Exhibit 8
Execution Copy
SUPPORT AGREEMENT
This SUPPORT AGREEMENT (this "Agreement") is entered into as
of October __, 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 Xxxxxx
X. Xxxxxxxxxx'x 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, Xxxxx Xxxxx, Xxxxxxx Xxxxxxxxx, 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 $8.85 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 $8.85
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, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx,
Xxx Xxxx, XX 00000. 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. Xxxxxx X. Xxxxxxxxxx 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)
Xxxxxxx X. Xxxxxxxxxx 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 Xxxxxxx X. Xxxxxxxxxx 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 "Xxxxxxxxxx," "Goody's," or any
derivative thereof or Xxxxxx X. Xxxxxxxxxx'x 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
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telecopy: (000) 000-0000
c/o Prentice Capital Management, LP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
Telecopy: (000) 000-0000
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/ Xxxxx Xxxxx
-------------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Executive Officer
GF Acquisition Corp.
By: /s/ Xxxxx Xxxxx
-------------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Executive Officer
----------------------------------------------
PRINCIPAL SHAREHOLDERS:
----------------------------------------------
Xxxxxx X. Xxxxxxxxxx
----------------------------------------------
Xxxxx X. Xxxxxxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxxxxxx
THE XXXXXX XXXXXX XXXXXXXXXX SUBCHAPTER S TRUST,
DATED JANUARY 23, 1991
By:
------------------------------------------
Xxx Xxxxx
Its Trustee
THE XXXXXXX XXXX XXXXXXXXXX SUBCHAPTER S TRUST,
DATED JANUARY 23, 1991
By:
------------------------------------------
Xxx Xxxxx
Its Trustee
THE XXXXXXXXXX FOUNDATION
By:
------------------------------------------
Xxxxxx X. Xxxxxxxxxx
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
---------------------------- -------------------------- -------------------------- --------------------------
Xxxxxx X. Xxxxxxxxxx 12,098,330 750,000 75,000
000 Xxxx Xxx Xxx Xxxxx
Xxxxxxxxx, XX 00000
---------------------------- -------------------------- -------------------------- --------------------------
Xxxxxx X. Xxxxxxxxxx & 22,500 0 0
Xxxxx X. Xxxxxxxxxx
000 Xxxx Xxx Xxx Xxxxx
Xxxxxxxxx, XX 00000
---------------------------- -------------------------- -------------------------- --------------------------
Xxxxxxx X. Xxxxxxxxxx 0 15,000 9,000
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
---------------------------- -------------------------- -------------------------- --------------------------
The Xxxxxx Xxxxxx 317,270 0
Xxxxxxxxxx Subchapter S
Trust, dated January 23,
1991
000 Xxxx Xxx Xxx Xxxxx
Xxxxxxxxx, XX 00000
---------------------------- -------------------------- -------------------------- --------------------------
The Xxxxxxx Xxxx 317,270 0 0
Xxxxxxxxxx Subchapter S
Trust, dated January 23,
1991
000 Xxxx Xxx Xxx Xxxxx
Xxxxxxxxx, XX 00000
---------------------------- -------------------------- -------------------------- --------------------------
The Xxxxxxxxxx Foundation 1,000,000 0 0
000 Xxxx Xxx Xxx Xxxxx
Xxxxxxxxx, XX 00000
---------------------------- -------------------------- -------------------------- --------------------------
Schedule B
----------
Xxxxxxx Xxxx Xxxxxxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxxxx
Xx Xxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxxxxx
Xxx Xxxxxx
Xxxx Xxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxxxxxx
