES............................................................................7
4.1 CONVERSION OF SHARES.....................................................................................7
4.2 DISSENTING SHAREHOLDERS..................................................................................7
4.3 CONVERSION OF STOCK OPTIONS..............................................................................7
Article 5. EXCHANGE OF SHARES.....................................................................................8
5.1 EXCHANGE PROCEDURES......................................................................................8
5.2 RIGHTS OF FORMER TARGET SHAREHOLDERS.....................................................................9
Article 6. REPRESENTATIONS AND WARRANTIES OF TARGET...............................................................9
6.1 ORGANIZATION, STANDING, AND POWER........................................................................9
6.2 AUTHORITY OF TARGET; NO BREACH BY AGREEMENT.............................................................10
6.3 CAPITAL STOCK...........................................................................................10
6.4 TARGET SUBSIDIARIES.....................................................................................11
6.5 SEC FILINGS; FINANCIAL STATEMENTS.......................................................................12
6.6 ABSENCE OF UNDISCLOSED LIABILITIES......................................................................12
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS....................................................................13
6.8 TAX MATTERS.............................................................................................13
6.9 ASSETS..................................................................................................15
6.10 INTELLECTUAL PROPERTY.................................................................................16
6.11 ENVIRONMENTAL MATTERS.................................................................................16
6.12 COMPLIANCE WITH LAWS..................................................................................17
6.13 LABOR RELATIONS.......................................................................................18
6.14 EMPLOYEE BENEFIT PLANS................................................................................19
6.15 MATERIAL CONTRACTS....................................................................................22
6.16 LEGAL PROCEEDINGS.....................................................................................22
6.17 REPORTS...............................................................................................23
6.18 STATEMENTS TRUE AND CORRECT...........................................................................23
6.19 STATE TAKEOVER LAWS...................................................................................23
6.20 CHARTER PROVISIONS....................................................................................24
6.21 RIGHTS AGREEMENT......................................................................................24
6.22 OPINION OF FINANCIAL ADVISOR..........................................................................24
6.23 BOARD RECOMMENDATION..................................................................................24
6.24 CONSENT...............................................................................................24
6.25 PRIVACY OF CUSTOMER INFORMATION.......................................................................25
6.26 TENDER AND OPTION AGREEMENTS..........................................................................25
Article 7. REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................25
7.1 ORGANIZATION, STANDING AND POWER........................................................................25
7.2 AUTHORITY; NO BREACH BY AGREEMENT.......................................................................25
7.3 STATEMENTS TRUE AND CORRECT.............................................................................26
7.4 AUTHORITY OF SUB........................................................................................27
Article 8. CONDUCT OF BUSINESS PENDING CONSUMMATION..............................................................27
8.1 AFFIRMATIVE COVENANTS OF TARGET.........................................................................27
8.2 NEGATIVE COVENANTS OF TARGET..............................................................................
8.3 COVENANTS OF BUYER......................................................................................29
8.4 ADVERSE CHANGES IN CONDITION............................................................................29
8.5 REPORTS.................................................................................................30
Article 9. ADDITIONAL AGREEMENTS.................................................................................30
9.1 SHAREHOLDER APPROVAL; PROXY STATEMENT...................................................................30
9.2 OTHER OFFERS, ETC.......................................................................................32
9.3 CONSENTS OF REGULATORY AUTHORITIES......................................................................33
9.4 FILINGS WITH STATE OFFICES..............................................................................33
9.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE...................................................................33
9.6 INVESTIGATION AND CONFIDENTIALITY.......................................................................34
9.7 PRESS RELEASES..........................................................................................34
9.8 STATE TAKEOVER LAWS.....................................................................................35
9.9 CHARTER PROVISIONS......................................................................................35
9.10 INDEMNIFICATION.......................................................................................35
9.11 DELIVERY OF TARGET DISCLOSURE MEMORANDUM..............................................................36
Article 10. CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE....................................................37
10.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY...............................................................37
Article 11. TERMINATION..........................................................................................37
11.1 TERMINATION...........................................................................................37
11.2 EFFECT OF TERMINATION.................................................................................39
11.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS.........................................................40
Article 12. MISCELLANEOUS........................................................................................40
12.1 DEFINITIONS...........................................................................................40
12.2 EXPENSES..............................................................................................48
ii
12.3 BROKERS AND FINDERS...................................................................................50
12.4 ENTIRE AGREEMENT......................................................................................50
12.5 AMENDMENTS............................................................................................50
12.6 WAIVERS...............................................................................................51
12.7 ASSIGNMENT............................................................................................51
12.8 NOTICES...............................................................................................52
12.9 GOVERNING LAW.........................................................................................52
12.10 COUNTERPARTS..........................................................................................53
12.11 CAPTIONS; ARTICLES AND SECTIONS.......................................................................53
12.12 INTERPRETATIONS.......................................................................................53
12.13 ENFORCEMENT OF AGREEMENT..............................................................................53
12.14 SEVERABILITY..........................................................................................53
ANNEX I
ANNEX II
iii
EXHIBIT INDEX
Exhibit Description Page
------- ----------- ----
Exhibit A Tender and Option Agreement 1
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of June 26, 2001, by and among Tropical Sportswear Int'l
Corporation, a Florida corporation ("Buyer"), HB Acquisition Corp., a Georgia
corporation ("Sub"), and Duck Head Apparel Company, Inc., a Georgia corporation
("Target").
Preamble
--------
The respective Boards of Directors of Target, Sub and Buyer are of the
opinion that the transactions described herein are in the best interests of each
of the parties to this Agreement and their respective shareholders. Among other
matters, this Agreement provides for the acquisition of Target by Buyer pursuant
to the tender offer by Sub for Target Common Stock (as defined below) and the
merger of Sub with and into Target. At the effective time of such merger, the
outstanding shares of the capital stock of Target shall be converted into the
right to receive a cash payment from Buyer or the Surviving Corporation (except
as provided herein). As a result, Target shall continue to conduct its business
and operations as a wholly owned subsidiary of Buyer. The transactions described
in this Agreement are subject to the approvals of the shareholders of Target,
and the satisfaction of certain other conditions described in this Agreement.
In order to effect the above-described acquisition, Sub will make a
cash tender offer to acquire all of the issued and outstanding shares of Target
Common Stock for $4.75 per share, net to the seller in cash, subject to any
required withholding taxes.
As an inducement to Buyer to acquire Target, and as a condition to
Buyer's and Sub's willingness to enter into this Agreement, concurrently with
the execution and delivery of this Agreement, Sub and certain shareholders of
Target are entering into a Tender and Option Agreement in the form attached as
Exhibit A (the "Tender and Option Agreement") pursuant to which such
shareholders (the "Selling Shareholders") have agreed to (i) grant Sub an
irrevocable option to buy their shares of Target Common Stock, (ii) tender and,
in the event such irrevocable option is not theretofore exercised, sell their
shares of Target Common Stock in the Offer (as defined below) and (iii) vote
their shares of Target Common Stock in favor of the Merger (as defined below),
in each case upon the terms and subject to the conditions set forth in the
Tender and Option Agreement.
Certain capitalized terms used in this Agreement are defined in Section
12.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1. THE OFFER
1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 11.1 and nothing shall have occurred or be existing
(that has not been waived by Buyer) that would result in a failure to satisfy
any of the conditions set forth in ANNEX I, as promptly as practicable, but in
any event within ten business days after the public announcement of the
execution and delivery of this Agreement, Buyer shall cause Sub to commence, and
Sub shall commence an offer (the "Offer") to purchase all outstanding shares of
Target Common Stock at a price of $4.75 per share, net to the seller in cash,
subject to any required withholding taxes (such price, or any higher
consideration paid in the Offer pursuant to the terms of this Agreement, the
"Offer Price"). The Offer shall be subject, and only subject, to the condition
that there shall be validly tendered pursuant to the Offer and not properly
withdrawn a number of shares of Target Common Stock that, together with the
shares of Target Common Stock then beneficially owned by Buyer (including any
shares of Target Common Stock acquired pursuant to the Tender and Option
Agreement), if any, represents at least a majority of the shares of Target
Common Stock outstanding on a fully diluted basis at the time of purchase ("on a
fully diluted basis" meaning the number of shares of Target Common Stock
outstanding plus all shares of Target Common Stock issuable by Target pursuant
to Equity Rights outstanding at that date (whether or not such Equity Rights are
currently exercisable or convertible)) (the "Minimum Condition") and to the
other conditions set forth in ANNEX I. The initial expiration date of the Offer
shall be the later of (x) the twentieth (20th) business day following the
commencement of the Offer (determined using Rule 14d-2 adopted under the
Exchange Act), (y) the fifth (5th) business day following the waiver or
expiration of Buyer's right to terminate the Agreement pursuant to Section
11.1(f), or (z) if prior to the date specified in clause (y) Target shall have
received an Acquisition Proposal and provided notice to Buyer pursuant to
Sections 9.1(b) or 9.2(a), the fifth (5th) business day following a Subsequent
Determination (as defined in Section 9.1(b)). Buyer expressly reserves the right
to waive any of the conditions to the Offer and to make any change in the terms
or conditions of the Offer, provided that, without the prior written consent of
Target, no change may be made that changes or waives the Minimum Condition,
changes the form of consideration to be paid, decreases the Offer Price or the
number of shares of Target Common Stock sought in the Offer, extends the Offer
(except as set forth in the next two sentences) or modifies, in any manner
adverse to the holders of Target Common Stock, or adds to, the conditions to the
Offer set forth in ANNEX I. Notwithstanding the foregoing, Buyer may, without
the consent of Target, (i) extend the Offer in increments of up to ten (10)
business days each, if at the scheduled expiration date of the Offer any of the
conditions to Sub's obligation to purchase shares of Target Common Stock are not
satisfied, until such time as such conditions are satisfied or waived, (ii)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the SEC or the staff thereof applicable to the Offer, (iii) make
available a subsequent offering period (within the meaning of Rule 14d-11
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adopted under the Exchange Act) and (iv) increase the Offer Price. Buyer and Sub
agree that if any of the conditions to the Offer set forth in ANNEX I (other
than the conditions set forth in clause (iii)(B) or clause (iii)(E) of ANNEX I)
are not satisfied on the initial expiration date of the Offer or such subsequent
expiration dates, then if all such conditions are capable of being satisfied
prior to November 1, 2001, Buyer shall cause Sub to extend the Offer from time
to time (each such individual extension not to exceed ten (10) business days
after the previously scheduled expiration date) until such conditions are
satisfied or waived; provided that Sub shall not be required to extend the Offer
beyond November 1, 2001. Subject to the foregoing and to the conditions set
forth in ANNEX I and the other terms and conditions of the Offer, Buyer shall
cause Sub to, and Sub shall, accept for payment and pay for, as promptly as
practicable after the expiration of the Offer, all shares of Target Common Stock
validly tendered and not properly withdrawn pursuant to the Offer.
(b) As soon as practicable on the date of commencement of the Offer, Buyer
shall file with the SEC a Statement on Schedule TO with respect to the Offer
(such Schedule TO and the documents included therein pursuant to which the Offer
will be made, together with any supplements or amendments thereto, the "Offer
Documents"). Buyer and Target each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect. Sub
agrees to take all steps necessary to cause the Offer Documents and any
corrected Offer Document to be filed with the SEC and to be disseminated to
holders of shares of Target Common Stock, in each case as and to the extent
required by applicable federal securities Laws. Target and its counsel shall be
given a reasonable opportunity to review and comment on the Offer Documents and
any corrected Offer Document prior to their being filed with the SEC or
disseminated to the holders of shares of Target Common Stock. Buyer and Sub
shall provide the Target and its counsel with a copy of any written comments or
telephonic notification of any verbal comments Buyer or Sub may receive from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
thereof and will provide the Target and its counsel with a copy of any written
responses and telephonic notification of any verbal response of Buyer, Sub or
their counsel. In the event that the Offer is terminated or withdrawn by Sub,
Buyer and Sub shall cause all tendered Target Common Stock to be returned
promptly to the registered holders of the Target Common Stock represented by the
certificate or certificates surrendered to Sub.
1.2 Target Action.
(a) Target hereby approves of, and consents to, the Offer and represents and
warrants that its Board of Directors, at a meeting duly called and held, has
unanimously (i) determined that this Agreement, the Tender and Option Agreements
and the transactions contemplated hereby and thereby, including the Offer and
the Merger, are fair to, and in the best interests of, Target's shareholders,
(ii) adopted this Agreement and the transactions contemplated hereby, including
the Offer and the Merger, in accordance with the requirements of the GBCC and
such adoption constitutes approval of the Offer, the Merger, this Agreement and
the transactions contemplated hereby for purposes of Section 14-2-1131 through
14-2-1133 of the GBCC, (iii) resolved (subject to Sections 9.1(b) and 9.2) to
recommend acceptance of the Offer and approval of this Agreement and the Merger
by its shareholders. Target further represents that ▇▇▇▇ ▇▇▇▇▇▇ Associates
Capital Advisors ("Target Financial Advisor") has delivered to Target's Board of
Directors its opinion that the consideration to be paid in the Offer and the
Merger is fair to the holders of shares of Target Common Stock from a financial
point of view. Target will promptly furnish Buyer with a list of its
shareholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of shares of Target
Common Stock and lists of securities positions of shares of Target Common Stock
held in stock depositories, in each case true and correct as of the most recent
3
practicable date, and will provide to Buyer such additional information
(including updated lists of shareholders, mailing labels and lists of securities
positions) and such other assistance as Buyer may reasonably request in
connection with the Offer. Subject to the requirements of applicable Law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer or the Merger, Buyer, its
Affiliates, agents and advisors shall hold in confidence the information
contained in any such lists, labels, listings or files, shall use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated shall comply with Section 9.6(b) with respect to
all such information.
(b) As soon as practicable after the time that the Offer is commenced
(subject to Sections 9.1(b) and 9.2), Target shall file with the SEC and
disseminate to holders of shares of Target Common Stock a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that shall reflect the
recommendations of the Board of Directors of Target described above. Target, Sub
and Buyer each agree promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect. Target agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of shares of Target Common Stock, in each case as and to
the extent required by applicable federal securities Laws. Buyer and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 prior to its filing with the SEC or dissemination to holders of shares of
Target Common Stock. Target shall provide the Buyer and its counsel with a copy
of any written comments or telephonic notification of any verbal comments Target
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt thereof and will provide the Buyer and its counsel
with a copy of any written responses and telephonic notification of any verbal
response of Target or its counsel.
1.3 Directors.
(a) Effective upon the acceptance for payment pursuant to the Offer of a
number of shares of Target Common Stock that satisfies the Minimum Condition,
Buyer shall be entitled to designate that number of directors, rounded up to the
nearest whole number, on the Board of Directors of Target equal to the product
of (i) the total number of directors on the Board of Directors of Target and
(ii) the percentage that the number of shares of Target Common Stock
beneficially owned by Buyer bears to the total number of shares of Target Common
Stock outstanding, and Target shall take all action necessary to cause Buyer's
designees to be elected or appointed to the Board of Directors of Target,
including increasing the number of directors and seeking and accepting
resignations of incumbent directors. At such time, Target will also, upon the
request of Buyer, use all commercially reasonable efforts to cause individuals
designated by Buyer to constitute that number of members, rounded up to the
nearest whole number, on (i) each committee of the Board of Directors of Target
(some of whom may be required to be independent as required by applicable law or
the rules of AMEX) and (ii) each board of directors of each subsidiary of Target
(and each committee thereof), that represents the same percentage as the number
of Buyer designated directors represent on the Board of Directors of Target.
