Exhibit 11
Execution Copy
SUPPORT AGREEMENT
This SUPPORT AGREEMENT (this "Agreement") is entered into as of
October 27, 2005, by and among GF Goods Inc., a Delaware corporation
("Parent"), GF Acquisition Corp., a Tennessee corporation ("Acquisition
Corp."), and each of the persons listed on Schedule A hereto (each a "Principal
Shareholder" and, collectively, the "Principal Shareholders"). Each capitalized
term used but not otherwise defined herein shall have the meaning ascribed to
such term in the Acquisition Agreement and Plan of Merger, dated as of the date
hereof (as amended, supplemented and otherwise modified from time to time, the
"Acquisition Agreement"), by and among Parent, Acquisition Corp. and Goody's
Family Clothing, Inc., a Tennessee corporation (the "Company").
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company, Parent and Acquisition Corp. are entering into the
Acquisition Agreement which provides, subject to the terms and conditions set
forth in the Acquisition Agreement, for (i) the making of a tender offer (the
"Offer") to purchase all of the Company's shares of common stock, no par value
per share ("Company Common Stock"), which are issued and outstanding (the
"Outstanding Common Shares") and tendered pursuant to the terms thereof, at a
price per Outstanding Common Share equal to the Offer Price, and (ii) the
merger of Acquisition Corp. and the Company (the "Merger"), whereby each
Outstanding Common Share not purchased pursuant to the Offer (other than any
Outstanding Common Shares owned by Parent, Acquisition Corp. or any other
wholly owned Subsidiary of Parent) will be converted into the right to receive
the Merger Consideration in cash;
WHEREAS, the Board of Directors of the Company (the "Board") has, at a
meeting duly called and held, unanimously (i) approved the Acquisition
Agreement, each of the other Transaction Agreements, as well as the Offer, the
Merger and the other Transactions, and (ii) recommended that the holders of
Common Shares accept the Offer, tender their Common Shares pursuant to the
Offer and approve and adopt this Agreement and the Merger;
WHEREAS, each Principal Shareholder is the record and beneficial owner
of the number of Outstanding Common Shares and the Stock Rights (as defined
below) in each case set forth opposite such Principal Shareholder's name on
Schedule A hereto (collectively, the "Existing Equity Rights" of such Principal
Shareholder; and, together with all shares of Company Common Stock and Stock
Rights acquired after the date hereof by such Principal Shareholder, whether
upon the exercise, conversion or exchange of any Existing Equity Rights, upon
the exercise, conversion or exchange of any Stock Rights obtained hereafter by
such Principal Shareholder or otherwise hereafter acquired by such Principal
Shareholder, in each case as such shares, rights and other securities may be
adjusted from time to time for any stock dividend, stock split,
recapitalization, combination, exchange, merger, consolidation, reorganization
or other change or transaction involving the Company, are referred to herein
collectively as the "Principal Shareholder Shares" of such Principal
Shareholder). For purposes hereof, "Stock Rights" means options and other
rights to acquire shares of Company Common Stock or rights exercisable for or
convertible into shares of Company Common Stock; and
WHEREAS, as a condition to the willingness of Parent and Acquisition
Corp. to enter into the Acquisition Agreement, Parent and Acquisition Corp.
have requested that the Principal Shareholders enter into this Agreement.
NOW, THEREFORE, to induce Parent and Acquisition Corp. to enter into,
and in consideration of them entering into, the Acquisition Agreement, and in
consideration of the foregoing premises and the representations, warranties,
covenants and agreements contained herein, Parent, Acquisition Corp. and each
of the Principal Shareholders hereby agree as follows:
1. Representations and Warranties of Each Principal Shareholder. Each
Principal Shareholder, acting solely in its capacity as a holder of Principal
Shareholder Shares and not as a director of the Company or in any other
capacity, hereby, severally and not jointly with any other Principal
Shareholder, represents and warrants to Parent and Acquisition Corp. as
follows:
(a) Authority. Such Principal Shareholder has all requisite
power and authority to execute and deliver this Agreement, to perform
all of its obligations hereunder and otherwise to consummate the
transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly authorized by such Principal
Shareholder. This Agreement has been duly executed and delivered by
such Principal Shareholder and, assuming this Agreement constitutes a
valid and binding obligation of the Parent and Acquisition Corp.,
constitutes a valid and binding obligation of such Principal
Shareholder enforceable against such Principal Shareholder in
accordance with its terms. Other than in connection with or in
compliance with the provisions of the Exchange Act or the HSR Act,
neither the execution, delivery or performance of this Agreement by
such Principal Shareholder nor the consummation by such Principal
Shareholder of the transactions contemplated hereby will (i) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Authority (except for filing an amendment to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇'▇ Schedule 13D to reflect the transactions contemplated by
this Agreement), (ii) result in a material violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
material default under, or give rise to any right of termination,
amendment, cancellation or acceleration under, result in the creation
of any material Lien upon a material portion of the properties or
assets of each Principal Shareholder, or result in the creation of any
Lien upon any Company Common Stock, under, any of the terms,
conditions or provisions of any Contract to which such Principal
Shareholder is a party or by which such Principal Shareholder or any
of such Principal Shareholder's properties or assets, including the
Principal Shareholder Shares owned by such Principal Shareholder, may
be bound or (iii) violate, in any material respect, any Order or any
Law applicable to such Principal Shareholder or any of such Principal
Shareholder's properties or assets, including the Principal
Shareholder Shares owned by such Principal Shareholder.
(b) Ownership of Principal Shareholder Shares. The Existing
Equity Rights of such Principal Shareholder and all certificates
representing such Existing Equity Rights are now, and at all times
while this Agreement is in effect will be, held by such Principal
Shareholder, or by a nominee or custodian for the benefit of such
Principal Shareholder, and such Principal Shareholder has good and
marketable title to such Existing Equity Rights, free and clear of any
Liens, proxies, voting trusts or agreements, understandings or
arrangements, except for any such Liens or proxies arising hereunder,
other than, with respect to any Principal Shareholder, those
agreements set forth on Schedule A opposite such Principal
Shareholder's name, all of which agreements (including the Support
Agreement, dated as of October 7, 2005, among GFC Holding Corp., GFC
Enterprises, Inc. and the principal Shareholders (the "Sun Support
Agreement")) have been terminated prior to the date hereof. All
Principal Shareholder Shares acquired hereafter by such Principal
Shareholder shall at all times while this Agreement is in effect be
held by such Principal Shareholder, or by a nominee or custodian for
the benefit of such Principal Shareholder, and such Principal
Shareholder shall at all time while this Agreement is in effect have
good and marketable title to all such Principal Shareholder Shares,
free and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements, except for any such Liens or proxies
arising hereunder. Such Principal Shareholder does not own of record
or beneficially any Outstanding Common Shares, any options or other
rights to purchase shares of Company Common Stock or any rights
exercisable for or convertible into shares of Company Common Stock,
other than the Outstanding Common Shares and shares of Company Common
Stock issuable upon the exercise of Company Stock Options, in each
case set forth opposite such Principal Shareholder's name on Schedule
A hereto. The Principal Shareholders own, in the aggregate, 41.5% of
the Outstanding Common Shares and, assuming the options are exercised
pursuant to Section 3(b)(1), over 39.6% of the shares of Company
Common Stock on a Fully-Diluted Basis.
(c) Acquisition Agreement. Such Principal Shareholder
understands and acknowledges that Parent and Acquisition Corp. are
entering into the Acquisition Agreement in reliance upon execution and
delivery of this Agreement by such Principal Shareholder.
(d) Adequacy of Information. Such Principal Shareholder is a
sophisticated investor with respect to the Principal Shareholder
Shares of such Principal Shareholder and has adequate information
concerning the business and financial condition of the Company to make
an informed decision regarding the transactions contemplated hereby
and by the Acquisition Agreement and has independently and without
reliance upon either Parent or Acquisition Corp. and based on such
information as the Shareholder has deemed appropriate made its own
analysis and decision to enter into this Agreement. Such Principal
Shareholder has received and reviewed the Acquisition Agreement and
acknowledges that neither Parent nor Acquisition Corp. has made or
makes any representation or warranty, whether express or implied, of
any kind or character except as expressly set forth herein or in the
Acquisition Agreement. Such Principal Shareholder acknowledges that
the agreements contained herein with respect to the Principal
Shareholder Shares of such Principal Shareholder are irrevocable
(subject to termination in accordance with Section 14 of this
Agreement), and that such Principal Shareholder has no recourse to
such Principal Shareholder Shares or to Parent or Acquisition Corp.,
except with respect to breaches by Parent or Acquisition Corp. of
their respective representations, warranties, covenants and agreements
expressly set forth in this Agreement.
