AGREEMENT AND PLAN OF MERGER
by and among
BERKSHIRE HATHAWAY INC.
BG MERGER SUB INC.
and
GARAN, INCORPORATED
July 2, 2002
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July
2, 2002, by and among Berkshire Hathaway Inc., a Delaware corporation
("Parent"), BG Merger Sub Inc., a Virginia corporation and a wholly owned
subsidiary of Parent (the "Merger Sub"), and Garan, Incorporated, a Virginia
corporation (the "Company").
WHEREAS, the Board of Directors of Parent, the Board of Directors
of Merger Sub, and the Board of Directors of the Company have approved, and
determined that it is advisable and in the best interests of their respective
companies and stockholders to consummate, the merger of Merger Sub with and
into the Company (the "Merger"), with the Company as the surviving
corporation in the Merger, upon and subject to the terms and conditions set
forth in this Agreement, pursuant to which the shares of Common Stock, no par
value, of the Company (the "Shares" or the "Company Common Stock"), together
with the rights (the "Rights") attached thereto to purchase additional Shares
pursuant to the Amended and Restated Rights Agreement dated as of April 21,
1993, as amended October 1, 2001 (as amended, supplemented or otherwise
modified, the "Rights Agreement") between the Company and X.X. Xxxxxx Xxxxx
(then Chemical Bank), as rights agent, issued and outstanding immediately
prior to the Effective Time (as defined in Section 1.2), other than shares
described in Section 2.1(b), will be converted into the right to receive
$60.00 per Share (including associated Rights) in cash (the "Merger
Consideration"); and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection
with the Merger; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to Parent's and Merger Sub's willingness to
enter into this Agreement, Parent and Merger Sub have entered into a
Stockholders Agreement, dated the date hereof, the form of which is attached
as Exhibit A hereto (the "Stockholders Agreement"), with the stockholders
named therein (the "Stockholders"), pursuant to which each Stockholder has,
among other things agreed to vote certain Shares beneficially owned by the
Stockholder in favor of the Merger and this Agreement and against any
Takeover Proposal (as defined herein), in each case subject to and on the
conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of
this Agreement and the provisions of the Virginia Stock Corporation Act (the
"VSCA"), at the Effective Time (as defined in Section 1.2 hereof), the
Company and Merger Sub shall consummate a merger (the "Merger") pursuant to
which (a) Merger Sub shall be merged with and into the Company and the
separate corporate existence of Merger Sub shall thereupon cease, (b) the
Company shall be the successor or surviving corporation in the Merger (the
"Surviving Corporation") under the name "Garan, Incorporated" and shall
continue to be governed by the laws of the Commonwealth of Virginia, and (c)
the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by
the Merger. After the Effective Time, (x) the articles of incorporation of
the Company, as in effect immediately prior to the Effective Time or as it
may be amended by the Articles of Merger (as defined below), shall be the
articles of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such articles of incorporation, and (y) the
bylaws of the Company, as in effect immediately prior to the Effective Time,
shall be the bylaws of the Surviving Corporation until thereafter amended as
provided by law, the articles of incorporation and such bylaws. The Merger
shall have the effects set forth in the VSCA.
Section 1.2 Effective Time. Parent, Merger Sub, and the Company
shall cause appropriate articles of merger meeting the requirements of
Section 13.1-720 of the VSCA (the "Articles of Merger") to be executed and
filed on the date of the Closing (as defined in Section 1.3) (or on such
other date as Parent and the Company may agree) with the State Corporation
Commission of the Commonwealth of Virginia (the "Commission") as provided in
the VSCA. The Merger shall become effective on the date on which the
certificate of merger has been duly issued by the Commission or such later
time as is agreed upon by the parties and designated in the Articles of
Merger as the effective time of the Merger, and such time is hereinafter
referred to as the "Effective Time."
Section 1.3 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m., on a date to be specified by the parties,
which shall be as soon as practicable, but in no event later than the fourth
business day, after satisfaction or waiver of all of the conditions set forth
in Article VI hereof (the "Closing Date"), at or directed from the offices of
Xxxxxx, Xxxxxx & Xxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000, unless another date or place is agreed to in writing by the parties
hereto.
Section 1.4 Directors and Officers of the Surviving Corporation.