Notwithstanding the foregoing, Buyer and Target shall use their reasonable
efforts to ensure that at least two members of the Board of Directors of Target
as of the date hereof who are not employees of Target (the "Continuing
Directors") shall remain members of the Board of Directors of Target until the
Effective Time, provided that if the number of Continuing Directors shall be
4
reduced below two for any reason whatsoever, the remaining Continuing Director
shall be entitled to designate a person to fill such vacancy who shall be deemed
to be a Continuing Director for purposes of this Agreement or, if no Continuing
Director then remains, the other directors shall designate two persons to fill
such vacancies who shall not be shareholders, Affiliates or associates of Buyer
or Sub and such persons shall be deemed to be Continuing Directors for purposes
of this Agreement.
(b) Target's obligations to appoint Buyer's designees to Target's Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
adopted thereunder. Target shall promptly take all actions, and shall include in
the Schedule 14D-9 such information with respect to Target and its officers and
directors, as such Section 14(f) and Rule 14f-1 require in order to fulfill its
obligations under this Section. Buyer shall supply to Target in writing and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Following the election or appointment of Buyer's designees pursuant to Section
1.3(a) and until the Effective Time, the approval of a majority of the
Continuing Directors shall be required to authorize (and such authorization
shall constitute the authorization of Target's Board of Directors and no other
action on the part of Target, including any action by any other director of
Target, shall be required to authorize) any termination of this Agreement by
Target pursuant to Section 11.1(a), any amendment of this Agreement requiring
action by Target's Board of Directors, any amendment of the Articles of
Incorporation or Bylaws of Target, any consent of Target pursuant to Section
8.3, any extension of time for performance of any obligation or action hereunder
by Buyer or Sub, and any waiver of compliance with or amendment of any of the
agreements or conditions contained herein for the benefit of Target or the
holders of Target Common Stock.
(c) The Parties hereby agree that appointment or election of Buyer's
designees to Target's Board of Directors contemplated in Section 1.3(b) of this
Agreement shall constitute a "Change in Control" as such term is defined in and
for purposes of each of the Severance Protection Agreements dated November 3,
2000 by and between Target and each of K. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ Head, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
ARTICLE 2. TRANSACTIONS AND TERMS OF MERGER
2.1 Merger.
Subject to the terms and conditions of this Agreement, at the Effective
Time, Sub shall be merged with and into Target in accordance with the provisions
of Section 14-2-1101 or 14-2-1104 of the GBCC and with the effect provided in
Section 14-2-1106 of the GBCC (the "Merger"). Target shall be the Surviving
Corporation resulting from the Merger and become a wholly owned Subsidiary of
Buyer and shall continue to be governed by the Laws of the State of Georgia.
5
2.2 Time and Place of Closing.
The closing of the transactions contemplated hereby (the "Closing")
will take place at 9:00 A.M. on a date to be agreed upon by the parties, and if
such date is not agreed upon by the parties, the Closing shall occur on the
second business day after satisfaction or waiver of all of the conditions set
forth in ARTICLE 10. , at the offices of ▇▇▇▇▇▇ & Bird, LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. At the Closing, Buyer shall cause the Surviving
Corporation to have sufficient funds to deposit, and shall cause the Surviving
Corporation to deposit in trust with the Exchange Agent, cash in the aggregate
amount payable in the Merger to the holders of the Target Common Stock. No loss
on any investment of such funds shall relieve Buyer or the Surviving Corporation
of its obligation to pay the Cash Payment.
2.3 Effective Time.
Buyer, Sub and Target will cause Articles of Merger to be executed and
filed on the Closing Date (or on such other date as Buyer and the Continuing
Directors of Target may agree) with the Secretary of State of Georgia as
provided in the GBCC. The Merger shall become effective on the Closing Date at
the time the Articles of Merger reflecting the Merger shall become effective
with the Secretary of State of the State of Georgia (the "Effective Time").
ARTICLE 3. TERMS OF MERGER
3.1 Charter.
The Articles of Incorporation of Sub in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until duly amended or repealed.
3.2 Bylaws.
The Bylaws of Sub in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until duly amended or repealed.
3.3 Directors and Officers.
The directors of Sub in office immediately prior to the Effective Time,
together with such additional persons as may thereafter be elected, shall serve
as the directors of the Surviving Corporation from and after the Effective Time
in accordance with the Bylaws of the Surviving Corporation. The officers of Sub
in office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the officers of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation.
6
ARTICLE 4. MANNER OF CONVERTING SHARES
4.1 Conversion of Shares.
Subject to the provisions of this ARTICLE 4. , at the Effective Time,
by virtue of the Merger and without any action on the part of Buyer, Target, Sub
or the shareholders of any of the foregoing, the shares of the constituent
corporations shall be converted as follows:
(a) Each share of Sub Common Stock issued and outstanding immediately prior
to the Effective Time shall remain issued and outstanding from and after the
Effective Time as shares of the Surviving Corporation.
(b) Each share of Target Common Stock, excluding shares held by
shareholders who perfect their statutory dissenters' rights as provided in
Section 4.2, issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for the
right to receive from Buyer a cash payment in the amount of the Offer Price
(less any required withholding of Taxes, the "Cash Payment").
4.2 Dissenting Shareholders.
Any holder of shares of Target Common Stock who perfects such holder's
dissenters' rights in accordance with and as contemplated by Sections 14-2-1301
et seq. of the GBCC shall be entitled to receive from the Surviving Corporation
the value of such shares in cash as determined pursuant to such provision of
Law; provided, that no such payment shall be made to any dissenting shareholder
unless and until such dissenting shareholder has complied with the applicable
provisions of the GBCC and surrendered to Target the certificate or certificates
representing the shares for which payment is being made. In the event that after
the Effective Time a dissenting shareholder of Target fails to perfect, or
effectively withdraws or loses, such holder's right to appraisal of and payment
for such holder's shares, Buyer or the Surviving Corporation shall issue and
deliver the consideration to which such holder of shares of Target Common Stock
is entitled under this ARTICLE 4. (without interest) upon surrender by such
holder of the certificate or certificates representing the shares of Target
Common Stock held by such holder. If and to the extent required by applicable
Law, the Surviving Corporation will establish (or cause to be established) an
escrow account with an amount sufficient to satisfy the maximum aggregate
payment that may be required to be paid to dissenting shareholders. Upon
satisfaction of all claims of dissenting shareholders, the remaining escrowed
amount, reduced by payment of the fees and expenses of the escrow agent, will be
returned to the Surviving Corporation.
4.3 Conversion of Stock Options.
As compensation for services rendered to Target, at the Effective Time,
each option or other Equity Right to purchase shares of Target Common Stock
pursuant to stock options or incentive stock awards ("Target Options") granted
by Target under the Target Stock Plans and outstanding at the Effective Time,
whether or not exercisable, shall be canceled in exchange for a cash payment by
the Surviving Corporation for each share of Target Common Stock subject to such
Target Option ("Option Settlement Payment") equal to the amount, if any, by
which the Cash Payment exceeds the exercise price per share pursuant to which
7
the holder of such Target Option may purchase the shares of Target Common Stock
to which such Target Option relates. At the Effective Time, each such Target
Option shall no longer represent the right to purchase shares of Target Common
Stock, but in lieu thereof shall represent only the nontransferable right to
receive the Option Settlement Payment.
ARTICLE 5. EXCHANGE OF SHARES
5.1 Exchange Procedures.
(a) Promptly after the Effective Time, Buyer and Target shall cause the
transfer agent or another exchange agent reasonably selected by Buyer (the
"Exchange Agent") to mail to each holder of record of a certificate or
certificates which represented shares of Target Common Stock immediately prior
to the Effective Time (the "Certificates"), appropriate transmittal materials
and instructions (which shall specify that delivery shall be effected, and risk
of loss and title to such Certificates shall pass, only upon proper delivery of
such Certificates to the Exchange Agent). The Certificate or Certificates of
Target Common Stock so delivered shall be duly endorsed as the Exchange Agent
may require. In the event of a transfer of ownership of shares of Target Common
Stock represented by Certificates that is not registered in the transfer records
of Target, Cash Payment may be issued to a transferee if the Certificates
representing such shares are delivered to the Exchange Agent, accompanied by all
documents required to evidence such transfer and by evidence satisfactory to the
Exchange Agent that any applicable stock transfer taxes have been paid. If any
Certificate shall have been lost, stolen, mislaid or destroyed, upon receipt of
(i) an affidavit of that fact from the holder claiming such Certificate to be
lost, mislaid, stolen or destroyed, (ii) such bond, security or indemnity as
Buyer and the Exchange Agent may reasonably require and (iii) any other
documents necessary to evidence and effect the bona fide exchange thereof, the
Exchange Agent shall issue to such holder the Cash Payment. The Exchange Agent
may establish such other reasonable and customary rules and procedures in
connection with its duties as it may deem appropriate. The Surviving Corporation
shall pay all charges and expenses, including those of the Exchange Agent, in
connection with the distribution of the Cash Payment.
(b) After the Effective Time, each holder of shares of Target Common Stock
(other than shares as to which statutory dissenters' rights have been perfected
as provided in Section 4.2) issued and outstanding at the Effective Time shall
surrender the Certificate or Certificates representing such shares to the
Exchange Agent and shall promptly receive the Cash Payment in exchange for such
shares. Buyer shall not be obligated to deliver the consideration to which any
former holder of Target Common Stock is entitled as a result of the Merger until
such holder surrenders such holder's Certificate or Certificates for exchange as
provided in this Section 5.1.
(c) Each of Buyer, the Surviving Corporation and the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Target Common Stock such
amounts, if any, as it is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code or any provision of
state, local or foreign Tax Law. To the extent that any amounts are so withheld
by Buyer, the Surviving Corporation or the Exchange Agent, as the case may be,
8
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Target Common Stock in respect
of which such deduction and withholding was made by Buyer, the Surviving
Corporation or the Exchange Agent, as the case may be.
(d) Any other provision of this Agreement notwithstanding, none of Buyer,
the Surviving Corporation or the Exchange Agent shall be liable to a holder of
Target Common Stock for any amounts paid or property delivered in good faith to
a public official pursuant to any applicable abandoned property, escheat or
similar Law.
5.2 Rights of Former Target Shareholders.
At the Effective Time, the stock transfer books of Target shall be
closed as to holders of Target Common Stock immediately prior to the Effective
Time and no transfer of Target Common Stock by any such holder shall thereafter
be made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 5.1, each Certificate theretofore representing shares of
Target Common Stock shall from and after the Effective Time represent for all
purposes only the right to receive the consideration provided in Sections 4.1
and 4.3 (or, if applicable, Section 4.2) in exchange therefor, subject, however,
to the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which have been
declared or made by Target in respect of such shares of Target Common Stock in
accordance with the terms of this Agreement and which remain unpaid at the
Effective Time.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to Buyer and Sub as follows:
6.1 Organization, Standing, and Power.
Target is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of Georgia, and has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its Assets. Target is duly qualified or licensed to transact business as
a foreign corporation in good standing in the states of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Target Material
Adverse Effect. The minute book and other organizational documents for Target
have been made available to Buyer for its review and, except as disclosed in
Section 6.1 of the Target Disclosure Memorandum, are true and complete in all
material respects as in effect on the date of this Agreement and accurately
reflect in all material respects all amendments thereto and all proceedings of
the Board of Directors (including any committees of the Board of Directors) and
shareholders thereof.
9
6.2 Authority of Target; No Breach By Agreement.
(a) Target has the corporate power and authority necessary to execute,
deliver and, other than with respect to the Merger, perform this Agreement, and,
with respect to the Merger, upon the approval of this Agreement and the Merger
by Target's shareholders in accordance with this Agreement and Georgia law, to
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein, including the
Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of Target, subject to the approval of this
Agreement by the holders of a majority of the outstanding shares of Target
Common Stock as contemplated by Section 9.1, which is the only shareholder vote
that is required for approval of this Agreement and consummation of the Merger
by Target. Subject to such requisite shareholder approval, this Agreement
represents a legal, valid and binding obligation of Target, enforceable against
Target in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Target, nor the
consummation by Target of the transactions contemplated hereby, nor compliance
by Target with any of the provisions hereof, will (i) conflict with or result in
a breach of any provision of Target's Articles of Incorporation or Bylaws or the
certificate or articles of incorporation or bylaws of any Target Subsidiary or
any resolution adopted by the board of directors or the shareholders of any
Target Entity, or (ii) except as disclosed in Section 6.2 of the Target
Disclosure Memorandum, constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of any
Target Entity under, any Contract or Permit of any Target Entity or, (iii)
subject to receipt of the requisite Consents referred to in Sections 10.1(a) and
10.1(b) and clause (iii)(G) of Annex I, constitute or result in a Default under,
or require any Consent pursuant to, any Law or Order applicable to any Target
Entity or any of their respective material Assets (including any Buyer Entity or
any Target Entity becoming subject to or liable for the payment of any Tax on
any of the Assets owned by any Buyer Entity or any Target Entity being
reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and the rules
of AMEX, and other than Consents required from Regulatory Authorities, and other
than notices to or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans, or
under the HSR Act, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Target of the Merger and the
other transactions contemplated in this Agreement.
6.3 Capital Stock.
(a) The authorized capital stock of Target consists of (i) 9,000,000 shares
of Target Common Stock, of which 2,855,438 shares are issued and outstanding as
of the date of this Agreement and (ii) 2,000,000 shares of preferred stock, par
value $0.01 per share, none of which is issued and outstanding. All of the
issued and outstanding shares of capital stock of Target are duly and validly
issued and outstanding and are fully paid and nonassessable under the GBCC. None
of the outstanding shares of capital stock of Target has been issued in
violation of any preemptive rights of the current or past shareholders of
Target.
10
(b) Except as set forth in Section 6.3(a), as disclosed in Section 6.3(b)
of the Target Disclosure Memorandum and for the Tender and Option Agreements,
there are no shares of capital stock or other equity securities of Target
outstanding and no outstanding Equity Rights relating to the capital stock of
Target. Except as specifically contemplated by this Agreement or as disclosed in
Section 6.3(b) of the Target Disclosure Memorandum, no Person has any Contract
or any right or privilege (whether pre-emptive or contractual) capable of
becoming a Contract or Equity Right for the purchase, subscription or issuance
of any securities of Target.
6.4 Target Subsidiaries.
Target has disclosed in Section 6.4 of the Target Disclosure Memorandum
each of the Target Subsidiaries that is a corporation (identifying its
jurisdiction of incorporation, each jurisdiction in which it is qualified and/or
licensed to transact business, and the number of shares owned and percentage
ownership interest represented by such share ownership) and each of the Target
Subsidiaries that is a general or limited partnership, limited liability company
or other non-corporate entity (identifying the Law under which such entity is
organized, each jurisdiction in which it is qualified and/or licensed to
transact business, and the amount and nature of the ownership interest therein).
Except as disclosed in Section 6.4 of the Target Disclosure Memorandum, Target
or one of its wholly owned Subsidiaries owns all of the issued and outstanding
shares of capital stock (or other equity interests) of each Target Subsidiary.
No capital stock (or other equity interest) of any Target Subsidiary is or may
become required to be issued (other than to another Target Entity) by reason of
any Equity Rights, and there are no Contracts by which any Target Subsidiary is
bound to issue (other than to another Target Entity) additional shares of its
capital stock (or other equity interests) or Equity Rights or by which any
Target Entity is or may be bound to transfer any shares of the capital stock (or
other equity interests) of any Target Subsidiary (other than to another Target
Entity). There are no Contracts relating to the rights of any Target Entity to
vote or to dispose of any shares of the capital stock (or other equity
interests) of any Target Subsidiary. All of the shares of capital stock (or
other equity interests) of each Target Subsidiary held by a Target Entity are
fully paid and nonassessable and are owned by the Target Entity (except as
disclosed in Section 6.4 of the Target Disclosure Memorandum) free and clear of
any Lien. Except as disclosed in Section 6.4 of the Target Disclosure
Memorandum, each Target Subsidiary is a corporation and is duly organized,
validly existing and (as to corporations) in good standing under the Laws of the
jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease and operate its Assets and to
carry on its business as now conducted. Each Target Subsidiary is duly qualified
or licensed to transact business as a foreign entity in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Target Material Adverse Effect. The minute book and other
organizational documents for each Target Subsidiary have been made available to
Buyer for its review, and, except as disclosed in Section 6.4 of the Target
11
Disclosure Memorandum, are true and complete in all material respects as in
effect as of the date of this Agreement and accurately reflect in all material
respects all amendments thereto and all proceedings of the Board of Directors
and shareholders thereof.