(e) Excluded Information. Such Principal Shareholder
acknowledges and confirms that (i) Parent and Acquisition Corp. may
possess or hereafter come into possession of certain non-public
information concerning the Principal Shareholder Shares and/or the
Company which is not known to such Principal Shareholder and which may
be material to such Principal Shareholder's decision to enter into
this Agreement or to consummate the transactions contemplated hereby
(the "Excluded Information"), (ii) such Principal Shareholder has
requested not to receive the Excluded Information and has determined
to enter into this Agreement and to consummate the transactions
contemplated hereby (including, without limitation, to exercise,
convert or cancel all Existing Equity Rights into shares of Company
Common Stock at or prior to the Effective Time and to sell the
Principal Shareholder Shares of such Principal Shareholder pursuant to
the Offer) notwithstanding its lack of knowledge of the Excluded
Information, and (iii) neither Parent nor Acquisition Corp., nor any
of their respective officers, directors, shareholders or
representatives, shall have any liability or obligation to such
Principal Shareholder in connection with, and such Principal
Shareholder hereby waives and releases each of Parent, Acquisition
Corp. and their respective officers, directors, shareholders and
representatives from, any claims which such Principal Shareholder or
its successors or assigns may have against Parent, Acquisition Corp.
or any their respective officers, directors, shareholders or
representatives (whether pursuant to applicable securities, laws or
otherwise) with respect to the non-disclosure of the Excluded
Information.
2. Representations and Warranties of Parent and Acquisition Corp. Each
of Parent and Acquisition Corp. hereby represents and warrants to the Principal
Shareholders that each of Parent and Acquisition Corp. has the requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and otherwise to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by Parent and Acquisition Corp. and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Acquisition Corp. This Agreement has been duly
executed and delivered by Parent and Acquisition Corp. and, assuming this
Agreement constitutes a valid and binding obligation of each Principal
Shareholder, constitutes a valid and binding obligation of Parent and
Acquisition Corp. enforceable in accordance with its terms.
3. Covenants. Each Principal Shareholder, acting solely in its
capacity as a holder of Principal Shareholder Shares and not as a director or
officer of the Company or in any other capacity, hereby, severally and not
jointly with any other Principal Shareholder, agrees as follows:
(a) such Principal Shareholder shall not, except as expressly
contemplated by the terms of this Agreement or the Acquisition
Agreement, (A) sell, transfer, pledge, assign or otherwise dispose of
(including, without limitation, by merger or otherwise by operation of
law), or enter into any Contract, option or other arrangement
(including, without limitation, any profit sharing arrangement) or
understanding with respect to the sale, transfer, pledge, assignment
or other disposition of (including, without limitation, by merger or
otherwise by operation of law), all or any portion, or any interest in
any, of the Principal Shareholder Shares of such Principal Shareholder
to any person other than Acquisition Corp. or any Person(s) designated
in writing by Acquisition Corp., (B) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney or otherwise, with respect to all or any portion of
the Principal Shareholder Shares of such Principal Shareholder or (C)
take any other action that would in any way restrict, limit or
interfere with the performance of such Principal Shareholder's
obligations hereunder or the transactions contemplated hereby or in
the Acquisition Agreement;
(b) such Principal Shareholder (i), no later than one business
day prior to the then applicable expiration date of the Offer as set
forth in the Acquisition Agreement shall take all actions necessary or
desirable to exercise or convert all options to acquire Company Common
Stock which have an exercise price equal to or less than the Offer
Price into shares of Common Stock and shall validly tender such shares
of Company Common Stock as set forth in Section 3(c) below and (ii)
prior to the commencement of the Offer, such Principal Shareholder
shall execute a written acknowledgement to Parent, Acquisition Corp.
and the Company confirming that as of the Effective Date, (x) the
payment of the Option Consideration, if any, for all of such Principal
Shareholder's Stock Rights with an exercise price equal to or less
than Offer Price per share will satisfy in full the Company's
obligation to such person pursuant to any and all Stock Rights then
outstanding (other than with respect to any Options which have been
exercised prior to the Effective Time) and (y) subject to the payment
of the Option Consideration, if any, all Stock Rights (including Stock
Rights with an exercise price or conversion price in excess of the
Option Consideration with respect to such Stock Rights) by such
Principal Shareholder shall, without any action on the part of the
Company or the Principal Shareholder, be deemed terminated, canceled,
void and of no further force and effect as between the Company and
such Principal Shareholder and neither party shall have any further
rights or obligations with respect thereto. Such written
acknowledgement shall be in substantially the form of Exhibit D to the
Acquisition Agreement;
(c) such Principal Shareholder shall (A) as promptly as
practicable (but in any event within 5 business days after the
commencement of the Offer), validly tender all of the Principal
Shareholder Shares of such Principal Shareholder pursuant to and in
accordance with the terms of the Offer, and (B) not withdraw, or cause
to be withdrawn, all or any portion of such Principal Shareholder
Shares from the Offer, unless this Agreement is terminated;
(d) at any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which such
Principal Shareholder's vote, consent or other approval is sought,
such Principal Shareholder shall as requested by Acquisition Corp.
vote (or cause to be voted) all of the Principal Shareholder Shares of
such Principal Shareholder in favor of the approval and adoption of
the Acquisition Agreement and the Transactions and against (A) any
Acquisition Proposal (as defined in the Acquisition Agreement), (B)
any action which would result in a change in a majority of the
individuals who constitute the Board and (C) any amendment of the
Company's Charter or by-laws or any other proposal or transaction
involving the Company or any of its Subsidiaries, which amendment or
other proposal or transaction would in any manner impede, frustrate,
prevent or nullify, the Acquisition Agreement, the Merger or any of
the other Transactions (collectively, "Frustrating Transactions");
(e) notwithstanding any provision herein or in the Acquisition
Agreement to the contrary, such Principal Shareholder hereby waives
any rights of appraisal that such Principal Shareholder may have under
the Tenn. Acts in connection with the Merger or any of the other
Transactions; and
(f) such Principal Shareholder shall not, and shall cause each
of its immediate family members and affiliates not to, directly or
indirectly, encourage, solicit, participate in or initiate discussions
or negotiations with, provide any information to, or enter into any
agreement with, any Person or group of Persons (other than Parent,
Acquisition Corp. or any of their respective affiliates) concerning
all or any portion, or interest in any, of the Principal Shareholder
Shares of such Principal Shareholder or any Acquisition Proposal;
provided, however, that this provision shall in no way be construed as
limiting the ability to act in the capacity of an officer or director
of the Company (other than as set forth in the Acquisition Agreement)
if such Principal Shareholder is an officer or director of the
Company.
4. Notice of Acquisition of Additional Principal Shareholder Shares.
Each Principal Shareholder hereby, severally and not jointly with any other
Principal Shareholder, agrees, while this Agreement is in effect, to promptly
notify Parent and Acquisition Corp. of each acquisition by such Principal
Shareholder of any shares of Company Common Stock or Stock Rights after
execution hereof, which notice shall specify in each case the number of
acquired shares (and, in the case of any such Stock Rights, the number of
shares of Company Common Stock issuable upon the exercise, exchange or
conversion thereof and the other material terms thereof). All such shares of
Company Common Stock and Stock Rights shall be subject to the terms of this
Agreement as though owned by such Principal Shareholder on the date hereof.
5. Irrevocable Proxy.
(a) Solely for the purpose of facilitating the enforcement of
each Principal Shareholder's obligations under Section 3(d) of this
Agreement, each Principal Shareholder hereby irrevocably grants to,
and appoints, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and any other individual
who shall hereafter be designated by Acquisition Corp., such Principal
Shareholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Principal
Shareholder, to vote all of the Principal Shareholder Shares of such
Principal Shareholder, or grant a consent or approval in respect of
such Principal Shareholder Shares, at any meeting of shareholders of
the Company or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is
sought in favor of the approval and adoption of the Acquisition
Agreement and the Transactions or against any Acquisition Proposal
(including, without limitation, any Superior Proposal) and any
Frustrating Transaction.
(b) Each Principal Shareholder represents that, except for the
proxies pursuant to the Sun Support Agreement, none of the proxies (if
any) heretofore given in respect of any of the Principal Shareholder
Shares of such Principal Shareholder are irrevocable, and each such
Principal Shareholder agrees that all such proxies (including the
proxies pursuant to the Sun Support Agreement) are hereby revoked.
(c) Each Principal Shareholder hereby affirms that the proxy
granted by such Principal Shareholder in this Section 5 is coupled
with an interest and is irrevocable until the earlier of (i) such time
as this Agreement terminates in accordance with its terms and (ii)
consummation of the Merger in accordance with the terms of the
Acquisition Agreement. Each Principal Shareholder hereby further
affirms that the proxy granted by such Principal Shareholder in this
Section 5 is granted in connection with the execution of the
Acquisition Agreement, is given to secure the performance of the
duties of such Principal Shareholder under this Agreement, and
therefore is coupled with an interest.
6. Grant of Stock Option.
(a) Each Principal Shareholder hereby grants to Acquisition
Corp. an irrevocable option (the "Option") to purchase all such
Principal Shareholder Shares, in the manner set forth below, at an
exercise price of $9.60 per share, subject to adjustment as provided
below (the "Option Price").