The directors of Merger Sub and the officers of the Company immediately prior
to the Effective Time shall, from and after the Effective Time, be the
directors and officers, respectively, of the Surviving Corporation until
their successors shall have been duly elected or appointed or qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's articles of incorporation and bylaws.
Section 1.5 Stockholders' Meeting; Proxy Statement.
(a) Subject to the Company's rights under Section
7.1(c)(ii), the Company, acting through its Board of Directors, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders for the purpose of considering and taking
action upon this Agreement (the "Special Meeting") as soon as practicable
following the date hereof;
(ii) prepare and use reasonable best efforts to file
with the United States Securities and Exchange Commission (the "SEC"), by
July 12, 2002, a preliminary proxy statement relating to the Merger and this
Agreement and use its reasonable efforts (A) to obtain and furnish the
information required to be included by the federal securities laws (and the
rules and regulations thereunder) in the Proxy Statement (as hereinafter
defined) and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy statement and,
as soon as practicable thereafter to cause a definitive proxy statement (the
"Proxy Statement") to be mailed to its stockholders and (B) to obtain the
necessary approvals of the Merger and this Agreement by its stockholders as
soon as practicable; and
(iii) include in the Proxy Statement the recommendation
of the Board that stockholders of the Company vote in favor of
the approval of the Merger and the adoption of this Agreement, unless such
recommendation has been withdrawn, or as such recommendation has been
modified or amended, in each case in accordance with Section 5.2, and the
opinion of Xxxxxxx Sachs & Co. (the "Financial Advisor") described in Section
3.20, if the Financial Advisor authorizes such inclusion, which authorization
the Company will request;
(b) Parent shall provide the Company with the information
concerning Parent and Merger Sub required to be included in the Proxy
Statement. Parent shall vote, or cause to be voted, all of the Shares (if
any) then owned by it, Merger Sub or any of its other subsidiaries and
affiliates in favor of the approval of the Merger and the adoption of this
Agreement.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
holders of any shares of Company Common Stock or of the common stock, no par
value, of Merger Sub (the "Merger Sub Common Stock"):
(a) Merger Sub Common Stock. Each issued and outstanding
share of Merger Sub Common Stock shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock, no par
value, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned
Stock. All shares of Company Common Stock that are owned by the Company as
treasury stock, all shares of Company Common Stock owned by any subsidiary of
the Company and any shares of Company Common Stock owned by Parent, Merger
Sub or any other wholly owned subsidiary of Parent, in each case including
associated Rights, shall be canceled and retired and shall cease to exist and
no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding
share of Company Common Stock (including associated Rights), other than
Shares to be canceled in accordance with Section 2.1(b) hereof, shall be
converted into the right to receive the Merger Consideration in cash, without
interest, payable to the holder thereof upon surrender of the certificate
formerly representing such share of Company Common Stock in the manner
provided in Section 2.2 hereof. All such shares of Company Common Stock
(including associated Rights), when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such Shares shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor upon the surrender of such certificate in
accordance with Section 2.2 hereof, without interest, and any dividends
declared and unpaid as of the Effective Time. Following the Effective Time,
the Surviving Corporation shall pay to the holders of certificates as of the
Effective Time any unpaid dividends declared in respect of the Company Common
Stock with a record date prior to the Effective Time and which remain unpaid
at the Effective Time.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent
shall designate a bank or trust company (the "Paying Agent") reasonably
acceptable to the Company to make the payments of the funds to which holders
of shares of Company Common Stock shall become entitled pursuant to Section
2.1(c) hereof. When and as needed, Parent shall deposit with the Paying
Agent such funds in trust for the benefit of holders of shares of Company
Common Stock for exchange in accordance with Section 2.1, for timely payment
hereunder. Such funds shall be invested by the Paying Agent as directed by
Parent; provided that such investments shall be in obligations of or
guaranteed by the United States of America and backed by the full faith and
credit of the United States of America or in commercial paper obligations
rated A-1 or P-1 or better by Xxxxx'x Investors Service, Inc. or Standard &
Poor's Corporation, respectively. Any net profit resulting from, or interest
or income produced by, such investments will be payable to Parent.