6.5 SEC Filings; Financial Statements.
(a) Target has timely filed all SEC Documents required to be filed by
Target since the date that it was first required to file SEC Documents (the
"Target SEC Reports"). The Target SEC Reports (i) at the time filed, complied in
all material respects with the applicable requirements of the Securities Laws
and other applicable Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing or, in the case of registration statements, at the
effective date thereof) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Target SEC Reports or
necessary in order to make the statements in such Target SEC Reports, in light
of the circumstances under which they were made, not misleading. No Target
Subsidiary is required to file any SEC Documents.
(b) Each of the Target Financial Statements (including, in each case, any
related notes) contained in the Target SEC Reports, including any Target SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of Target
and its Subsidiaries as of the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect. In addition, the unaudited consolidated balance sheet of Target as of
June 2, 2001 (the "June 2 Balance Sheet") and the consolidated statements of
income and cash flows for the eleven (11) months then ended were prepared in
accordance with GAAP (except for the absence of notes) applied on a consistent
basis with the Target Financial Statements and fairly present in all material
respects the consolidated financial position of Target and its Subsidiaries as
of June 2, 2001 and the consolidated results of operations and cash flows for
the eleven (11) months then ended, except that such financial statements are
subject to normal and recurring year-end adjustments that are not expected to be
material in amount or effect.
6.6 Absence of Undisclosed Liabilities.
Except as set forth on Section 6.6 of the Target Disclosure Memorandum,
no Target Entity has any Liability that is reasonably likely to have an
individual effect of $50,000 or more or an aggregate effect with all other
Liabilities of $250,000 or more, except Liabilities that are accrued or reserved
against in the June 2 Balance Sheet. Except as set forth on Section 6.6 of the
Target Disclosure Memorandum, no Target Entity has incurred or paid any
Liability since June 2, 2001, except for any Liability incurred or paid in the
ordinary course of business consistent with past business practice and that is
not reasonably likely to have an individual effect of $50,000 or more or an
aggregate effect with all other Liabilities of $250,000 or more. Except as
12
disclosed in Section 6.6 of the Target Disclosure Memorandum, no Target Entity
is directly or indirectly liable, by guarantee, indemnity or otherwise, upon or
with respect to, or obligated, by discount or repurchase agreement or in any
other way, to provide funds in respect to, or obligated to guarantee or assume
any Liability of any Person.
6.7 Absence of Certain Changes or Events.
Since June 2, 2001, except as disclosed in the June 2 Balance Sheet
delivered prior to the date of this Agreement or as disclosed in Section 6.7 of
the Target Disclosure Memorandum, (i) there have been no events, changes or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Target Material Adverse Effect, and (ii) none of the Target
Entities have taken any action, or failed to take any action, prior to the date
of this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any of
the covenants and agreements of Target provided in ARTICLE 8. .
6.8 Tax Matters.
(a) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
all Target Entities have timely filed (taking into account extensions) with the
appropriate Taxing Authorities all Tax Returns in all jurisdictions in which Tax
Returns are required to be filed, and such Tax Returns are correct and complete
in all respects. Except as disclosed in Section 6.8 of the Target Disclosure
Memorandum, none of the Target Entities is currently the beneficiary of any
extension of time within which to file any Tax Return. Except as disclosed in
Section 6.8 of the Target Disclosure Memorandum, all Taxes of the Target
Entities (whether or not shown on any Tax Return) have been fully and timely
paid. Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
there are no Liens for any Taxes (other than a Lien for current real property or
ad valorem Taxes not yet due and payable) on any of the Assets of any of the
Target Entities. Except as disclosed in Section 6.8 of the Target Disclosure
Memorandum, no claim has ever been made by an authority in a jurisdiction where
any Target Entity does not file a Tax Return that such Target Entity may be
subject to Taxes by that jurisdiction.
(b) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
none of the Target Entities has received any notice of assessment or proposed
assessment in connection with any Taxes, and there are no threatened or pending
disputes, claims, audits or examinations regarding any Taxes of any Target
Entity or the assets of any Target Entity. Except as disclosed in Section 6.8 of
the Target Disclosure Memorandum, no officer or employee responsible for Tax
matters of any Target Entity expects any Taxing Authority to assess any
additional Taxes for any period for which Tax Returns have been filed. Except as
disclosed in Section 6.8 of the Target Disclosure Memorandum, none of the Target
Entities has waived any statute of limitations in respect of any Taxes or agreed
to a Tax assessment or deficiency.
(c) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
each Target Entity has complied with all applicable Laws, rules and regulations
relating to the withholding of Taxes and the payment thereof to appropriate
authorities, including Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee or independent contractor,
and Taxes required to be withheld and paid pursuant to Sections 1441 and 1442 of
the Internal Revenue Code or similar provisions under foreign Law.
13
(d) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
the unpaid Taxes of each Target Entity (i) did not, as of the most recent fiscal
month end, exceed the reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the most recent balance sheet (rather than in
any notes thereto) for such Target Entity and (ii) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with
past custom and practice of the Target Entities in filing their Tax Returns.
(e) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
none of the Target Entities is a party to any Tax allocation or sharing
agreement and none of the Target Entities has been a member of an affiliated
group filing a consolidated federal income Tax Return (other than a group the
common parent of which was Target) or has any Tax Liability of any Person under
Treasury Regulation Section 1.1502-6 or any similar provision of state, local or
foreign Law (other than the other members of the consolidated group of which
Target is parent), or as a transferee or successor, by contract or otherwise.
(f) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
during the five year period ending on the date hereof, none of the Target
Entities was a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the Internal Revenue Code.
(g) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
none of the Target Entities has made any payments, is obligated to make any
payments, or is a party to any contract that could obligate it to make any
payments that could be disallowed as a deduction under Section 280G or 162(m) of
the Internal Revenue Code. Except as disclosed in Section 6.8 of the Target
Disclosure Memorandum, Target has not been a United States real property holding
corporation within the meaning of Internal Revenue Code Section
897(c)(1)(A)(ii). Except as disclosed in Section 6.8 of the Target Disclosure
Memorandum, none of the Target Entities has been or will be required to include
any adjustment in taxable income for any Tax period (or portion thereof)
pursuant to Section 481 of the Internal Revenue Code or any comparable provision
under state or foreign Tax Laws as a result of transactions or events occurring
prior to the Closing. Except as disclosed in Section 6.8 of the Target
Disclosure Memorandum, the net operating losses of the Target Entities are not
subject to any limitation on their use under the provisions of Sections 382 or
269 of the Internal Revenue Code or any other provisions of the Internal Revenue
Code or the Treasury Regulations dealing with the utilization of net operating
losses other than any such limitations as may arise as a result of the
consummation of the Offer or the other transactions contemplated by this
Agreement.
(h) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
each of the Target Entities is in compliance with, and its records contain all
information and documents (including properly completed IRS Forms W-9) necessary
to comply with, all applicable information reporting and Tax withholding
requirements under federal, state, and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code.
14
(i) Except as disclosed in Section 6.8 of the Target Disclosure Memorandum,
no Target Entity has or has had in any foreign country a permanent
establishment, as defined in any applicable tax treaty or convention between the
United States and such foreign country.
6.9 Assets.
(a) Except as disclosed in Section 6.9 of the Target Disclosure Memorandum
or as disclosed or reserved against in the June 2 Balance Sheet, the Target
Entities have good and marketable title, free and clear of all Liens, to all of
their respective Assets. All tangible properties used in the businesses of the
Target Entities are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with Target's past
practices.
(b) All items of inventory of the Target Entities reflected on the June 2
Balance Sheet consisted, and all items of inventory of the Target Entities at
the Effective Time will consist, as applicable, of items of a quality and
quantity usable and saleable in the ordinary course of business and conform to
generally accepted standards in the industry in which the Target Entities are a
part.
(c) Except as disclosed in Section 6.9 of the Target Disclosure Memorandum,
the accounts receivable of the Target Entities as set forth on the June 2
Balance Sheet or arising since the date thereof are valid and genuine; have
arisen solely out of bona fide sales and deliveries of goods, performance of
services and other business transactions in the ordinary course of business
consistent with past practice; are not subject to valid defenses, set-offs or
counterclaims; and are collectible within 90 days after billing at the full
recorded amount thereof less, in the case of accounts receivable appearing on
the June 2 Balance Sheet, the recorded allowance for collection losses on such
balance sheet and, in the case of accounts receivable arising since the date
thereof, less the allowance for collection losses recorded on the books of
Target. The allowance for collection losses on such balance sheet has been
determined in accordance with GAAP.
(d) All Assets which are material to Target's business on a consolidated
basis, held under leases or subleases by any of the Target Entities, are held
under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other Laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought), and each such Contract is in
full force and effect.
(e) The Target Entities currently maintain the insurance set forth on
Section 6.9 of the Target Disclosure Memorandum. None of the Target Entities has
received notice from any insurance carrier that (i) any policy of insurance will
be canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. Except as set forth in Section 6.9(e) of the Target Disclosure
Memorandum, there are presently no claims for amounts exceeding in any
15
individual case $5,000 or exceeding $20,000 in the aggregate pending under such
policies of insurance and no notices of claims in excess of such amounts have
been given by any Target Entity under such policies.
(f) The Assets of the Target Entities include all Assets required to
operate the business of the Target Entities as presently conducted.
6.10 Intellectual Property.
Except as set forth in Section 6.10 of the Target Disclosure
Memorandum, each Target Entity owns or has a license to use all of the
Intellectual Property used by such Target Entity in the course of its business,
including sufficient rights in each copy possessed by each Target Entity. Each
Target Entity is the owner of or has a license, with the right to sublicense or
convey, as the case may be, any Intellectual Property sold or licensed to a
third party by such Target Entity in connection with such Target Entity's
business operations. No Target Entity is in Default under any of its
Intellectual Property licenses. No proceedings have been instituted, or are
pending or to the Knowledge of Target threatened, which challenge the rights of
any Target Entity with respect to Intellectual Property used, sold or licensed
by such Target Entity in the course of its business, nor has any person claimed
or alleged any rights to such Intellectual Property. The conduct of the business
of the Target Entities does not infringe any Intellectual Property of any other
person. Except as disclosed in Section 6.10 of the Target Disclosure Memorandum,
no Target Entity is obligated to pay any recurring royalties to any Person with
respect to any such Intellectual Property. No officer, director, or employee of
any Target Entity has any interest in any Intellectual Property of a Target
Entity or any trade secrets, proprietary data, customer information, or other
business information of a Target Entity, and no such officer, director or
employee is party to any Contract with any Person other than a Target Entity
which requires such officer, director or employee to assign any interest in any
Intellectual Property to any Person other than a Target Entity or to keep
confidential any trade secrets, proprietary data, customer information, or other
business information of any Person other than a Target Entity that in any way
interferes with the performance by such Person of his or her duties to any
Target Entity. Except as disclosed in Section 6.10 of the Target Disclosure
Memorandum, no officer, director or employee of any Target Entity is party to
any Contract which restricts or prohibits such officer, director or employee
from engaging in activities competitive with any Target Entity.
6.11 Environmental Matters.
(a) Except as disclosed in Section 6.11 of the Target Disclosure
Memorandum, each Target Entity, its Participation Facilities and its Operating
Properties are, and have been, in compliance with all Environmental Laws.
(b) Except as disclosed in Section 6.11 of the Target Disclosure
Memorandum, there is no Litigation pending or, to the Knowledge of Target,
threatened before any court, governmental agency or authority or other forum in
which any Target Entity or any of its Operating Properties or Participation
Facilities (or Target in respect of such Operating Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with or
Liability under any Environmental Law or (ii) relating to the release,
16
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site currently or formerly owned, leased or operated by
any Target Entity or any of its Operating Properties or Participation
Facilities, nor is there any reasonable basis for any Litigation of a type
described in this sentence.
(c) Except as disclosed in Section 6.11(c) of the Target Disclosure
Memorandum, during the period of (i) any Target Entity's ownership or operation
of any of their respective current properties, (ii) any Target Entity's
participation in the management of any Participation Facility, or (iii) any
Target Entity's holding of a security interest in any Operating Property, there
have been no releases, discharges, spillages, or disposals of Hazardous Material
in, on, under, adjacent to, or affecting (or potentially affecting) such
properties. Prior to the period of (i) any Target Entity's ownership or
operation of any of their respective current properties, (ii) any Target
Entity's participation in the management of any Participation Facility, or (iii)
any Target Entity's holding of a security interest in any Operating Property, to
the Knowledge of Target, there were no releases, discharges, spillages or
disposals of Hazardous Material in, on, under, or affecting any such property,
Participation Facility or Operating Property.
6.12 Compliance with Laws.
Each Target Entity has in effect all Permits necessary for it to own,
lease or operate its material Assets and to carry on its business as now
conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Target Material Adverse
Effect, and there has occurred no Default under any such Permit. Except as
disclosed in Section 6.12 of the Target Disclosure Memorandum, none of the
Target Entities:
(a) is in Default under any of the provisions of its Articles of
Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Order, or Permits applicable to its
business or employees conducting its business; or
(c) since January 1, 1996, has received any notification or communication
from any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Target Entity
is not, or may not be, in compliance with any Laws or Orders, (ii) threatening
to revoke any Permits, or (iii) requiring any Target Entity to enter into or
consent to the issuance of a cease and desist order, injunction formal
agreement, directive, commitment, or memorandum of understanding, or to adopt
any board resolution or similar undertaking, which restricts materially the
conduct of its business or in any manner relates to its employment decisions,
its employment or safety policies or practices, its management or the payment of
dividends; or
(d) has effectuated (i) a "plant closing" (as defined in the Worker
Adjustment and Retraining Notification Act (the "WARN Act")) affecting any site
of employment or one or more facilities or operating units within any site of
employment or facility of any Target Entity; or (ii) a "mass layoff" (as defined
in the WARN Act) affecting any site of employment or facility of any Target
Entity; and no Target Entity has been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger application
17
of any similar state or local Law. Except as set forth in Section 6.12 of the
Target Disclosure Memorandum, none of any Target Entity's employees has suffered
an "employment loss" (as defined in the WARN Act) since six months prior to the
Closing Date.
Section 6.12 of the Target Disclosure Memorandum contains a list of all
independent contractors of each Target Entity (separately listed by Target
Entity) and each such Person meets the standards under all Laws (including
Treasury Regulations under the Internal Revenue Code and federal and state labor
and employment Laws) as independent contractors and no such Person is an
employee of any Target Entity under any applicable Law. Copies of all material
reports, correspondence, notices and other documents relating to any inspection,
audit, monitoring or other form of review or enforcement action by a Regulatory
Authority have been made available to Buyer.
6.13 Labor Relations.
(a) Except as set forth in Section 6.13(a) of the Target Disclosure
Memorandum, no Target Entity is the subject of any Litigation asserting that it
or any other Target Entity has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state Law) or other
violation of state or federal labor Law or seeking to compel it or any other
Target Entity to bargain with any labor organization or other employee
representative as to wages or conditions of employment, nor is any Target Entity
party to any collective bargaining agreement or subject to any bargaining order,
injunction or other Order relating to Target's relationship or dealings with its
employees, any labor organization or any other employee representative. There is
no strike, slowdown, lockout or other job action or labor dispute involving any
Target Entity pending or to the Knowledge of Target threatened and there has
been no such actions or disputes in the past five years. To the Knowledge of
Target, in the past five years, there has not been any attempt by any Target
Entity employees or any labor organization or other employee representative to
organize or certify a collective bargaining unit or to engage in any other union
organization activity with respect to the workforce of any Target Entity. Except
as disclosed in Section 6.13 of the Target Disclosure Memorandum, the employment
of each employee and the engagement of each independent contractor of each
Target Entity is terminable at will by the relevant Target Entity without any
penalty, liability or severance obligation incurred by any Target Entity. Except
as disclosed in Section 6.13 of the Target Disclosure Memorandum, no Target
Entity will owe any amounts to any of its employees or independent contractors
as of the Closing Date, including any amounts incurred for any wages, bonuses,
vacation pay, sick leave, contract notice periods, change of control payments or
severance obligations.