(b) Exercise of Option. Acquisition Corp.'s designee may
exercise the Option, in whole or in part, at any time, or from time to
time following the occurrence of a Triggering Event (as defined
below). In the event Acquisition Corp. wishes to exercise the Option,
Acquisition Corp. shall deliver written notice (the "Exercise Notice")
to the Principal Shareholder specifying its intention to exercise the
Option, the total number of Principal Shareholder Shares it wishes to
purchase and a date and time for the closing of such purchase (an
"Option Closing") not less than three nor more than 30 Business Days
after the date such Exercise Notice is given; provided, however, that
if any waiting period under the HSR Act applicable to the Transaction
or the purchase of the Principal Shareholder Shares pursuant to the
Option shall not have expired or terminated by the date specified in
the Exercise Notice for the Option Closing, then the Option Closing
shall occur within one Business Day following such expiration or
termination. The term "Triggering Event" means the termination of the
Acquisition Agreement either (i) by Parent or Acquisition Corp. in
accordance with Section 8.03(c) of the Acquisition Agreement or (ii)
by the Company for any reason (other than in accordance with Section
8.04(a) or Section 8.04(b) of the Acquisition Agreement). In the event
that Acquisition Corp. exercises the Option following a termination of
the Acquisition Agreement by the Company (other than a termination in
accordance with Section 8.04(c) of the Acquisition Agreement), then
Acquisition Corp. shall use its reasonable best efforts to acquire the
remaining shares of Company Common Stock not held by it or its
affiliates at a price equal to $9.60 per share at the earliest
practicable date following the Option Closing.
(c) Payment of Option Price and Delivery of Certificate. Any
Option Closing under Section 6(b) shall be held at the offices of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇. At any Option Closing hereunder, (i) Acquisition Corp. or
its designee will make payment to the Principal Shareholder of the
aggregate price for the Principal Shareholder Shares being so
purchased by delivery of a certified check, official bank check or
wire transfer of funds pursuant to the Principal Shareholder's
instructions payable to the Principal Shareholder in an amount equal
to the product obtained by multiplying the Option Price by the number
of Principal Shareholder Shares to be purchased, and (ii) upon receipt
of such payment, the Principal Shareholder will deliver to Acquisition
Corp. or its designee a certificate or certificates representing the
number of validly issued, fully paid and non-assessable Principal
Shareholder Shares so purchased, in the denominations and registered
in such names designated to the Principal Shareholder in writing by
Acquisition Corp., along with all appropriate and effective
instruments of transfer.
(d) Adjustments Upon Changes in Capitalization. In the event of
any change in the number of Outstanding Common Shares by reason of any
stock dividend, stock split, recapitalization, merger, rights
offering, share exchange or other change in the corporate or capital
structure of the Company, Acquisition Corp. shall receive, upon
exercise of the Option, the stock or other securities, cash or
property to which Acquisition Corp. would have been entitled if it had
exercised the Option and had been a holder of record of Company Common
Stock on the record date fixed for determination of holders of Company
Common Stock entitled to receive such stock or other securities, cash
or property and the Option Price shall be adjusted appropriately.
7. Further Assurances. Solely for the purpose of facilitating the
enforcement of each Principal Shareholder's obligations hereunder, each
Principal Shareholder will, from time to time, execute and deliver, or cause to
be executed and delivered, such additional or further transfers, assignments,
endorsements, consents and other instruments as Parent or Acquisition Corp. may
reasonably request for the purpose of effectively carrying out the transactions
contemplated by this Agreement and to vest the power to vote the Principal
Shareholder Shares of such Principal Shareholder as contemplated by Section 3.
Each of Parent and Acquisition Corp. hereby agrees to use reasonable efforts to
take, or cause to be taken, all actions necessary to comply promptly with all
legal requirements that may be imposed with respect to the transactions
contemplated by this Agreement (including, without limitation, any legal
requirements of the HSR Act).
8. Name and Likeness. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ hereby grants to the
Company and its Subsidiaries the exclusive right to use his name and likeness,
including without limitation any and all trademark rights thereof, in
connection with the Company's and its Subsidiaries' advertising, marketing and
sales programs in any and all media formats (now existing or hereafter
developed) for a period of six months after the Offer Payment Date; provided
however that the Company and its Subsidiaries shall not use such name and
likeness in a manner substantially inconsistent with the current and currently
proposed use of such person's name and likeness, including without limitation
the current use and currently proposed use set forth in existing plans of the
Company and its Subsidiaries relating to such programs.
9. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the holders of a majority of Company Common Stock owned by
the Principal Shareholders. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties hereto and their respective successors and assigns. Notwithstanding
anything in this Section 9 to the contrary, each of Parent and Acquisition
Corp. shall have the right to assign all or any portion of its respective
rights, interests and obligations hereunder (a) to any of its respective
affiliates and/or (b) as collateral security to any Person who may provide
financing to Parent for the Transactions, in each case without the prior
written consent of any of the other parties hereto; provided that no such
assignment shall relieve Parent or Acquisition Corp. of any of its respective
obligations hereunder to the extent such assignee does not perform such
obligations; provided, further, the rights of the assignee will be subject to
all defenses, excuses, claims and counterclaims assertable against Parent or
Acquisition Corp., as applicable. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and permitted assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
10. Non-Competition and Non-Solicitation. In consideration of Parent's
and Acquisition Corp.'s agreement to enter into this Agreement and the
Acquisition Agreement, and as a condition thereto, each Principal Shareholder
covenants and agrees as follows:
(a) Each Principal Shareholder hereby acknowledges that it is or
may be familiar with the Companies' trade secrets and with other
confidential information and such Principal Shareholder acknowledges
and agrees that Parent, Acquisition Corp., the Company and their
respective Subsidiaries would be irreparably damaged if it were to
provide services to or otherwise participate in the business of any
person competing with the Company or any of its Subsidiaries in a
similar business and that any such competition by such Principal
Shareholder would result in a significant loss of goodwill by Parent,
Acquisition Corp., the Company and their Subsidiaries.
(b) From the date hereof through and including the date eighteen
months after the Offer Payment Date, no Principal Shareholder or any
of its affiliates shall, directly or indirectly, own any interest in,
manage, control, participate in (whether as an officer, director,
employee, partner, agent, representative or otherwise), consult with,
render services for, or in any other manner engage, anywhere in the
Restricted Territories in any business engaged directly or indirectly
the ownership or operation of retail clothing stores or other sales
outlets providing similar clothing goods and services as those
provided by the Company and its Subsidiaries; provided that nothing
herein shall prohibit (x) such Principal Shareholder or any of its
affiliates from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly
traded so long as none of such Persons has any active participation in
the business of such corporation or (y) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ from
owning any interest in, managing, or controlling, participating in,
consulting with, rendering services for, or engaging in any business;
provided that during such eighteen-month period ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
shall not, directly or indirectly, own or have voting control over any
retail clothing stores or other sales outlets providing similar
clothing goods and services as those provided by the Company and its
Subsidiaries with more than 20 stores. From the date hereof through
and including the third anniversary of the Offer Payment Date, no
Principal Shareholder or any of its affiliates shall, directly or
indirectly, use the name "▇▇▇▇▇▇▇▇▇▇," "Goody's," or any derivative
thereof or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇'▇ or his immediate family members'
names or likenesses in any business. From and after the date hereof,
no Principal Shareholder shall, directly or indirectly, use the name
"Goody's" in any business in the clothing industry so long as the
Company or any of its affiliates, successors or assigns is then using
such name. For purposes of this Agreement, "Restricted Territories"
shall mean the States of Alabama, Arizona, Delaware, Florida, Georgia,
Iowa, Illinois, Indiana, Kentucky, Kansas, Louisiana, Missouri,
Mississippi, North Carolina, Ohio, Oklahoma, South Carolina,
Tennessee, Texas, Virginia, West Virginia and any other state the
Company or any of its Subsidiaries currently proposes to conduct
business. Each Principal Shareholder acknowledges that the Company's
and its Subsidiaries' businesses has been conducted or is presently
proposed to be conducted throughout the Restricted Territories and
that the geographic restrictions set forth above are reasonable and
necessary to protect the goodwill of the Company's and its
Subsidiaries' businesses.
(c) From the date hereof through and including the date eighteen
months after the Offer Payment Date, no Principal Shareholder or any
of their affiliates shall, directly, or indirectly through another
Person, (A) induce or attempt to induce any employee of the any
Company or its Subsidiaries or affiliates to leave the employ of such
Company or any of its Subsidiaries or affiliates, or in any way
interfere with the relationship between the Company or any of its
Subsidiaries or affiliates and any employee thereof, (B) hire any
person who was an employee of the Company or any of its Subsidiaries
or affiliates at any time during the one-year period immediately prior
to the Offer Payment Date (it being conclusively presumed by the
parties so as to avoid any disputes under this Section 10(c) that any
such hiring within such one-year period is in violation of clause (A)
above) unless such employee was identified on Schedule B hereto and
was terminated by the Company or voluntarily terminated employment;
provided, however, that, nothing in this Section 10(c) shall be
construed to prohibit any Principal Shareholder or any of their
affiliates from hiring any other Principal Shareholder whose
employment has been terminated whether voluntarily or not, so long as
such hiring does not violate any other provisions of this Agreement,
including without limitation Section 10(b), or (C) for so long as such
Principal Shareholder has continuing obligations under Section 10(c)
above, call on, solicit or service any supplier, licensee, licensor or
other business relation of the Company or any of its Subsidiaries or
affiliates (including any Person that was a supplier or other
potential business relation of the Company or any of its Subsidiaries
or affiliates at any time during the one-year period immediately prior
to such call, solicit or service), induce or attempt to induce such
Person to cease doing business with the Company or any of its
Subsidiaries or affiliates, or in any way interfere with the
relationship between any such customer, supplier, licensee or business
relation and the Company or any of its Subsidiaries or affiliates
(including making any negative statements or communications about the
Company or any of its Subsidiaries or affiliates).