(b) Exchange Procedures. As promptly as practicable
after the Effective Time but in no event more than ten (10) days thereafter,
Parent shall cause the Paying Agent to mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock and associated Rights
(the "Certificates"), whose shares were converted pursuant to Section 2.1(c)
into the right to receive the Merger Consideration, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such
other provisions as Parent and the Surviving Corporation may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent, together
with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration (subject to subsection (e) below) multiplied by the number of
shares of Company Common Stock formerly represented by such Certificate and
the Certificate so surrendered shall forthwith be canceled. If payment of
the Merger Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition
of payment that the Certificate so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person requesting
such payment shall have paid any transfer and other taxes required by reason
of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in
Company Common Stock. At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration
of transfers of shares of Company Common Stock (and associated Rights) on the
records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of shares of Company Common Stock (and
associated Rights) outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares (and associated Rights),
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged for Merger Consideration in
the proper amount of cash as provided in this Article II.
(d) Return of Funds; No Liability. At any time following
270 calendar days after the Effective Time, Parent or the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it
any funds (including any interest received with respect thereto) which had
been deposited with the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to
look only to Parent or the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) as general creditors thereof with
respect to the payment of any Merger Consideration that may be payable upon
surrender of any Certificates such stockholder holds, as determined pursuant
to this Agreement, without any interest thereon. Notwithstanding the
foregoing, none of Parent, the Surviving Corporation nor the Paying Agent
shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(e) Withholding Taxes. If so specified in the Proxy
Statement, Parent, the Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable to a
holder of Shares pursuant to the Merger such amounts as Parent, the Surviving
Corporation or the Paying Agent is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code") or any provision of state, local or foreign tax
law. To the extent amounts are so withheld by Parent, the Surviving
Corporation or the Paying Agent, the withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which the deduction and withholding was made.
Section 2.3 Company Option Plans. Prior to the Closing Date, the
Board of Directors of the Company (or, if appropriate, any committee
administering the Option Plans (as defined below)) shall adopt such
resolutions or take such other actions as may be required to effect the
following:
(a) Adjust the terms of all outstanding stock options to
purchase shares of Company Common Stock ("Company Stock Options") granted
under the Company's 1989 Stock Option Plan or 1998 Stock Option Plan, each as
amended (the "Option Plans"), to provide that each Company Stock Option
outstanding immediately prior to the Effective Time, with an exercise price
of less than the Merger Consideration, shall be canceled at the Effective
Time in exchange for a payment from the Surviving Corporation (subject to any
applicable withholding taxes) equal to the product of (1) the total number of
shares of Company Common Stock subject to such Company Stock Option and (2)
the excess of the Merger Consideration over the exercise price per share of
Company Common Stock subject to such Company Stock Option, payable in cash
immediately following the Effective Time.
(b) Except as provided in subsection (a) above, the
Company Stock Options, the Option Plans and any other plan, program or
arrangement providing for the issuance or grant of any interest in respect of
the capital stock of the Company or any subsidiary, including the Rights
Agreement, shall terminate as of the Effective Time, and following the
Effective Time no holder of a Company Stock Option nor any participant in any
such plan, program or arrangement shall have any right thereunder to acquire
capital securities of the Surviving Corporation or of Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
Section 3.1 Corporate Organization.
(a) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the requisite corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted. Each of the Company and
its subsidiaries is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect (as defined
below) on the Company ("Company Material Adverse Effect"). The copies of the
Restated Articles of Incorporation and Bylaws of the Company, and amendments
thereto (the "Company Charter" and "Company Bylaws"), as most recently filed
with the Company's SEC Documents (as hereinafter defined), are true, complete
and correct copies of such documents as in effect as of the date of this
Agreement.