(b) All of the employees employed in the United States are either United
States citizens or are legally entitled to work in the United States under the
Immigration Reform and Control Act of 1986, as amended, other U.S. immigration
Laws and the Laws related to the employment of non-United States citizens
applicable in the state in which the employees are employed.
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6.14 Employee Benefit Plans
(a) Target has disclosed in Section 6.14 of the Target Disclosure
Memorandum, and has delivered or made available to Buyer prior to the execution
of this Agreement, (i) copies of each Employee Benefit Plan for which the
present value of all vested and non-vested benefits associated with such
Employee Benefit Plan is more than $5,000 and currently adopted, maintained by,
sponsored in whole or in part by or contributed to by any Target Entity or ERISA
Affiliate thereof for the benefit of employees, former employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
or under which employees, retirees, former employees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate (collectively, the "Target Benefit Plans") and (ii) a list of each
Employee Benefit Plan that is not identified in (i) above (e.g., former Employee
Benefit Plans) but for which the Target Entity or ERISA Affiliate has or
reasonably could have any obligation or Liability. Any of the Target Benefit
Plans which is an "employee pension benefit plan," as that term is defined in
ERISA Section 3(2), is referred to herein as a "Target ERISA Plan." Each Target
ERISA Plan which is also a "defined benefit plan" (as defined in Internal
Revenue Code Section 414(j)) is referred to herein as a "Target Pension Plan."
(b) Target has delivered to Buyer prior to the execution of this Agreement
(i) all trust agreements or other funding arrangements for all Employee Benefit
Plans, (ii) all determination letters, rulings, opinion letters, information
letters or advisory opinions issued by the United States Internal Revenue
Service ("IRS"), the United States Department of Labor ("DOL") or the Pension
Benefit Guaranty Corporation during this calendar year or any of the preceding
three calendar years with respect to any Target Benefit Plans, (iii) any filing
or documentation (whether or not filed with the IRS) where corrective action was
taken in connection with the IRS EPCRS program set forth in Revenue Procedure
2001-17 (or its predecessor or successor rulings) with respect to any Target
Benefit Plans, (iv) annual reports or returns, audited or unaudited financial
statements, actuarial reports and valuations prepared for any Employee Benefit
Plan for the current plan year and the three preceding plan years, and (v) the
most recent summary plan descriptions and any material modifications thereto for
all Target ERISA plans.
(c) Each Target Benefit Plan is in compliance with the terms of such Target
Benefit Plan, in material compliance with the applicable requirements of the
Internal Revenue Code, in material compliance with the applicable requirements
of ERISA, and in material compliance with any other applicable Laws. Each Target
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the IRS
that is still in effect and applies to the Target ERISA Plan as amended and as
administered or, within the time permitted under Internal Revenue Code Section
401(b), has timely applied for a favorable determination letter which when
issued will apply retroactively to the Target ERISA Plan as amended and as
administered. Target is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. Target has not received
any communication (written or unwritten) from any government agency questioning
or challenging the compliance of any Target Benefit Plan with applicable Laws.
No Target Benefit Plan is currently being audited by a governmental agency for
compliance with applicable Laws or has been audited with a determination by the
governmental agency that the Employee Benefit Plan failed to comply with
applicable Laws.
19
(d) There has been no oral or written representation or communication with
respect to any aspect of the Employee Benefit Plans made to employees of the
Target which is not in accordance with the written or otherwise preexisting
terms and provisions of such plans. Neither the Target nor any administrator or
fiduciary of any Target Benefit Plan (or any agent of any of the foregoing) has
engaged in any transaction, or acted or failed to act in any manner, which could
subject the Target or Buyer to any direct or indirect Liability (by indemnity or
otherwise) for breach of any fiduciary, co-fiduciary or other duty under ERISA.
There are no unresolved claims or disputes under the terms of, or in connection
with, the Target Benefit Plans other than claims for benefits which are payable
in the ordinary course of business and no action, proceeding, prosecution,
inquiry, hearing or investigation has been commenced with respect to any Target
Benefit Plan.
(e) All Target Benefit Plan documents and annual reports or returns,
audited or unaudited financial statements, actuarial valuations, summary annual
reports, and summary plan descriptions issued with respect to the Target Benefit
Plans are correct and complete, have been timely filed with the IRS, the DOL or
distributed to participants of the Target Benefit Plans (as required by Law),
and there have been no changes in the information set forth therein.
(f) No "party in interest" (as defined in ERISA Section 3(14)) or
"disqualified person" (as defined in Internal Revenue Code Section 4975(e)(2))
of any Target Benefit Plan has engaged in any nonexempt "prohibited transaction"
(described in Internal Revenue Code Section 4975(c) or ERISA Section 406) that
could reasonably result in Liability being incurred by Target or its ERISA
Affiliates.
(g) For any Target Pension Plan, the fair market value of such Target
Pension Plan's assets equals or exceeds the present value of all benefits
(whether vested or not) accrued to date by all present or former participants in
such Target Pension Plan. For this purpose the assumptions prescribed by the
Pension Benefit Guaranty Corporation for valuing plan assets or liabilities upon
plan termination shall be applied and the term "benefits" shall include the
value of all benefits, rights and features protected under Internal Revenue Code
Section 411(d)(6) or its successors and any ancillary benefits (including
disability, shutdown, early retirement and welfare benefits) provided under any
such employee pension benefit plan and all "benefit liabilities" as defined in
ERISA Section 4001(a)(16). Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
the Target Pension Plan, (ii) no change in the actuarial assumptions with
respect to any Target Pension Plan, and (iii) no increase in benefits under any
Target Pension Plan as a result of Target Pension Plan amendments or changes in
any applicable Law which is reasonably likely to have, individually or in the
aggregate, a material adverse effect on the funding status of such Target
Pension Plan. All contributions with respect to an Employee Benefit Plan of
Target, or any of its ERISA Affiliates that is subject to Internal Revenue Code
Section 412 or ERISA Section 302 have or will be timely made and, with respect
to any such Employee Benefit Plan, there is no Lien nor is there expected to be
a Lien under Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax
under Internal Revenue Code Section 4971. No Target Pension Plan has a
"liquidity shortfall" as defined in Internal Revenue Code Section 412(m)(5).
Neither Target nor any of its ERISA Affiliates is subject to or can reasonably
be expected to become subject to a Lien under Internal Revenue Code Section
401(a)(29). All premiums required to be paid under ERISA Section 4006 have been
timely paid by Target and by its ERISA Affiliates.
20
(h) No Liability under Title IV of ERISA has been or is expected to be
incurred by Target or its ERISA Affiliates and no event has occurred that could
reasonably result in Liability under Title IV of ERISA being incurred by Target
or its ERISA Affiliates with respect to any ongoing, frozen or terminated
single-employer plan of Target or the single-employer plan of any ERISA
Affiliate. There has been no "reportable event," within the meaning of ERISA
Section 4043 for which the 30-day reporting requirement has not been waived by
any ongoing, frozen, or terminated single employer plan of Target or of an ERISA
Affiliate.
(i) Except as disclosed in Section 6.14 of the Target Disclosure
Memorandum, no Target Entity has any Liability for retiree health and life
benefits under any of the Target Benefit Plans and there are no restrictions on
the rights of such Target Entity to amend or terminate any such retiree health
or benefit Plan without incurring any Liability thereunder except to the extent
required under Part 6 of Title I of ERISA or Internal Revenue Code 4980B. No Tax
under Code Sections 4980B or 5000 has been incurred with respect to any Target
Benefit Plan and no circumstance exists which could reasonably give rise to such
Taxes.
(j) Except as disclosed in Section 6.14 of the Target Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of any Target Entity
from any Target Entity under any Target Benefit Plan or otherwise, (ii) increase
any benefits otherwise payable under any Target Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any such benefit.
(k) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any Target Entity and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Internal Revenue Code Section 412 or ERISA Section 302, have been
fully reflected on the June 2 Balance Sheet to the extent required by and in
accordance with GAAP.
(l) All individuals who render services to any Target Entity and who are
authorized to participate in a Target Benefit Plan pursuant to the terms of such
Target Benefit Plan are in fact eligible to and authorized to participate in
such Target Benefit Plan. With respect to tax qualified Target Benefit Plans
whose tax qualification is dependant on restricting participation solely to
common-law employees, all individuals participating in (or eligible to
participate in) any Target Benefit Plan are common-law employees of a Target
Entity.
(m) On or after September 26, 1980, neither the Target nor any of its ERISA
Affiliates has had an "obligation to contribute" (as defined in ERISA Section
4212) to a "multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and
3(37)(A)).
21
6.15 Material Contracts.
Except as disclosed in Section 6.15 of the Target Disclosure Memorandum
or otherwise reflected in the Target Financial Statements, or filed as an
exhibit to any SEC Document filed by any Target Entity, none of the Target
Entities, nor any of their respective Assets, businesses or operations, is a
party to, or is bound or affected by, or receives benefits under, (i) any
employment, severance, termination, consulting or retirement Contract providing
for aggregate payments to any Person in any calendar year in excess of $5,000,
(ii) any Contract relating to the borrowing of money by any Target Entity or the
guarantee by any Target Entity of any such obligation (other than Contracts
evidencing trade payables and Contracts relating to borrowings or guarantees
made in the ordinary course of business), (iii) any Contract which prohibits or
restricts any Target Entity from engaging in any business activities in any
geographic area, line of business or otherwise in competition with any other
Person, (iv) any Contract between or among Target Entities, (v) any Contract
involving Intellectual Property (other than Contracts entered into in the
ordinary course with customers and "shrink-wrap" software licenses), (vi) any
Contract relating to the provision of data processing, network communication or
other technical services to or by any Target Entity, (vii) any Contract relating
to the purchase or sale of any goods or services (other than Contracts entered
into in the ordinary course of business and involving payments under any
individual Contract not in excess of $5,000 or involving payments in the
aggregate not in excess of $25,000), (viii) any exchange-traded or
over-the-counter swap, forward, future, option, cap, floor or collar financial
Contract, or any other interest rate or foreign currency protection Contract not
included on its balance sheet which is a financial derivative Contract, and (ix)
any other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by Target with the SEC as of the date of this
Agreement (together with all Contracts referred to in Sections 6.10 and 6.14(a),
the "Target Contracts"). With respect to each Target Contract and except as
disclosed in Section 6.15 of the Target Disclosure Memorandum: (i) the Contract
is in full force and effect, (ii) no Target Entity is in Default thereunder,
(iii) no Target Entity has repudiated or waived any material provision of any
such Contract, and (iv) no other party to any such Contract is, to the Knowledge
of Target, in Default in any respect or has repudiated or waived any material
provision thereunder. Except as disclosed in Section 6.15 of the Target
Disclosure Memorandum, all of the indebtedness of any Target Entity for money
borrowed is prepayable at any time by such Target Entity without penalty or
premium.
6.16 Legal Proceedings.
Except as disclosed in Section 6.16 of the Target Disclosure
Memorandum, there is no Litigation instituted or pending, or, to the Knowledge
of Target, threatened (or unasserted but considered probable of assertion and
which if asserted would have at least a reasonable possibility of an unfavorable
outcome) against any Target Entity, or against any director, officer or employee
in their capacities as such or Employee Benefit Plan of any Target Entity, or
against any Asset interest, or right of any of them, nor are there any Orders
outstanding against any Target Entity. Section 6.16 of the Target Disclosure
Memorandum contains a summary of all Litigation as of the date of this Agreement
to which any Target Entity is a party and which names a Target Entity as a
defendant or cross-defendant or for which any Target Entity has any potential
Liability. Section 6.16 of the Target Disclosure Memorandum contains a summary
of all Orders to which any Target Entity is subject.
22
6.17 Reports.
Since January 1, 1998, or the date of organization if later, each
Target Entity has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document did not, in all
material respects, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
6.18 Statements True and Correct.
(a) No statement, certificate, instrument, or other writing furnished or to
be furnished by any Target Entity or any Affiliate thereof to Buyer pursuant to
this Agreement or any other document, agreement or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) None of the information supplied or to be supplied by any Target Entity
or any Affiliate thereof for inclusion in the proxy statement to be mailed to
Target's shareholders in connection with the Shareholders' Meetings pursuant to
Section 9.1, and any other documents to be filed by a Target Entity or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the proxy statement, when first mailed
to the shareholders of Target, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the proxy statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting.
(c) All documents that any Target Entity or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
6.19 State Takeover Laws.
Each Target Entity has taken all necessary action to exempt the
transactions contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable "moratorium," "fair price,"
"business combination," "control share," or other anti-takeover Laws of their
jurisdiction of incorporation, including Sections 14-2-1131 through 14-2-1133 of
the GBCC (collectively, "Takeover Laws").
23
6.20 Charter Provisions.
Each Target Entity has taken all action so that the entering into of
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws or other
governing instruments of any Target Entity or restrict or impair the ability of
Buyer or any of its Subsidiaries to vote, or otherwise to exercise the rights of
a shareholder with respect to, shares of any Target Entity that may be directly
or indirectly acquired or controlled by them.
6.21 Rights Agreement.
Target has permanently terminated the Target Rights Agreement;
accordingly, the entering into of this Agreement, the acquisition of shares
pursuant to the Offer, the acquisition of shares pursuant to, or other exercise
of rights under, the Tender and Option Agreement and the consummation of the
Merger and the Offer and the other transactions contemplated hereby do not and
will not result in any Person becoming able to exercise any Target Rights under
the Target Rights Agreement. No Target Rights are attached to the shares of
Target Common Stock or are otherwise extant.
6.22 Opinion of Financial Advisor.
Target has received the oral opinion of Target Financial Advisor, (and
no later than five days after the date of this Agreement will receive the
written opinion of Target Financial Advisor, dated the date of this Agreement)
to the effect that the consideration to be received in the Merger by the holders
of Target Common Stock is fair, from a financial point of view, to such holders,
a signed copy of which will be delivered to Buyer no later than five days after
the date of this Agreement.
6.23 Board Recommendation.
The Board of Directors of Target, at a meeting duly called and held,
has by unanimous vote of the directors present (who constituted all of the
directors then in office) (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, and the Tender and
Option Agreements and the transactions contemplated thereby, taken together, are
fair to and in the best interests of the shareholders and (ii) resolved to
recommend that the holders of the shares of Target Common Stock approve this
Agreement.
6.24 Consent.
Target hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board of Directors of Target described in Section 9.1, and
Target Financial Advisor has consented to the inclusion of its opinion in
Schedule 14D-9 so long as such inclusion is in form and substance satisfactory
to Target Financial Advisor.
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6.25 Privacy of Customer Information.
(a) Target is the sole owner of all individually identifiable personal
information ("IIPI") relating to customers, former customers, prospective
customers, consumers, former consumers, prospective consumers, employees, former
employees or prospective employees that will be transferred to the Surviving
Corporation pursuant to this Agreement. For purposes of this Agreement, "IIPI"
shall mean any information relating to an identified or identifiable natural
person.
(b) Target's collection and use of such IIPI and the retention and use of
such IIPI by the Surviving Corporation as contemplated by this Agreement
complies with Target's privacy policy and all applicable state, federal and
foreign policy Laws and any Contract or industry standard relating to privacy.
6.26 Tender and Option Agreements.
Each of the directors of Target has executed and delivered to Sub the
Tender and Option Agreements.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and Sub hereby represent and warrant to Target as follows:
7.1 Organization, Standing and Power.
Buyer is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of Florida, and has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its material Assets. Buyer is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Buyer
Material Adverse Effect.
7.2 Authority; No Breach By Agreement.
(a) Buyer has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Offer and the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Buyer, and this
Agreement represents a legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Buyer, nor the
consummation by Buyer of the transactions contemplated hereby, nor compliance by
Buyer with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of Buyer's Certificate of Incorporation or Bylaws, or
25
(ii) constitute or result in a Default under, or require any Consent pursuant
to, or result in the creation of any Lien on any Asset of any Buyer Entity
under, any Contract or Permit of any Buyer Entity, where such Default or Lien,
or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Buyer Material Adverse Effect, or, (iii)
subject to receipt of the following requisite Consents, constitute or result in
a Default under, or require any Consent pursuant to, any Law or Order applicable
to any Buyer Entity or any of their respective material Assets (including any
Buyer Entity or any Target Entity becoming subject to or liable for the payment
of any Tax or any of the Assets owned by any Buyer Entity or any Target Entity
being reassessed or revalued by any Taxing authority): (A) Consent under the
Loan and Security Agreement, as amended, by and among Buyer, Fleet Capital
Corporation, as agent, and the Lenders thereunder, dated June 10, 1998 and (B)
Consent under the Loan Agreement, as amended, by and between Buyer and Bank of
America, N.A., dated May 28, 1999.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the AMEX, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the IRS or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, or under the HSR Act,
and other than Consents, filings or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Buyer Material Adverse Effect, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by Buyer of the
Merger and the other transactions contemplated in this Agreement.
7.3 Statements True and Correct.
(a) No statement, certificate, instrument or other writing furnished or to
be furnished by any Buyer Entity or any Affiliate thereof to Target pursuant to
this Agreement or any other document, agreement or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) None of the information supplied or to be supplied by any Buyer Entity
or any Affiliate thereof for inclusion in the Proxy Statement to be mailed to
Target's shareholders in connection with the Shareholders' Meetings, and any
other documents to be filed by any Buyer Entity or any Affiliate thereof with
the SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Offer Documents or the Proxy Statement, when first mailed to
the shareholders of Target, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Offer Documents or any amendment or
supplement thereto, at any time the Offer is outstanding, or, in the case of the
Proxy Statement or any amendment thereof or supplement thereto, at the time of
the Shareholders' Meetings, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the Offer or the solicitation of any
proxy for the Shareholders' Meetings (as applicable).
26
(c) All documents that any Buyer Entity or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
7.4 Authority of Sub.
Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Georgia as a wholly owned Subsidiary of
Buyer. The authorized capital stock of Sub consists of 1,000 shares of Sub
Common Stock, all of which are validly issued and outstanding, fully paid and
nonassessable and is owned by Buyer free and clear of any Lien. Sub has the
corporate power and authority necessary to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Sub. This Agreement represents a legal, valid, and
binding obligation of Sub, enforceable against Sub in accordance with its terms.
Buyer, as the sole shareholder of Sub, has voted the shares of Sub Common Stock
in favor of approval of the Offer, the Merger and this Agreement, as and to the
extent required by applicable Law.
ARTICLE 8. CONDUCT OF BUSINESS PENDING CONSUMMATION
8.1 Affirmative Covenants of Target.
From the date of this Agreement until the earlier of (i) the election
to Target's Board of Directors of Buyer's designees pursuant to Section 1.3(a),
(ii) the Effective Time, or (iii) the termination of this Agreement, unless the
prior written consent of Buyer shall have been obtained, and except as otherwise
expressly contemplated herein, Target shall, and shall cause each of its
Subsidiaries to, (a) operate its business only in the usual, regular and
ordinary course, (b) preserve intact its business organization and Assets and
maintain its rights and franchises, and (c) take no action which would (i)
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 10.1(b), or
(ii) adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
8.2 Negative Covenants of Target.
From the date of this Agreement until the earlier of (i) the election
to Target's Board of Directors of Buyer's designees pursuant to Section 1.3(a),
(ii) the Effective Time, or (iii) the termination of this Agreement, unless the
prior written consent of Buyer shall have been obtained, and except as otherwise
expressly contemplated herein, Target covenants and agrees that it will not do
or agree or commit to do, or permit any of its Subsidiaries to do or agree or
commit to do, any of the following:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any Target Entity; or
27
(b) incur any additional debt obligation or other obligation for borrowed
money or impose, or suffer the imposition, on any Asset of any Target Entity of
any Lien or permit any such Lien to exist (other than in connection with Liens
in effect as of the date hereof that are disclosed in the Target Disclosure
Memorandum); or
(c) repurchase, redeem or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any Target Entity, or declare or pay any dividend or make any
other distribution in respect of Target's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of stock options
outstanding as of the date hereof and pursuant to the terms thereof in existence
on the date hereof, or as disclosed in Section 8.2 of the Target Disclosure
Memorandum, issue, sell, pledge, encumber, authorize the issuance of, enter into
any Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of Target Common
Stock or any other capital stock of any Target Entity, or any stock appreciation
rights, or any option, warrant, or other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of any Target
Entity or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of Target Common Stock, or sell, lease, mortgage
or otherwise dispose of or otherwise encumber (x) any shares of capital stock of
any Target Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another Target Entity) or (y) any Asset other than in the
ordinary course of business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S. Government
agency securities, which in either case have maturities of three years or less,
purchase any securities or make any material investment, either by purchase of
stock of securities, contributions to capital, Asset transfers, or purchase of
any Assets, in any Person other than a wholly owned Target Subsidiary, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, or (ii) the
creation of new wholly owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Target Entity, except in accordance with past practice disclosed
in Section 8.2 of the Target Disclosure Memorandum or as required by Law; pay
any severance or termination pay or any bonus other than pursuant to written
policies or written Contracts in effect on the date of this Agreement and
disclosed in Section 8.2 of the Target Disclosure Memorandum; and enter into or
amend any severance agreements with officers of any Target Entity; grant any
material increase in fees or other increases in compensation or other benefits
to directors of any Target Entity except in accordance with past practice
disclosed in Section 8.2 of the Target Disclosure Memorandum; or waive any stock
repurchase rights, accelerate, amend or change the period of exercisability of
any Equity Rights or restricted stock, or reprice Equity Rights granted under
the Target Stock Plan or authorize cash payments in exchange for any Equity
Rights; or
28
(h) enter into or amend any employment Contract between any Target Entity
and any Person (unless such amendment is required by Law) that the Target Entity
does not have the unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after the Effective
Time; or
(i) adopt any new employee benefit plan of any Target Entity or terminate
or withdraw from, or make any material change in or to, any existing employee
benefit plans of any Target Entity other than any such change that is required
by Law or that, in the opinion of counsel, is necessary or advisable to maintain
the tax qualified status of any such plan, or make any distributions from such
employee benefit plans, except as required by Law, the terms of such plans or
consistent with past practice; or
(j) make any significant change in any Tax or accounting methods or systems
of internal accounting controls, except as may be appropriate to conform to
changes in Tax Laws or regulatory accounting requirements or GAAP; or
(k) commence any Litigation, other than in accordance with past practice,
or settle any Litigation involving any Liability of any Target Entity for
material money damages or restrictions upon the operations of any Target Entity;
or
(l) enter into, modify, amend or terminate any material Contract or waive,
release, compromise or assign any material rights or claims.
8.3 Covenants of Buyer.
From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, unless the prior written consent of Target
shall have been obtained, and except as otherwise expressly contemplated herein,
Buyer covenants and agrees that it shall take no action which would (i)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentence of Section
10.1(b), or (ii) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement; provided, that the foregoing
shall not prevent any Buyer Entity from acquiring any Assets or other businesses
or from discontinuing or disposing of any of its Assets or business if such
action is, in the judgment of Buyer, desirable in the conduct of the business of
Buyer and its Subsidiaries.
8.4 Adverse Changes in Condition.
Each Party agrees to give written notice promptly to the other Party
upon becoming aware of the occurrence or impending occurrence of any event or
circumstance relating to it or any of its Subsidiaries which (i) is reasonably
likely to have, individually or in the aggregate, a Target Material Adverse
Effect or a Buyer Material Adverse Effect, as applicable, or (ii) would cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
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8.5 Reports.
Each Party and its Subsidiaries shall file all reports required to be
filed by it with Regulatory Authorities between the date of this Agreement and
the Effective Time and shall deliver to the other Party copies of all such
reports promptly after the same are filed. If financial statements are contained
in any such reports filed with the SEC, such financial statements will fairly
present the consolidated financial position of the entity filing such statements
as of the dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As of their respective
dates, such reports filed with the SEC will comply in all material respects with
the Securities Laws and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports. In addition, until the Effective Time, Target
shall prepare and deliver to Buyer and Sub on or before the twelfth (12th )
(fourteenth (14th) in the case of the fiscal month ending June 30, 2001)
calendar day following the end of each fiscal month an unaudited consolidated
balance sheet as of the end of each such month and unaudited consolidated
statements of income and cash flows for each such month then ended, each
prepared in accordance with GAAP applied on a consistent basis with the Target
Financial Statements throughout the periods involved, subject to normal
recurring year-end adjustments that are not expected to be material in amount or
effect.
ARTICLE 9. ADDITIONAL AGREEMENTS
9.1 Shareholder Approval; Proxy Statement.
(a) Unless the GBCC does not require a vote of the shareholders of the
Target for consummation of the Merger, Target shall duly call, give notice of,
convene and hold a Shareholders' Meeting, to be held as soon as reasonably
practicable after consummation of the Offer on a date reasonably acceptable to
Buyer, for the purpose of voting upon approval and adoption of this Agreement
("Target Shareholder Approval") and such other related matters as it deems
appropriate and shall, subject to the provisions of Section 9.1(b), through its
Board of Directors, recommend to its shareholders the approval and adoption of
this Agreement and use its reasonable efforts to obtain the Target Shareholder
Approval. In connection with the Target Shareholder Approval and the
Shareholders' Meeting, Target shall prepare and file with the SEC a preliminary
proxy statement relating to the Merger and this Agreement and Target shall use
its best efforts to obtain and furnish the information required by the SEC to be
included in such proxy statement and, after consultation with Buyer, to respond
promptly to any comments made by the SEC with respect to such proxy statement,
including any amendment or supplement thereto, to be mailed to its shareholders,
provided that no amendment or supplement to such proxy statement will be made by
Target without consultation with Buyer and its counsel. Target, subject to
Sections 9.1(b) and 9.2, shall use its best efforts to solicit from holders of
Shares proxies in favor of the Merger and shall take all other action necessary
or, in the reasonable opinion of Buyer, advisable to secure any vote or consent
of shareholders required by the GBCC to effect the Merger. Buyer will promptly
provide Target with and shall be responsible for the information concerning
Buyer and Sub required to be included in the proxy statement. If after
consummation of the Offer, Buyer, Sub or any other subsidiary of Buyer shall
directly or indirectly beneficially own at least 90% of the outstanding shares
of Target Common Stock, the parties hereto agree to take all necessary and
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appropriate action to cause the Merger to be effective as soon as practicable
after the acceptance for payment and purchase of shares of Target Common Stock
pursuant to the Offer without a meeting of shareholders of Target in accordance
with Section 14-2-1104 of the GBCC. To the extent permitted by law, Buyer and
Sub each agree to vote all Target Common Stock beneficially owned by it in favor
of approval and adoption of this Agreement.
(b) Neither the Board of Directors of Target nor any committee thereof
shall (i) except as expressly permitted by this Section 9.1(b), withdraw,
qualify or modify, or propose publicly to withdraw, qualify or modify, in a
manner adverse to Buyer, the approval or recommendation of such Board of
Directors or such committee of the Merger or this Agreement, (ii) except as
expressly permitted by this Section 9.1(b), approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (iii) cause
Target to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, an "Acquisition Agreement") related
to any Acquisition Proposal. Notwithstanding the foregoing, in the event that,
after the expiration or waiver of Buyer's right to terminate this Agreement
pursuant to Section 11.1(f), but prior to the time of acceptance for payment of
shares of Target Common Stock pursuant to the Offer, the Board of Directors of
Target determines in good faith, after it has received a Superior Proposal and
after receipt of advice from outside counsel, that the failure to do so would
result in a breach of its fiduciary duties to Target shareholders under
applicable Law, the Board of Directors of Target may (subject to this and the
following sentences) inform Target shareholders that it no longer believes that
the Offer and the Merger is advisable and no longer recommends approval and may
(subject to this and the following sentences) approve or recommend a Superior
Proposal (and in connection therewith withdraw or modify its approval or
recommendation of the Offer, this Agreement and the Merger) (a "Subsequent
Determination"), but only at a time that is after the second (2nd) business day
following Buyer's receipt of written notice advising Buyer that the Board of
Directors of Target has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal (and including a copy thereof
with all accompanying documentation, if in writing), identifying the person
making such Superior Proposal and stating that it intends to make a Subsequent
Determination. After providing such notice, Target shall provide two (2)
business days to Buyer to make such adjustments in the terms and conditions of
this Agreement as would enable Target to proceed with its recommendation to its
shareholders without a Subsequent Determination; provided, however, that any
such adjustment shall be at the discretion of the Parties at the time.
Notwithstanding any other provision of this Agreement, except to the extent
prohibited by Georgia law in the written opinion of counsel to Target, which
shall be reasonably acceptable to Buyer, Target shall submit this Agreement to
its shareholders at its Shareholders' Meeting even if the Board of Directors of
Target determines at any time after the date hereof that it is no longer
advisable or recommends that Target shareholders reject it.
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9.2 Other Offers, Etc.
(a) No Target Entity shall, nor shall it authorize or permit any of its
Affiliates or Representatives to, directly or indirectly (i) solicit, initiate,
encourage or induce the making, submission or announcement of any Acquisition
Proposal, (ii) participate in any discussions or negotiations regarding, or
furnish to any Person or "Group" (as such term is defined in Section 13(d) under
the Exchange Act) any nonpublic information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal,
(iii) subject to Sections 9.1(b) and 9.2(d), approve, endorse or recommend any
Acquisition Proposal, or (iv) enter into any Acquisition Agreement contemplating
or otherwise relating to any Acquisition Transaction; provided however, that,
after the expiration or waiver of Buyer's right to terminate this Agreement
pursuant to Section 11.1(f), this Section 9.2(a) shall not prohibit a Target
Entity from furnishing nonpublic information regarding any Target Entity to, or
entering into a confidentiality agreement or discussions or negotiations with,
any Person or Group in response to a bona fide unsolicited written Acquisition
Proposal submitted by such Person or Group (and not withdrawn) if (A) no Target
Entity or Representative or Affiliate thereof shall have violated any of the
restrictions set forth in this Section 9.2, (B) the Board of Directors of Target
determines in its good faith judgment (based on, among other things, the advice
of Target Financial Advisor or any other financial advisor of nationally
recognized reputation) that such Acquisition Proposal constitutes a Superior
Proposal, (C) the Board of Directors of Target concludes in good faith, after
consultation with and the receipt of advice from its outside legal counsel, that
the failure to take such action would result in a breach of its fiduciary
duties, as such duties would exist in the absence of this Section 9.2, to the
shareholders of Target under applicable Law, (D) (1) at least two (2) business
days prior to furnishing any such nonpublic information to, or entering into
discussions or negotiations with, such Person or Group, Target gives Buyer
written notice of the identity of such Person or Group and of Target's intention
to furnish nonpublic information to, or enter into discussions or negotiations
with, such Person or Group, and (2) Target has previously received or receives
from such Person or Group an executed confidentiality agreement containing terms
no less favorable to the disclosing party than the terms of the Confidentiality
Agreement and (E) contemporaneously with furnishing any such nonpublic
information to such Person or Group, Target furnishes such nonpublic information
to Buyer (to the extent such nonpublic information has not been previously
furnished by Target to Buyer). In addition to the foregoing, Target shall
provide Buyer with at least two (2) business days' prior written notice of a
meeting of the Board of Directors of Target at which meeting the Board of
Directors of Target is reasonably expected to resolve to recommend a Superior
Proposal to its shareholders and together with such notice a copy of the most
recently proposed documentation relating to such Superior Proposal; provided
further that Target hereby agrees to provide to Buyer any revised documentation
and any definitive documentation promptly.
(b) In addition to the obligations of Target set forth in Section 9.2(a),
as promptly as practicable, and in any event within one (1) business day after
any of the executive officers of Target become aware thereof, Target shall
advise Buyer of any request received by Target for nonpublic information which
Target reasonably believes could lead to an Acquisition Proposal or of any
Acquisition Proposal, the material terms and conditions of such request or
Acquisition Proposal, and the identity of the Person or Group making any such
request or Acquisition Proposal. Target shall keep Buyer informed promptly of
material amendments or modifications to any such request or Acquisition
Proposal.
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(c) Target and its Subsidiaries shall immediately cease any and all
existing activities, discussions or negotiations with any Persons conducted
heretofore with respect to any Acquisition Proposal (other than with respect to
the potential sale of the facility in Winder, Georgia and the Jupiter plant in
Costa Rica) and will use their respective reasonable best efforts to enforce any
confidentiality or similar agreement relating to any Acquisition Proposal.
Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in this Section 9.2, by any Affiliate or Representative
of any Target Entity shall be deemed to be a breach of this Section 9.2 by
Target.
(d) Nothing contained in this Agreement shall prevent a Party or its board
of directors from complying with Rule 14d-9 and Rule 14e-2 under the Exchange
Act with respect to an Acquisition Proposal, provided that such Rules will in no
way eliminate or modify the effect that any action pursuant to such Rules would
otherwise have under this Agreement.
9.3 Consents of Regulatory Authorities.
The Parties hereto shall cooperate with each other and use their
reasonable efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings and to obtain as
promptly as practicable all Consents of all Regulatory Authorities and other
Persons which are necessary or advisable to consummate the transactions
contemplated by this Agreement (including the Offer and the Merger). The Parties
agree that they will consult with each other with respect to the obtaining of
all Consents of all Regulatory Authorities and other Persons necessary or
advisable to consummate the transactions contemplated by this Agreement and each
Party will keep the other apprised of the status of matters relating to
contemplation of the transactions contemplated hereby. Each Party also shall
promptly advise the other upon receiving any communication from any Regulatory
Authority whose Consent is required for consummation of the transactions
contemplated by this Agreement which causes such Party to believe that there is
a reasonable likelihood that any requisite Consent will not be obtained or that
the receipt of any such Consent will be materially delayed.
9.4 Filings with State Offices.
Upon the terms and subject to the conditions of this Agreement, Target
shall execute and file the Articles of Merger with the Secretary of State of the
State of Georgia in connection with the Closing.
9.5 Agreement as to Efforts to Consummate.
Subject to the terms and conditions of this Agreement, each Party
agrees to use, and to cause its Subsidiaries to use, its reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper, or advisable under applicable Laws to consummate and
make effective, as soon as reasonably practicable after the date of this
Agreement, the transactions contemplated by this Agreement, including using its
reasonable efforts to lift or rescind any Order adversely affecting its ability
to consummate the transactions contemplated herein and to cause to be satisfied
the conditions referred to in ANNEX I and the conditions referred to in ARTICLE
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10.; provided, that nothing herein shall preclude either Party from exercising
its rights under this Agreement. Without limiting the generality of the
foregoing, Buyer shall take all action necessary to cause Sub to perform its
obligations under this Agreement and to consummate the Offer and the Merger on
the terms and subject to the conditions set forth in this Agreement.
9.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, Target shall keep Buyer advised of all
material developments relevant to its business and to consummation of the Merger
and shall permit Buyer to make or cause to be made such investigation of the
business and properties of Target and its Subsidiaries and of their respective
financial and legal conditions as Buyer reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. No
investigation by a Party shall affect the ability of such Party to rely on the
representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein, each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Target shall use its reasonable efforts to exercise, and shall not
waive any of, its rights under confidentiality agreements entered into with
Persons which were considering an Acquisition Proposal with respect to Target to
preserve the confidentiality of the information relating to the Target Entities
provided to such Persons and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a material breach of
any representation, warranty, covenant or agreement of the other Party or which
has had or is reasonably likely to have a Target Material Adverse Effect or a
Buyer Material Adverse Effect, as applicable.
9.7 Press Releases.
Prior to the Effective Time, Target and Buyer shall consult with each
other as to the form and substance of any press release or other public
disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 9.7 shall be deemed
to prohibit any Party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such Party's disclosure obligations
imposed by Law.
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9.8 State Takeover Laws.
Each Target Entity shall take all necessary steps to exempt the
transactions contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable Takeover Law.
9.9 Charter Provisions.
Each Target Entity shall take all necessary action to ensure that the
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws or other
governing instruments of any Target Entity or restrict or impair the ability of
Buyer or any of its Subsidiaries to vote, or otherwise to exercise the rights of
a shareholder with respect to, shares of any Target Entity that may be directly
or indirectly acquired or controlled by them.
9.10 Indemnification.
(a) The Surviving Corporation shall indemnify, defend and hold harmless the
present and former directors, officers, employees and agents of each of the
Target Entities (each, an "Indemnified Party") against all Liabilities arising
in whole or in part out of actions or omissions arising in whole or in part out
of the Indemnified Party's service or services as directors, officers, employees
or agents of Target, any other Target Entity or, at any Target Entity's request,
of another corporation, partnership, joint venture, trust or other enterprise
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted under Georgia
Law and by Target's Articles of Incorporation and Bylaws as in effect on the
date hereof, including provisions relating to advances of expenses incurred in
the defense of any Litigation and whether or not any Buyer Entity is insured
against any such matter. Without limiting the foregoing, in any case in which
approval by the Surviving Corporation is required to effectuate any
indemnification, the Surviving Corporation shall direct, at the election of the
Indemnified Party, that the determination of any such approval shall be made by
independent counsel mutually agreed upon between Buyer and the Indemnified
Party.
(b) The Surviving Corporation shall use its reasonable efforts (and Target
shall cooperate prior to the Effective Time in these efforts) to maintain in
effect for a period of three years after the Effective Time Target's existing
directors' and officers' liability insurance policy (provided that Buyer or the
Surviving Corporation may substitute therefor (i) policies of at least the same
coverage and amounts containing terms and conditions which are substantially no
less advantageous or (ii) with the consent of Target given prior to the
Effective Time, any other policy) with respect to claims arising from facts or
events which occurred prior to the Effective Time and covering persons who are
currently covered by such insurance; provided, that neither Buyer nor the
Surviving Corporation shall be obligated to make aggregate annual premium
payments for such three-year period in respect of such policy (or coverage
replacing such policy) which exceed, for the portion related to Target's
directors and officers, 150% of the annual premium payments on Target's current
policy in effect as of the date of this Agreement (the "Maximum Amount"). If the
35
amount of the premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, the Surviving Corporation shall use its reasonable
efforts to maintain the most advantageous policies of directors' and officers'
liability insurance obtainable for a premium equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 9.10, upon learning of any such Liability or Litigation,
shall promptly notify Buyer and the Surviving Corporation thereof. In the event
of any such Litigation (whether arising before or after the Effective Time), (i)
Buyer or the Surviving Corporation shall have the right to assume the defense
thereof and neither Buyer nor the Surviving Corporation shall be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Buyer or the Surviving Corporation elects
not to assume such defense or counsel for the Indemnified Parties advises that
there are substantive issues which raise conflicts of interest between Buyer or
the Surviving Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Buyer or the Surviving Corporation
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided, that Buyer and
the Surviving Corporation shall be obligated pursuant to this paragraph (c) to
pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction, unless there is, as determined by counsel to the Indemnified
Parties, under applicable standards of professional conduct, a conflict or a
reasonable likelihood of a conflict on any significant issue between the
positions of any two or more Indemnified Parties, (ii) the Indemnified Parties
will cooperate in the defense of any such Litigation, and (iii) the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and provided
further that the Surviving Corporation shall not have any obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction shall
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law.
(d) The provisions of this Section 9.10 are intended to be for the benefit
of and shall be enforceable by, each Indemnified Party and their respective
heirs and representatives.
(e) The Articles of Incorporation and Bylaws of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification than
are set forth in the Articles of Incorporation and Bylaws of the Target, which
provisions shall not be amended, repealed or otherwise modified for a period of
six (6) years from the Effective Time in any manner that would affect adversely
the rights thereunder of individuals who at any time prior to the Effective Time
were directors, officers or employees of Target or any of the Subsidiaries,
unless such modification shall be required by the laws of the State of Georgia.
9.11 Delivery of Target Disclosure Memorandum.
On or before the fifth (5th) business day after the date of this
Agreement, Target shall deliver to Buyer and Sub a complete Target Disclosure
Memorandum.
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ARTICLE 10. CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
10.1 Conditions to Obligations of Each Party.
The respective obligations of each Party to consummate the Merger are
subject to the satisfaction of the following conditions, and only the following
conditions, unless waived by both Parties pursuant to Section 12.6:
(a) Shareholder Approval. The shareholders of Target shall have approved
this Agreement, and the consummation of the transactions contemplated hereby,
including the Merger, as and to the extent required by Law, by the provisions of
any governing instruments, or by the rules of the AMEX.
(b) Regulatory Approvals. All Consents of, filings and registrations with,
and notifications to, all Regulatory Authorities required for consummation of
the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
(including requirements relating to the raising of additional capital or the
disposition of Assets) which in the reasonable judgment of the Board of
Directors of Buyer would so materially adversely affect the economic or business
assumptions of the transactions contemplated by this Agreement that, had such
condition or requirement been known, such Party would not, in its reasonable
judgment, have entered into this Agreement.
(c) Legal Proceedings. No court or Regulatory Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law or Order (whether temporary, preliminary or permanent) or taken any other
action which prohibits, restricts or makes illegal consummation of the Merger.
(d) Purchase of Shares in Offer. Sub shall have purchased shares of Target
Common Stock pursuant to the Offer; provided, however, that neither Buyer nor
Sub shall be entitled to assert the failure of this condition if, in breach of
this Agreement or the terms of the Offer, Sub fails to purchase any Target
Common Stock validly tendered and not withdrawn pursuant to the Offer.
ARTICLE 11. TERMINATION
11.1 Termination.
Notwithstanding any other provision of this Agreement, and
notwithstanding the approval of this Agreement by the shareholders of Target,
this Agreement may be terminated and the Merger and the other transactions
contemplated hereby abandoned at any time prior to the Effective Time:
(a) By mutual written agreement of Buyer and Target; or
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(b) Prior to the acceptance for payment pursuant to the Offer of a number
of shares of Target Common Stock that satisfies the Minimum Condition, by either
Party in the event of a material breach by the other Party of any representation
or warranty contained in this Agreement which cannot be or has not been cured
within thirty (30) days after the giving of written notice to the breaching
Party of such breach; or
(c) Prior to the acceptance for payment pursuant to the Offer of a number
of shares of Target Common Stock that satisfies the Minimum Condition, by either
Party in the event of a material breach by the other Party of any covenant or
agreement contained in this Agreement which cannot be or has not been cured
within thirty (30) days after the giving of written notice to the breaching
Party of such breach; or
(d) By either Party in the event (i) any Law or Order permanently
restraining, enjoining or otherwise prohibiting the consummation of the Merger
or the Offer shall have become final and nonappealable, or (ii) the shareholders
of Target fail to vote their approval of this Agreement and the transactions
contemplated hereby at the Shareholders' Meetings where such matters were
presented to such shareholders for approval and voted upon; or
(e) By either Party in the event that the Offer shall not have been
consummated by November 1, 2001, if the failure to consummate the transactions
contemplated hereby on or before such date is not caused by any breach of this
Agreement by the Party electing to terminate pursuant to this Section 11.1(e);
provided, that the passage of the period referred to in this Section 11.1(e)
shall be tolled for any part thereof during which any Party to this Agreement
shall be subject to a nonfinal order or other action restraining, enjoining or
otherwise prohibiting the purchase of shares of Target Common Stock pursuant to
the Offer or the consummation of the Merger or the calling or holding of the
Target Shareholders Meetings; or
(f) By Buyer on or before the thirtieth (30th) day after the date of this
Agreement in the event that Buyer has not been satisfied in its reasonable
discretion, exercised in good faith, with the results of its due diligence
review of information concerning the Target and its business; or
(g) By Buyer if, at any time after the date hereof and prior to the
purchase of any shares of Target Common Stock pursuant to the Offer, (i) the
Board of Directors of Target shall have failed to reaffirm, upon Buyer's
request, its approval of the Offer or the Merger and the transactions
contemplated by this Agreement (to the exclusion of any other Acquisition
Proposal), or shall have resolved not to reaffirm the Merger, or (ii) the Board
of Directors of Target shall have affirmed, recommended or authorized entering
into any Acquisition Transaction other than the Offer and the Merger or, within
ten (10) business days after commencement of any tender or exchange offer (other
than the Offer) for any shares of Target Common Stock, the Board of Directors of
Target shall have failed to recommend against acceptance of such tender or
exchange offer by its shareholders or takes no position with respect to the
acceptance of such tender or exchange offer by its shareholders, or (iii) the
Board of Directors of Target negotiates or authorizes the conduct of
negotiations (and five business days have elapsed without such negotiations
being discontinued) with a third party (it being understood and agreed that
"negotiate" shall not be deemed to include the provision of information to, or
the request and receipt of information from, any Person that submits an
Acquisition Proposal or discussions regarding such information for the sole
purpose of ascertaining the terms of such Acquisition Proposal and determining
whether the board of directors will in fact engage in, or authorize,
negotiations) regarding an Acquisition Proposal other than the Merger, or (iv)
any Person (other than a Buyer Entity) shall have acquired after the date hereof
beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 15% or more of the outstanding shares of Target Common Stock in
addition to any shares of Target Common Stock beneficially owned by such Person
on the date hereof or any Person (other than a Buyer Entity) shall have acquired
before, on or after the date hereof beneficial ownership (determined pursuant to
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Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the outstanding
shares of Target Common Stock; provided, however, that for purposes of this
clause (iv) the creation of a Group (as defined in Section 13 of the Exchange
Act) shall not constitute acquiring beneficial ownership of shares after the
date hereof; provided, further, that any such newly constituted Group shall not
collectively beneficially own 25% or more of the outstanding shares of Target
Common Stock; or
(h) By Target, if prior to the adoption of this Agreement by the
affirmative vote of the holders of the requisite number of the outstanding
shares of Target Common Stock entitled to vote thereon at the Shareholders'
Meeting, the Board of Directors of Target has (x) withdrawn or modified or
changed its recommendation or approval of this Agreement in a manner adverse to
Buyer in order to approve and permit Target to accept a Superior Proposal: and
(y) determined, after consideration of the advice of outside legal counsel to
Target, that the failure to take such action as set forth in the preceding
clause (x) would result in breach of the Board of Directors' fiduciary duties
under applicable Law, if such Board of Directors could otherwise unilaterally
terminate this Agreement; provided, however, that (A) at least two (2) business
days prior to any such termination, Target shall, and shall cause its advisors
to, negotiate with Buyer to make such adjustments in the terms and conditions of
this Agreement as would enable Target to proceed with the transactions
contemplated herein on such adjusted terms, and (B) Target shall have tendered
to Buyer payment in full of the amount specified in Section 12.2(b) concurrently
with delivery of notice of termination pursuant to this Section 11.1(h); or
(i) By either Party, if as a result of the failure of any of the conditions
set forth in ANNEX I to this Agreement, the Offer shall have terminated and
expired in accordance with its terms and in accordance with Section 1.1(a)
without Sub having purchased any shares of Target Common Stock pursuant to the
Offer.
11.2 Effect of Termination.
In the event of the termination and abandonment of this Agreement
pursuant to Section 11.1, this Agreement shall become void and have no effect,
except that (i) the provisions of this Section 11.2, Sections 6.21 and 9.6(b)
and Article 12, and, if termination is after the acceptance for payment pursuant
to the Offer of a number of shares of Target Common Stock that satisfies the
Minimum Condition, Section 9.10, shall survive any such termination and
abandonment, and (ii) no such termination shall relieve the breaching Party from
Liability resulting from any breach by that Party of this Agreement.
39
11.3 Non-Survival of Representations and Covenants.
The respective representations, warranties, obligations, covenants, and
agreements of the Parties shall not survive the Effective Time except this
Section 11.3 and Articles 1, 2, 3, 4, 5 and 12 and Section 9.10 shall survive
the Effective Time.
ARTICLE 12. MISCELLANEOUS
12.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
"AMEX" shall mean the American Stock Exchange.
"Acquisition Proposal" shall mean any proposal (whether
communicated to Target or publicly announced to Target's shareholders)
by any Person (other than Buyer or any of its Affiliates) for an
Acquisition Transaction involving Target or any of its present or
future consolidated Subsidiaries, or any combination of such
Subsidiaries, the assets of which constitute ten percent (10%) or more
of the consolidated assets of Target as reflected on Target's
consolidated statement of condition prepared in accordance with GAAP.
"Acquisition Transaction" shall mean any transaction or series
of related transactions (other than the transactions contemplated by
this Agreement) involving: (i) any acquisition or purchase from Target
by any Person or "Group" (other than Buyer or any of its Affiliates) of
five percent (5%) or more in interest of the total outstanding voting
securities of Target or any of its Subsidiaries, or any tender offer or
exchange offer that if consummated would result in any Person or
"Group" (other than Buyer or any of its Affiliates) beneficially owning
five percent (5%) or more in interest of the total outstanding voting
securities of Target or any of its Subsidiaries, or any merger,
consolidation, business combination or similar transaction involving
Target pursuant to which the shareholders of Target immediately
preceding such transaction hold less than ninety-five percent (95%) of
the equity interests in the surviving or resulting entity (which
includes the parent corporation of any constituent corporation to any
such transaction) of such transaction; (ii) any sale or lease (other
than in the ordinary course of business), or exchange, transfer,
license (other than in the ordinary course of business), acquisition or
disposition of five percent (5%) or more of the assets of Target (other
than the facility in Winder, Georgia and the Jupiter Plant in Costa
Rica); or (iii) any liquidation or dissolution of Target.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person;
(ii) any officer, director, partner, employer, or direct or indirect
beneficial owner of any ten percent (10%) or greater equity or voting
interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
40
"Articles of Merger" shall mean the Articles of Merger to be
executed by Target and filed with the Secretary of State of the State
of Georgia relating to the Merger as contemplated by Section 2.1.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of
such Person and wherever located.
"Buyer Entities" shall mean, collectively, Buyer and all Buyer
Subsidiaries.
"Buyer Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event, change
or occurrence, has a material adverse impact on the ability of Buyer to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement,
provided that "Buyer Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in Laws of general applicability or
interpretations thereof by courts or governmental authorities, or (b)
actions and omissions of Buyer (or any of its Subsidiaries) taken with
the prior informed written Consent of Target in contemplation of the
transactions contemplated hereby.
"Buyer Subsidiaries" shall mean the Subsidiaries of Buyer,
which shall include any corporation, limited liability company, limited
partnership, limited liability partnership or other organization
acquired as a Subsidiary of Buyer in the future and held as a
Subsidiary by Buyer at the Effective Time.
"Closing Date" shall mean the date on which the Closing
occurs.
"Confidentiality Agreements" shall mean that certain
Confidentiality Agreement, dated March 16, 2001, between ▇▇▇▇ ▇▇▇▇▇▇
Associates Capitol Advisors, on behalf of Target, and Buyer.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, license, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
41
"Default" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order or
Permit, (ii) any occurrence of any event that with the passage of time
or the giving of notice or both would constitute a breach or violation
of, default under, contravention of, or conflict with, any Contract,
Law, Order, or Permit, or (iii) any occurrence of any event that with
or without the passage of time or the giving of notice would give rise
to a right of any Person to exercise any remedy or obtain any relief
under, terminate or revoke, suspend, cancel, or modify or change the
current terms of, or renegotiate, or to accelerate the maturity or
performance of, or to increase or impose any Liability under, any
Contract, Law, Order or Permit.
"Employee Benefit Plan" shall mean each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, share purchase, severance pay, vacation, bonus, retention,
change in control or other incentive plan, medical, vision, dental or
other health plan, any life insurance plan, flexible spending account,
cafeteria plan, vacation, holiday, disability or any other employee
benefit plan or fringe benefit plan, including any "employee benefit
plan," as that term is defined in Section 3(3) of ERISA and any other
plan, fund, policy, program, practice, custom understanding or
arrangement providing compensation or other benefits, whether or not
such Employee Benefit Plan is or is intended to be (i) covered or
qualified under the Code, ERISA or any other applicable Law, (ii)
written or oral, (iii) funded or unfunded, (iv) actual or contingent or
(v) arrived at through collective bargaining or otherwise.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata)
including the Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et
seq. ("RCRA"), and other Laws relating to emissions, discharges,
releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"Equity Rights" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip,
understandings, warrants, or other binding obligations of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of a Person or by which a
Person is or may be bound to issue additional shares of its capital
stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" means any entity which together with a
Target Entity would be treated as a single employer under Code Section
414.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
42
"Exhibit A" shall mean the Exhibit so marked, a copy of which
is attached to this Agreement. Such Exhibit is hereby incorporated by
reference herein and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document without being
attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended to date.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil, asbestos-containing materials and any
polychlorinated biphenyls.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, domain names,
together with all goodwill associated therewith, registrations and
applications therefor, technology rights and licenses, computer
software (including any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-how,
inventions, and other intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean the personal knowledge after due inquiry of the chairman,
president, chief financial officer, chief accounting officer, chief
operating officer, or any senior, executive or other vice president of
such Person and the knowledge of any such Persons obtained or which
would have been obtained from a reasonable inquiry.
"Law" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, or
statute applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any Regulatory
Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or
expense (including costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
43
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, lien,
mortgage, pledge, security interest, title retention or other security
arrangement, or any adverse right or interest, charge, or claim of any
nature whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due
and payable and (ii) Liens which do not materially impair the use of or
title to the Assets subject to such Lien.
"Litigation" shall mean any legal action, arbitration, cause
of action, lawsuit, legal claim, legal complaint, criminal prosecution,
governmental examination or investigation, audit (other than regular
audits of financial statements by outside auditors), hearing,
administrative or other proceeding relating to or affecting a Party,
its business, its records, its policies, its practices, its compliance
with Law, its actions, its Assets (including Contracts related to it),
or the transactions contemplated by this Agreement.
"Losses" shall mean any and all demands, claims, actions or
causes of action, assessments, losses, diminution in value, damages
(including special and consequential damages), liabilities, costs, and
expenses, including interest, penalties, cost of investigation and
defense, and reasonable attorneys' and other professional fees and
expenses.
"Material" or "material" for purposes of this Agreement shall
be determined in light of the facts and circumstances of the matter in
question; provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"Operating Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds a security interest or other
interest (including an interest in a fiduciary capacity), and, where
required by the context, includes the owner or operator of such
property, but only with respect to such property.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates
in the management and, where required by the context, said term means
the owner or operator of such facility or property, but only with
respect to such facility or property.
"Party" shall mean any of Target, Sub or Buyer, and "Parties"
shall mean Target, Sub and Buyer.
44
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets, or business.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, limited liability partnership, trust, business
association, group acting in concert, or any person acting in a
representative capacity.
"Proxy Statement" shall mean the proxy statement used by
Target to solicit the approval of its shareholders of the transactions
contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the SEC,
the AMEX, the Federal Trade Commission (the "FTC"), the United States
Department of Justice (the "DOJ") and all other federal, state, county,
local or other governmental or regulatory agencies, authorities
(including self-regulatory authorities), instrumentalities,
commissions, boards or bodies having jurisdiction over the Parties and
their respective Subsidiaries.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative or
agent engaged by a Person.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securities Laws" shall mean the Securities Act, the Exchange
Act, the Investment Company Act of 1940, as amended, the Investment
Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as
amended, and the rules and regulations of any Regulatory Authority
promulgated thereunder.
"Shareholders' Meetings" shall mean the meeting of the
shareholders of Target to be held pursuant to Section 9.1, including
any adjournment or adjournments thereof.
"Sub Common Stock" shall mean the $0.01 par value common stock
of Sub.
"Subsidiaries" shall mean all those corporations,
associations, or other business entities of which the entity in
question either (i) owns or controls fifty percent (50%) or more of the
outstanding equity securities either directly or through an unbroken
chain of entities as to each of which fifty percent (50%) or more of
the outstanding equity securities is owned directly or indirectly by
its parent (provided, there shall not be included any such entity the
45
equity securities of which are owned or controlled in a fiduciary
capacity), (ii) in the case of partnerships, serves as a general
partner, (iii) in the case of a limited liability company, serves as a
managing member, or (iv) otherwise has the ability to elect a majority
of the directors, trustees or managing members thereof.
"Superior Proposal" means any Acquisition Proposal (on its
most recently amended or modified terms, if amended or modified) (i)
involving the acquisition of the entire equity interest in, or all or
substantially all of the assets and liabilities of, the Target Entities
and (ii) with respect to which the Board of Directors of Target (x)
determines in good faith that such Acquisition Proposal, if accepted,
is reasonably likely to be consummated on a timely basis, taking into
account all legal, financial, regulatory and other aspects of the
Acquisition Proposal and the Person or Group making the Acquisition
Proposal, and (y) determines in its good faith judgment (based on,
among other things, the advice of Target Financial Advisor or any other
financial advisor of nationally recognized reputation) to be more
favorable to Target's shareholders than the Offer and the Merger taking
into account all relevant factors (including whether, in the good faith
judgment of the Board of Directors of Target, after obtaining the
advice of Target Financial Advisor or any other financial advisor of
nationally recognized reputation, the Person or Group making such
Acquisition Proposal is reasonably able to finance the transaction, and
any proposed changes to this Agreement that may be proposed by Buyer in
response to such Acquisition Proposal).
"Surviving Corporation" shall mean Target as the surviving
corporation resulting from the Merger.
"Target Common Stock" shall mean the $0.01 par value common
stock of Target.
"Target Disclosure Memorandum" shall mean the written
information entitled "Duck Head Apparel Company, Inc. Disclosure
Memorandum" delivered within 10 days after the date of this Agreement
to Buyer and Sub describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure
is being made. Information disclosed with respect to one Section shall
not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"Target Entities" shall mean, collectively, Target and all
Target Subsidiaries.
"Target Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Target as of March 31, 2001, and as of July 1, 2000 and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the nine months
ended March 31, 2001, and for each of the three fiscal years ended June
27, 1998, July 3, 1999 and July 1, 2000 as filed by Target in SEC
Documents, and (ii) the consolidated balance sheets of Target
(including related notes and schedules, if any) and related statements
46
of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to March 31, 2001.
"Target Material Adverse Effect" shall mean an event, change
or occurrence which, individually or together with any other event,
change or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of Target and
its Subsidiaries, taken as a whole, or (ii) the ability of Target to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement,
provided that "Material Adverse Effect" shall not be deemed to include
the impact of (a) changes in Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b)
changes in generally accepted accounting principles, or (c) actions and
omissions of Target (or any of its Subsidiaries) taken with the prior
informed written Consent of Buyer in contemplation of the transactions
contemplated hereby.
"Target Rights" shall mean the Equity Rights issued pursuant
to the Target Rights Agreement.
"Target Rights Agreement" shall mean that certain Shareholder
Rights Agreement, dated January 27, 2000, between Target and First
Union National Bank, as Rights Agent, as amended by that certain
Amendment No. 1 dated November 29, 2000, between Target and First Union
National Bank, as Rights Agent.
"Target Stock Plan" shall mean each existing stock option or
incentive stock award plan of Target designated as follows: Duck Head
Apparel Company, Inc. 2000 Stock Option Plan and Duck Head Apparel
Company, Inc. Incentive Stock Award Plan.
"Target Subsidiaries" shall mean the Subsidiaries of Target,
which shall include the Target Subsidiaries described in Section 6.4
and any corporation, limited liability company, limited partnership,
limited liability partnership or other organization acquired as a
Subsidiary of Target in the future and held as a Subsidiary by Target
at the Effective Time.
"Tax" or "Taxes" shall mean any federal, state, county, local,
or foreign taxes, charges, fees, levies, imposts, duties or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, recording, license, payroll, franchise,
severance, documentary, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties,
capital stock, paid-up capital, profits, withholding, Social Security,
single business, unemployment, disability, real property, personal
property, registration, ad valorem, value added, alternative or add-on
minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by the United States or
any state, county, local or foreign government or subdivision or agency
thereof, including any interest, penalties, and additions imposed
thereon or with respect thereto.
47
"Taxing Authority" shall mean any Regulatory Authority with
responsibility for the assessment, collection or enforcement of
obligations with respect to Taxes.
"Tax Return" shall mean any report, return, information return
or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or
combined or unitary group that includes a Party or its Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed thereto on
the referenced pages:
Term Page
Acquisition Agreement..............................31
Agreement...........................................1
Buyer...............................................1
Cash Payment........................................7
Certificates........................................8
Closing.............................................6
Continuing Directors................................4
Effective Time......................................6
Exchange Agent......................................8
Expiration Time.....................................1
GBCC................................................3
IIPI...............................................25
June 2 Balance Sheet...............................12
Maximum Amount.....................................36
Merger..............................................5
Minimum Condition...................................2
Offer...............................................2
Offer Documents.....................................3
Offer Price.........................................2
Option Settlement Payment...........................8
Schedule 14D-9......................................4
Selling Shareholders................................1
Sub.................................................1
Subsequent Determination...........................31
Takeover Laws......................................24
Target..............................................1
Target Benefit Plans...............................19
Target Contracts...................................22
Target ERISA Plan..................................19
Target Financial Advisor............................3
Target Options......................................7
Target Pension Plan................................19
Target SEC Reports.................................12
Target Shareholder Approval........................30
Tender and Option Agreement.........................1
Termination Fee....................................49
48
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
12.2 Expenses.
(a) Except as otherwise provided in this Section 12.2, each of the Parties
shall bear and pay all direct costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including filing,
registration and application fees, printing fees, and fees and expenses of its
own financial or other consultants, investment bankers, accountants and counsel.