(d) Each Principal Shareholder agrees that it shall not (and
shall cause its affiliates not to) (i) make any negative statement or
communication regarding Parent, Acquisition Corp. the Company or any
of their respective Subsidiaries, affiliates or employees with the
intent to harm the Parent, Acquisition Corp., the Company or any of
their respective Subsidiaries or (ii) make any derogatory or
disparaging statement or communication regarding Parent, Acquisition
Corp., the Company or any of their respective Subsidiaries, affiliates
or employees; provided, however, that the covenants contained in this
Section 10(d) shall not be construed so as to prohibit any Principal
Shareholder from giving truthful, sworn testimony pursuant any legal
or judicial proceeding.
(e) If, at the time of enforcement of the covenants contained in
this Section 10 (the "Restrictive Covenants"), a court shall hold that
the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that
the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or
area and that the court shall be allowed and directed to revise the
restrictions contained herein to cover the maximum period, scope and
area permitted by law. Each Principal Shareholder has consulted with
legal counsel regarding the Restrictive Covenants and based on such
consultation has determined and hereby acknowledges that the
Restrictive Covenants are reasonable in terms of duration, scope and
area restrictions and are necessary to protect the goodwill of the
Company's and its Subsidiaries' businesses and the substantial
investment in the Company made by Parent and Acquisition Corp.
hereunder. Each Principal Shareholder further acknowledges and agrees
that the Restrictive Covenants are being entered into by it in
connection with the proposed sale of Common Shares pursuant to the
Acquisition Agreement and not directly or indirectly in connection
with such Principal Shareholders' employment or other relationship
with the Company or any of its Subsidiaries.
(f) If any Principal Shareholder or an affiliate of a Principal
Shareholder breaches, or threatens to commit a breach of, any of the
Restrictive Covenants, the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of
the others and severally enforceable, and each of which is in addition
to, and not in lieu of, any other rights and remedies available to
Parent, Acquisition Corp., the Company or any of its affiliates at law
or in equity:
(i) the right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being
agreed that any breach or threatened breach of the Restrictive
Covenants would cause irreparable injury to Parent, Acquisition Corp.
and the Company and that money damages would not provide an adequate
remedy to the Parent, Acquisition Corp. and the Company; and
(ii) the right and remedy to require any Principal Shareholder
to account for and pay over to the Company any profits, monies,
accruals, increments or other benefits derived or received by such
person as the result of any transactions constituting a breach of the
Restrictive Covenants.
(g) In the event of any breach or violation by a Principal
Shareholder of any of the Restrictive Covenants, the time period of
such covenant with respect to such breaching Principal Shareholder
shall be extended for one day for each day of such breach or
violation.
11. General Provisions.
(a) Expenses. Subject to the terms of the Acquisition Agreement,
all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party
incurring such expense.
(b) Amendments. This Agreement may not be amended except by an
instrument in writing signed by Parent, Acquisition Corp. and the
holders of a majority of Company Common Stock owned by the Principal
Shareholders.
(c) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
Person, by facsimile or by registered or certified mail (postage
prepaid, return receipt requested) or by a nationally recognized
overnight courier service to the respective parties at the following
addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 11(c)):
(i) if to Parent or to Acquisition Corp., to:
GF Goods Inc.
GF Acquisition Corp.
c/o GMM Capital LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
c/o Prentice Capital Management, LP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
(ii) if to a Principal Shareholder, to the address set forth
under the name of such Principal Shareholder on Schedule A hereto.
(d) Interpretation; Construction. When a reference is made in
this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Wherever the
words "include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
This Agreement and any documents or instruments delivered pursuant
hereto or in connection herewith shall be construed without regard to
the identity of the Person who drafted the various provisions of the
same. Each and every provision of this Agreement and such other
documents and instruments shall be construed as though all of the
parties participated equally in the drafting of the same.