(b) As used in this Agreement, the term "Material Adverse
Effect" means any state of facts, change, development, effect, occurrence or
condition that has a material adverse effect on (i) the business, results of
operations, properties, assets, liabilities or financial condition of the
Company and its subsidiaries taken as a whole or Parent and its subsidiaries
taken as a whole, as applicable, or (ii) a party's or parties' ability to
consummate the transactions contemplated hereby (except to the extent caused
by any action or inaction of Parent or Merger Sub in the case of a Company
Material Adverse Effect, or of the Company or its subsidiaries in the case of
a Parent Material Adverse Effect, in breach of this Agreement); provided,
however, that a "Material Adverse Effect" shall not include the following or
any combination of the following: any state of facts, change, development,
effect, occurrence or condition (A) resulting from or attributable to general
national, international or regional economic or financial conditions, (B)
resulting from or attributable to the announcement, pendency or consummation
of this Agreement or the transactions contemplated hereby, or (C) generally
affecting the industries in which the Company or its subsidiaries operate
(including legal and regulatory changes), or (D) described as a risk factor
in the Company's Annual Report on Form 10-K/A for the fiscal year ended
September 30, 2001. For purposes of analyzing whether any state of facts,
change, development, effect, occurrence or condition has resulted in a
Company Material Adverse Effect, Merger Sub will not be deemed to have
knowledge of any state of facts, change, development, effect, occurrence or
condition relating to the Company or its subsidiaries unless it is disclosed
in the Company's SEC Documents or the Company Disclosure Schedule (as defined
below). As used in this Agreement, the word "subsidiary" when used with
respect to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated, of which at least a
majority of the securities or other interests having by their terms voting
power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly beneficially owned or controlled by such party or by
any one or more of its subsidiaries, or by such party and one or more of its
subsidiaries.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists
of 15,000,000 shares of Company Common Stock, no par value, and 500,000
shares of Preferred Stock, par value $10.00 per share (the "Preferred
Stock"). At the date hereof, there were (i) 4,523,975 shares of Company
Common Stock issued and outstanding and an equal number of shares of Company
Common Stock reserved for issuance upon exercise of Rights under the Rights
Agreement, (ii) 37,167 shares of Company Common Stock issuable upon the
exercise of outstanding Company Stock Options (all of which are presently
vested and exercisable) pursuant to the Option Plans, and (iii) no shares of
Preferred Stock issued or outstanding. All of the issued and outstanding
shares of Company Stock have been (and any shares of Company Common Stock
issued upon the exercise of Company Stock Options will be) duly authorized
and validly issued and are (or will be) fully paid, nonassessable and free of
preemptive rights. Except as set forth above or in Section 3.2(a) of the
Company's disclosure schedule delivered to Parent concurrently with the
execution of this Agreement (the "Company Disclosure Schedule"), as of the
date hereof, there are not and, as of the Effective Time there will not be,
any shares of Company Common Stock, Preferred Stock, or other capital stock
issued and outstanding or any subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any securities of the Company, including any securities
representing the right to purchase or otherwise receive any Company Common
Stock or Preferred Stock.
(b) The Company owns, directly or indirectly, all of the
issued and outstanding shares of capital stock of each of its subsidiaries,
free and clear of any liens, charges, encumbrances, adverse rights or claims
and security interests whatsoever ("Liens"), and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. None of the Company's subsidiaries has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
security of such subsidiary, including any securities representing the right
to purchase or otherwise receive any shares of capital stock or any other
equity security of such subsidiary.
(c) Disclosed in Section 3.2(c) of the Company Disclosure
Schedule is a true and complete list of all outstanding Company Stock Options
as of the date hereof, the exercise price therefor, and the holder thereof.
Section 3.3 Authority.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to obtaining the approval of
holders of more than two-thirds of the outstanding shares of Company Common
Stock (the "Company Stockholder Approval") prior to the consummation of the
Merger in accordance with Section 13.1-718 of the VSCA. The Company
Stockholder Approval is the only vote of the holders of any class or series
of the Company's securities necessary to approve this Agreement, the Merger,
and the other transactions contemplated hereby. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of
the transactions contemplated hereby, have been duly authorized by its Board
of Directors and, except for obtaining the approval of its stockholders as
contemplated by Section 1.5 hereof and as required by the VSCA, no other
corporate action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Agreement and the consummation
by it of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery hereof by the other parties thereto,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and
(ii) is subject to general principles of equity.
(b) The Board of Directors of the Company has approved
and taken all corporate action required to be taken by the Board of Directors
for the consummation by the Company of the transactions contemplated by this
Agreement.
Section 3.4 Consents and Approvals; No Violations.