(b) Notwithstanding the provisions of Section 12.2(a), if:
(i) Either Target or Buyer terminates this Agreement pursuant to
ARTICLE 11. , and (x) the Minimum Condition has not been satisfied and,
prior to such termination, there has been publicly announced and not
withdrawn another Acquisition Proposal or (y) Target has failed to perform
and comply in all material respects with any of its obligations, agreements
or covenants required by this Agreement or Buyer terminates this Agreement
pursuant to Section 11.1(c), and within twelve (12) months of such
termination Target shall either (A) consummate an Acquisition Transaction
or (B) enter into an Acquisition Agreement with respect to an Acquisition
Transaction, whether or not such Acquisition Transaction is subsequently
consummated (but changing, in the case of (A) and (B), the references to
the five percent (5%) and ninety-five percent (95%) amounts in the
definition of Acquisition Transaction to fifty percent (50%)); or
(ii) Buyer shall terminate this Agreement pursuant to 11.1(g); or
(iii) Target shall terminate this Agreement pursuant to Section
11.1(h); or
(iv) Any of the conditions in clauses (iii)(A), (iii)(C), (iii)(D),
(iii)(F), (iii)(G), (iii)(I) and (iii)(J) of ANNEX I shall not have been
fulfilled or satisfied, Buyer shall terminate this Agreement pursuant to
Section 11.1(i) and within twelve (12) months of such termination Target
shall either (A) consummate an Acquisition Transaction or (B) enter into an
Acquisition Agreement with respect to an Acquisition Transaction, whether
or not such Acquisition Transaction is subsequently consummated ( but
changing, in the case of (A) and (B), the references to the five percent
(5%) and ninety-five percent (95%) amounts in the definition of Acquisition
Transaction to fifty percent (50%));
then Target shall pay to Buyer an amount equal to three percent (3%) of the
Aggregate Purchase Price plus an amount equal to all of Buyer's and Sub's
reasonable costs and expenses related to this Agreement, the Offer and the
Merger; provided that such costs and expenses shall not exceed $1,000,000
(the "Termination Fee"). Target hereby waives any right to set-off or
counterclaim against such amount. The costs and expenses referred to in
this paragraph shall include, but not be limited to, fees and expenses of
Buyer's and Sub's attorneys, financial advisors, accountants,
dealer/manager, information agent, depositary, escrow agent and printer as
49
well as its regulatory filing fees, advertisement costs, mailing costs, and
travel and other out-of-pocket costs and expenses. If the Termination Fee
shall be payable pursuant to subsections (b)(i) or (b)(iv) of this Section
12.2, the Termination Fee shall be paid in same-day funds at or prior to
the earlier of the date of consummation of such Acquisition Transaction or
the date of execution of an Acquisition Agreement with respect to such
Acquisition Transaction. If the Termination Fee shall be payable pursuant
to subsection (b)(ii) of this Section 12.2, the Termination Fee shall be
paid in same-day funds upon the earlier of (i) the execution of an
Acquisition Agreement with respect to such Acquisition Transaction or (ii)
two (2) business days after the date of termination of this Agreement. If
the Termination Fee shall be payable pursuant to subsection (b)(iii) of
this Section 12.2, the Termination Fee shall be paid in same-day funds at
or prior to the termination of this Agreement. For purposes hereof,
"Aggregate Purchase Price" means the total consideration that would have
been paid by Buyer or Sub in the Offer and the Merger to the equity holders
of Target (other than Buyer and Sub in the Merger), including its
shareholders and holders of Equity Rights under the Target Stock Plans, had
the Offer been consummated.
(c) Notwithstanding the provisions of Section 12.2(a), if Buyer shall
terminate this Agreement pursuant to Section 11.1(f), within two (2) business
days of such termination, Target shall pay to Buyer an amount equal to all of
Buyer's and Sub's reasonable costs and expenses; provided that such costs and
expenses shall not exceed $1,000,000. The costs and expenses are those discussed
in the last paragraph of subsection (b) above.
(d) The Parties acknowledge that the agreements contained in paragraphs
(b), (c) and (d) of this Section 12.2 are an integral part of the transactions
contemplated by this Agreement, and that without these agreements, they would
not enter into this Agreement; accordingly, if Target fails to pay promptly any
fee payable by it pursuant to this Section 12.2, then Target shall pay to Buyer,
its reasonable costs and expenses (including attorneys' fees) in connection with
collecting such fee, together with interest on the amount of the fee at the
prime rate of First Union National Bank from the date such payment was due under
this Agreement until the date of payment
(e) Nothing contained in this Section 12.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by Target of the
terms of this Agreement or otherwise limit the rights of Buyer.
12.3 Brokers and Finders.
Except for Target Financial Advisor (and, as to the potential sale of
the facility in Winder, Georgia, CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc.) as to Target and except
for A2 Partners, LLC as to Buyer, each of the Parties represents and warrants
that neither it nor any of its officers, directors, employees or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions or finders'
fees in connection with this Agreement or the transactions contemplated hereby.
In the event of a claim by any broker or finder based upon such broker's
representing or being retained by or allegedly representing or being retained by
Target or by Buyer, each of Target and Buyer, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in respect
of any such claim.
12.4 Entire Agreement.
Except as otherwise expressly provided herein, this Agreement
(including the documents and instruments referred to herein) constitutes the
entire agreement among the Parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
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thereto, written or oral (except, as to Section 9.6(b), for the Confidentiality
Agreement). Nothing in this Agreement expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, other than as provided in Section 9.10.
12.5 Amendments.
To the extent permitted by Law, and subject to Section 1.3, this
Agreement may be amended by a subsequent writing signed by each of the Parties
upon the approval of each of the Parties, whether before or after shareholder
approval of this Agreement has been obtained; provided, that after any such
approval by the holders of Target Common Stock, there shall be made no amendment
that reduces or modifies in any material respect the consideration to be
received by holders of Target Common Stock.
12.6 Waivers.
(a) Prior to or at the Effective Time, Buyer, acting through its Board of
Directors, chief executive officer or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Target, to waive or extend the time for the compliance or fulfillment by Target
of any and all of its obligations under this Agreement, and to waive any or all
of the conditions precedent to the obligations of Buyer under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Buyer.
(b) Subject to Section 1.3, prior to or at the Effective Time, Target,
acting through its Board of Directors, chief executive officer or other
authorized officer, shall have the right to waive any Default in the performance
of any term of this Agreement by Buyer or Sub, to waive or extend the time for
the compliance or fulfillment by Buyer or Sub of any and all of its obligations
under this Agreement, and to waive any or all of the conditions precedent to the
obligations of Target under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Target.
(c) The failure of any Party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
12.7 Assignment.
Except as expressly contemplated hereby, neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any Party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other Party; provided that Buyer shall, without the obligation to
obtain the prior written consent of Target, be entitled to assign this Agreement
or all or any of its rights or obligations hereunder (i) to any one or more
Affiliates of Buyer, and (ii) to any lender to Buyer or Sub as collateral
security, but no assignment by Buyer under this Section 12.7 shall relieve Buyer
of any of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
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12.8 Notices.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
Target: Duck Head Apparel Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & K. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Copy to Counsel: Wyche, Burgess, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ (22901)
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Buyer or Sub: Tropical Sportswear Int'l Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Copy to Counsel: ▇▇▇▇▇▇ & Bird LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
12.9 Governing Law.
Regardless of any conflict of law or choice of law principles that
might otherwise apply, the Parties agree that this Agreement shall be governed
by and construed in all respects in accordance with the laws of the State of
Georgia. The Parties all expressly agree and acknowledge that the State of
Georgia has a reasonable relationship to the Parties and/or this Agreement. As
to any dispute, claim, or litigation arising out of or relating in any way to
this Agreement or the transaction at issue in this Agreement, the parties hereto
hereby agree and consent to be subject to the exclusive jurisdiction of the
United States District Court for the Northern District of Georgia or the Middle
District of Florida, to the extent jurisdiction is so available. Each party
52
hereto hereby irrevocably waives, to the fullest extent permitted by Law, (a)
any objection that it may now or hereafter have to laying venue of any suit,
action or proceeding brought in either such court, (b) any claim that any suit,
action or proceeding brought in either such court has been brought in an
inconvenient forum, and (c) any defense that it may now or hereafter have based
on lack of personal jurisdiction in such forum.
12.10 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
12.11 Captions; Articles and Sections.
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement. Unless otherwise indicated, all
references to particular Articles or Sections shall mean and refer to the
referenced Articles and Sections of this Agreement.
12.12 Interpretations.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against any party, whether under any rule of construction
or otherwise. No party to this Agreement shall be considered the draftsman. The
parties acknowledge and agree that this Agreement has been reviewed, negotiated
and accepted by all parties and their attorneys and shall be construed and
interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all parties hereto.
12.13 Enforcement of Agreement.
The Parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the Parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically, subject to
Section 12.9, the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
12.14 Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
53
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
ATTEST: TROPICAL SPORTSWEAR INT'L CORPORATION
____________________________ By: _____________________________________
Title: _____________________ Title: ______________________________
[CORPORATE SEAL]
ATTEST: HB ACQUISITION CORP.
_____________________________ By: _____________________________________
Title: ______________________ Title: ______________________________
[CORPORATE SEAL]
ATTEST: DUCK HEAD APPAREL COMPANY, INC.
_____________________________ By: _____________________________________
Title: ______________________ Title: ______________________________
[CORPORATE SEAL]
54
ANNEX I
Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Sub's obligation to pay for or return tendered shares
of Target Common Stock promptly after termination or withdrawal of the Offer),
pay for any shares of Target Common Stock tendered pursuant to the Offer, and
may postpone the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any shares of Target Common Stock tendered
pursuant to the Offer, and may amend or terminate the Offer (subject to the
provisions of Section 1.1 of this Agreement) as to any shares of Target Common
Stock not then paid for if: (i) the Minimum Condition has not been satisfied;
(ii) any waiting period under the HSR Act or other antitrust or competition Laws
applicable to the purchase of shares of Target Common Stock pursuant to the
Offer shall not have expired or been terminated; or (iii) at any time on or
after the date of this Agreement and prior to the scheduled time of acceptance
for payment for shares of Target Common Stock or the payment therefor (the
"Expiration Time"), any of the following conditions exists:
(A) At the Expiration Time,
(x) there shall have been any action taken by any Regulatory Authority,
or any Law or Order proposed, sought, promulgated, enacted, entered, enforced,
issued, amended or deemed to be applicable to Buyer, any of its Subsidiaries or
Affiliates, the Offer or the Merger (other than the application of the waiting
period provisions of the HSR Act or other antitrust or competition laws
applicable to the Offer or the Merger) by any Regulatory Authority that would or
is reasonably likely, directly or indirectly, to (I) make the acceptance for
payment of, or payment for or purchase of, all or a substantial number of the
shares of Target Common Stock pursuant to the Offer illegal, or otherwise
restrict in a manner adverse to Buyer or prohibit the making of the Offer or the
consummation of the Offer or the Merger, (II) result in a delay in, or restrict
the ability of Sub, or render Sub unable, to accept for payment, pay for or
purchase all or a substantial number of the shares of Target Common Stock
pursuant to the Offer or to effect the Merger, (III) impose limitations on the
ability of Buyer or any of its Subsidiaries or Affiliates to acquire or hold,
transfer or dispose of, or effectively to exercise all rights of ownership of,
all or a substantial number of the shares of Target Common Stock, including the
right to vote the shares of Target Common Stock purchased by it pursuant to the
Offer on an equal basis with all other shares of Target Common Stock on all
matters properly presented to the shareholders of Target, (IV) require the
divestiture by Buyer or any of its Subsidiaries or Affiliates of any shares of
Target Common Stock, or require Buyer or any of its Subsidiaries or Affiliates
to dispose of or hold separate all or any portion of their respective
businesses, assets or properties or impose any material limitations on the
ability of any of such Persons to conduct their respective businesses or own
such assets or shares of Target Common Stock, or on the ability of Buyer or its
Subsidiaries or Affiliates to conduct the business of Target and its
Subsidiaries and own the Assets of Target and its Subsidiaries, in each case
taken as a whole, or (V) impose any limitations on the ability of Buyer or any
of its Subsidiaries or Affiliates effectively to control the business or
operations of Target or Buyer or any of their respective Subsidiaries or
Affiliates;
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(y) there shall have been instituted or pending any Litigation
challenging the making of the Offer or the acquisition by Sub of shares of
Target Common Stock pursuant to the Offer or the consummation of the Merger, or
seeking, directly or indirectly, any of the consequences referred to in clause
(I) through (V) in subclause (x) above that, in the reasonable judgment of
Buyer, has a reasonable probability of success; or
(z) there shall have been threatened any action, proceeding or
counterclaim by any Regulatory Authority, challenging the making of the Offer or
the acquisition by Sub of the shares of Target Common Stock pursuant to the
Offer or the consummation of the Merger, or seeking, directly or indirectly, any
of the consequences referred to in clauses (I) through (V) in subclause (x)
above that, in the reasonable judgment of Buyer, has a reasonable probability of
success; or
(B) This Agreement shall have been terminated in accordance with its
terms; or
(C) At the Expiration Time, (x) the representations and warranties of
Target set forth in Section 6.3 shall not be true and correct (except for
inaccuracies which are de minimus in amount); (y) the representations and
warranties set forth in Sections 6.3, 6.19, 6.20 and 6.21 shall not be true and
correct in all materials respects; or (z) there shall exist inaccuracies in the
representations and warranties of Target set forth in this Agreement (including
the representations and warranties contained in Sections 6.3, 6.19, 6.20 and
6.21) such that the aggregate effect of such inaccuracies has, or is reasonably
likely to have, a Target Material Adverse Effect; provided that for purposes of
this sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or to the "Knowledge" of
any Person shall be deemed not to include such qualifications. For purposes of
this subsection (C), the accuracy of the representations and warranties of
Target set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Expiration Time with the same effect as though all such
representations and warranties had been made on and as of the Expiration Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date); or
(D) Target shall have failed to perform or to comply in any material
respect with any agreement or covenant of Target to be performed or complied
with by it under this Agreement and the breach or failure shall not have been
cured prior to the Expiration Time or is incapable of being cured prior to the
Expiration Time; or
(E) The Board of Directors of Target or any committee thereof (I) shall
have withdrawn, or modified or changed in a manner adverse to Buyer or Sub
(including by amendment of the Schedule 14D-9) its approval or recommendation of
this Agreement or the transactions contemplated hereby, including the Offer or
the Merger, (II) shall have recommended, endorsed or approved an Acquisition
Proposal, or (III) shall have adopted any resolution to effect any of the
foregoing.
(F) Any Consent of, filings and registrations with, and notifications
to, any Regulatory Authority required for consummation of the Merger shall not
have been obtained or made and shall not be in full force and effect and all
waiting periods required by Law shall not have expired. Any Consent obtained
from any Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital or the disposition of
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Assets) which in the reasonable judgment of the Board of Directors of Buyer
would so materially adversely affect the economic or business assumptions of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its reasonable judgment, have
entered into this Agreement.
(G) Any Party shall not have obtained all Consents required for
consummation of the Merger (other than those referred to in Section 10.1(a) or
10.1(b)) or for the preventing of any Default under any material Contract or
Permit of such Party, other than Target's Loan and Security Agreement with
Congress Financial Corporation (Southern).
(H) Target shall not have delivered to Buyer (i) a certificate, dated
as of the date of acceptance for payment for shares of Target Common Stock and
signed on its behalf by its chief executive officer and its chief financial
officer, to the effect that the conditions set forth in this Annex I have been
satisfied, and (ii) certified copies of resolutions duly adopted by Target's
Board of Directors evidencing the taking of all corporate action (other than
shareholder approval) necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Buyer and its counsel
shall request.
(I) Target shall not have delivered to Buyer (a) a certification from
Target, dated no more than thirty (30) days prior to the date of acceptance for
payment for shares of Target Common Stock and signed by a responsible corporate
officer of Target, that Target is not, and has not been at any time during the
five years preceding the date of such certification, a United States real
property holding company, as defined in Internal Revenue Code Section 897(c)(2),
and (b) proof reasonably satisfactory to Buyer that Target has provided notice
of such certification to the IRS in accordance with the provisions of Treasury
regulations Section 1.897-2(h)(2).
(J) Target shall have Stockholders' Equity of less than $21,000,000 at
the date of acceptance for payment for shares of Target Common Stock, except for
reductions to such Stockholder's Equity due to any of the Liabilities as, and in
the amounts, set forth on ANNEX II.
(K) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall not have entered into an employment
agreement with Buyer or another Buyer Entity or the Surviving Corporation on
terms and conditions reasonably satisfactory to Buyer, which terms shall
include, without limitation, the termination without any payment of that certain
Severance Protection Agreement made as of November 3, 2000 by and between Target
and ▇▇. ▇▇▇▇▇▇▇.
The foregoing conditions are for the sole benefit of Buyer and Sub and
may, subject to the terms of this Agreement, be waived by Buyer or Sub in whole
or in part, at any time and from time to time, in the sole discretion of Buyer
or Sub. The failure by Buyer or Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any right and each right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
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