Consequently, the parties acknowledge and agree that any rule of
construction that a document is to be construed against the drafting
party shall not be applicable to this Agreement or such other
documents and instruments.
(e) Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of
which when executed and delivered shall be deemed to be an original,
but all of which taken together shall constitute one and the same
agreement.
(f) Entire Agreement. This Agreement and the documents and
instruments referred to herein constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and
oral, among such parties with respect to the subject matter hereof.
(g) Governing Law; Waiver of Jury Trial. The provisions of this
agreement and the documents delivered pursuant hereto shall be
governed by and construed in accordance with the Laws of the State of
Tennessee (excluding any conflict of Law, rule or principle that would
refer to the Laws of another jurisdiction). EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY
LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR
PROCEEDING ARISING HEREUNDER.
(h) Public Announcements. The Principal Shareholders shall
consult Parent, Acquisition Corp. and the Company before issuing any
press release or otherwise making any public statement with respect to
this Agreement, any of the other Transaction Agreements or any of the
Transactions. Prior to the Closing, no Principal Shareholder shall
issue any press release or otherwise make any public statement without
the prior written consent of Parent and Acquisition Corp., except as
may be required by Law or any listing agreement with the Nasdaq or any
national securities exchange to which the Company is a party and, in
such case, shall consult with Parent and Acquisition Corp. prior to
such release or statement being issued.
(i) Third-Party Beneficiary. The Company is an intended third
party beneficiary of this Agreement and may enforce all rights and
remedies of the Company hereunder.
12. Shareholder Capacity. No Person executing this Agreement who,
during the term hereof, is or becomes a director or officer of the Company
makes any agreement or understanding herein in his or her capacity as a
director or officer of the Company. Each Principal Shareholder signs solely in
his, her or its capacity as the record holder and beneficial owner of, or the
trustee of a trust whose beneficiaries are the beneficial owners of, Principal
Shareholder Shares.
13. Enforcement. Each of the parties hereto agree that irreparable
damage will occur in the event that any of the provisions of this Agreement are
not performed in accordance with their specific terms or are otherwise
breached. It is accordingly agreed that each of the parties to this Agreement
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in a court of the United States in addition to any other remedy to
which they are entitled at law or in equity.
14. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. 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.
15. Termination. Subject to the two last sentences of this Section 15,
the provisions of Sections 3, 4, 5, 6, 7, 8 and 10 shall terminate
automatically and be of no further force or effect upon a valid termination of
the Acquisition Agreement; provided, however, nothing herein shall relieve any
party hereto from liability for fraud or a material and intentional breach of
any such provision prior to such termination. Notwithstanding anything to the
contrary in this Agreement, Section 3(a) and Section 6 shall survive a
termination of the Acquisition Agreement that constitutes a Triggering Event
for a period of 30 Business Days following the occurrence of the Triggering
Event. In the event Acquisition Corp. has provided any Principal Shareholder
with an Exercise Notice prior to the termination of Section 3(a) and Section 6
pursuant to this Section 15, then notwithstanding anything to the contrary in
this Agreement, Section 3(a) and Section 6 shall survive the time at which they
would otherwise terminate pursuant to this Section 15 with respect to any
Principal Shareholder Shares subject to such Exercise Notice until the Option
Closing.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first written above.
GF Goods Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
GF Acquisition Corp.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
PRINCIPAL SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ SUBCHAPTER S
TRUST, DATED JANUARY 23, 1991
By: /s/ ▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇ ▇▇▇▇▇
Its Trustee
THE ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ SUBCHAPTER S TRUST,
DATED JANUARY 23, 1991
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇ ▇▇▇▇▇
Its Trustee
THE ▇▇▇▇▇▇▇▇▇▇ FOUNDATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its President
Schedule A
-------------------------------------------------------------------------------------------------------------
Name and Address of Number of Shares of Number of Options Number of Other Options
Principal Shareholder Outstanding Common Described in Section
Shares Owned by 3(b)(1)
Principal Shareholder
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 12,098,330 750,000 75,000
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ & 22,500 0 0
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 0 15,000 9,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇ ▇▇▇▇▇▇ 317,270 0
▇▇▇▇▇▇▇▇▇▇ Subchapter S
Trust, dated January 23,
1991
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇▇ ▇▇▇▇ 317,270 0 0
▇▇▇▇▇▇▇▇▇▇ Subchapter S
Trust, dated January 23,
1991
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇▇▇▇▇ Foundation 1,000,000 0 0
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------
Schedule B
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