(a) Except for (i) the consents and approvals set forth
in Section 3.4(a) of the Company Disclosure Schedule, (ii) the filing with
the SEC of the preliminary proxy statement and the Proxy Statement, (iii) the
filing of the Articles of Merger with the Commission pursuant to the VSCA,
(iv) the adoption of this Agreement by the requisite vote of the stockholders
of the Company, and (v) filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, (A)
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (B) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (C) any filings required under the rules and regulations of the
American Stock Exchange ("AMEX"), and (D) if required, the Federal Law of
Economic Competition (Mexico), as amended (the "Mexican Competition Act"), no
consents or approvals of, or filings, declarations or registrations with, any
federal, state or local court, administrative or regulatory agency or
commission or other governmental authority or instrumentality, domestic or
foreign (each a "Governmental Entity") are necessary for the consummation by
the Company of the transactions contemplated hereby or by the Stockholders
Agreement, other than such other consents, approvals, filings, declarations
or registrations that, if not obtained, made or given, would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
(b) Except as set forth in Section 3.4(b) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement by
the Company nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with any of the terms or
provisions hereof, nor the consummation of the transactions contemplated by
the Stockholders Agreement or compliance with the terms and provisions
thereof, will (i) conflict with or violate any provision of the Company
Charter or Company Bylaws or any of the similar organizational documents of
any of its subsidiaries or (ii) assuming that the authorizations, consents
and approvals referred to in Section 3.4(a) and the authorization hereof by
the Company's stockholders in accordance with the VSCA are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to the Company or any of its
subsidiaries or any of their respective properties or assets, or (y) subject
to obtaining the third-party consents set forth in Section 3.4(b) of the
Company Disclosure Schedule, violate, conflict with, result in the loss of
any material benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of the Company or any of its
subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party, or by which they or any of their respective properties or assets may
be bound or affected, except, in the case of clause (ii) above, for such
violations, conflicts, breaches, defaults, losses, terminations of rights
thereof, accelerations or Lien creations which, individually or in the
aggregate, would not reasonably be expected to have a Company Material
Adverse Effect.
Section 3.5 SEC Documents; Undisclosed Liabilities. The Company
has filed all required reports, schedules, forms and registration statements
with the SEC since October 1, 2000 (collectively, and in each case including
all exhibits, schedules, and amendments thereto and documents incorporated by
reference therein, the "SEC Documents"; provided that, in respect of the Form
10-K for the year ended September 30, 2001, "SEC Documents" shall refer only
to the Form 10-K/A for the year ended September 30, 2001). As of their
respective dates, the SEC Documents complied in all material respects with
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Documents, and none
of the SEC Documents (including any and all financial statements included
therein) as of such dates contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in the SEC Documents (the "SEC
Financial Statements") comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated otherwise in the notes thereto) and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited quarterly statements, to normal year-end
audit adjustments). Since September 30, 2001, neither the Company nor any of
its subsidiaries, has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required, if known, to
be reflected or reserved against on a consolidated balance sheet of the
Company prepared in accordance with GAAP except (i) as and to the extent set
forth on the audited balance sheet of the Company and its subsidiaries as of
September 30, 2001 (including the notes thereto) included in the SEC
Documents, (ii) as incurred in connection with the transactions contemplated
by this Agreement, (iii) as incurred after September 30, 2001 in the ordinary
course of business and consistent with past practice, (iv) as described in
the SEC Documents filed since September 30, 2001 (the "Recent SEC
Documents"), or (v) as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
Section 3.6 Broker's Fees. Except for the Financial Advisor's
fee set forth in Section 3.6 of the Company Disclosure Schedule, neither the
Company nor any subsidiary of the Company nor any of their respective
officers or directors on behalf of the Company or such subsidiaries has
employed any financial advisor, broker or finder or incurred any liability
for any financial advisory fee, broker's fees, commissions or finder's fees
in connection with any of the transactions contemplated hereby.
Section 3.7 Absence of Certain Changes or Events. Except as set
forth in the Recent SEC Documents filed prior to the date hereof or in
Section 3.7 of the Company Disclosure Schedule, since September 30, 2001, the
Company and its subsidiaries have conducted their businesses in all material
respects in the ordinary course and in a manner consistent with past practice
and, since such date, there has not been any event that, individually or in
the aggregate, has had or would reasonably be expected to have, a Company
Material Adverse Effect. Since March 31, 2002, neither the Company nor any
of its subsidiaries has taken, or failed to take, any action that would have
constituted a breach of Section 5.1(a), 5.1(b), or 5.1(e) hereof had the
covenants therein applied since that date.
Section 3.8 Legal Proceedings.
(a) Except as set forth in Section 3.8 of the Company
Disclosure Schedule or as disclosed in the Recent SEC Documents, there is no
action, suit or proceeding, claim, arbitration or investigation pending or,
to the Company's knowledge, threatened against the Company or any of its
subsidiaries, and neither the Company nor any or its subsidiaries is a party
to any action, suit or proceeding, arbitration or investigation, which,
individually or in the aggregate, would reasonably be expected to have a
Company Material Adverse Effect.
(b) Except as set forth in Section 3.8 of the Company
Disclosure Schedule or as disclosed in the Recent SEC Documents, there is no
injunction, order, judgment, decree or regulatory restriction imposed upon
the Company, any of its subsidiaries or the assets of the Company or any of
its subsidiaries which, when aggregated with all other such injunctions,
orders, judgments, decrees and restrictions, would reasonably be expected to
have a Company Material Adverse Effect.
Section 3.9 Compliance with Applicable Law. Except as disclosed
in Section 3.9 of the Company Disclosure Schedule or in the Recent SEC
Documents, the Company and each of its subsidiaries hold all material
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their respective businesses as presently conducted and are in
compliance with the terms thereof, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance would not,
when aggregated with all other such failures or noncompliance, reasonably be
expected to have a Company Material Adverse Effect, and neither the Company
nor any of its subsidiaries knows of, or has received notice of, any material
violations of any applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to the Company or any of
its subsidiaries, which, in the aggregate, would reasonably be expected to
have a Company Material Adverse Effect.
Section 3.10 Company Information. The information relating to the
Company and its subsidiaries to be provided by the Company for inclusion in
the Proxy Statement or in any other document filed with any other
Governmental Entity in connection herewith at the respective times filed with
the SEC or such other Governmental Entity and first published, sent or given
to stockholders of the Company and, in addition, in the case of the Proxy
Statement, at the date it or any amendment or supplement is mailed to holders
of the shares of Company Common Stock and at the time of the Special Meeting,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading (except that no
representation or warranty is made by the Company as to such portions thereof
that relate only to Parent, Merger Sub, or any of their subsidiaries or to
statements made therein based on information supplied by or on behalf of
Parent or Merger Sub for inclusion or incorporation by reference therein).
The Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 3.11 Employee Matters.
(a) The Company has delivered or made available to Parent
full and complete copies or descriptions of each material employment,
severance, bonus, change-in-control, profit sharing, compensation,
termination, stock option, stock appreciation right, restricted stock,
phantom stock, performance unit, pension, retirement, deferred compensation,
welfare or other employee benefit agreement, trust fund or other employee
benefit arrangement and any union, guild or collective bargaining agreement
maintained or contributed to or required to be contributed to by the Company
or any of its ERISA Affiliates (as defined below), for the benefit or welfare
of any director, officer, employee or former employee of the Company or any
of its ERISA Affiliates (such plans and arrangements being collectively the
"Company Benefit Plans"). Except as set forth in Section 3.11(a) of the
Company Disclosure Schedule, each of the Company Benefit Plans is in material
compliance with all applicable laws including the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code except where such
noncompliance would not reasonably be expected to have a Company Material
Adverse Effect. Except as set forth in Section 3.11(a) of the Company
Disclosure Schedule, the Internal Revenue Service has determined that each
Company Benefit Plan that is intended to be a qualified plan under Section
401(a) of the Code is so qualified and the Company is aware of no event
occurring after the date of such determination that would adversely affect
such determination, except where such event would not reasonably be expected
to have a Company Material Adverse Effect. Except as set forth in Section
3.11(a) of the Company Disclosure Schedule, no condition exists that is
reasonably likely to subject the Company or any of its subsidiaries to any
direct or indirect liability under Title IV of ERISA or Section 4976 of the
Code that would reasonably be expected to have a Company Material Adverse
Effect and that is not reflected on such balance sheet or that is reasonably
likely to result in any loss of a federal tax deduction under Section 280G of
the Code. Except as set forth in Section 3.11(a) of the Company Disclosure
Schedule, there are no pending or to the Company's knowledge, threatened,
claims (other than routine claims for benefits or immaterial claims) by, on
behalf of or against any of the Company Benefit Plans or any trusts related
thereto except where such claims would not reasonably be expected to have a
Company Material Adverse Effect. "ERISA Affiliate" means, with respect to
any person, any trade or business, whether or not incorporated, that together
with such person would be deemed a "single employer" within the meaning of
Section 4001(a)(15) of ERISA.
(b) Neither the Company nor any of its subsidiaries is a
party to, or bound by, any collective bargaining agreement (other than as set
forth in Section 3.11(b) of the Company's Disclosure Schedule) or other
contract or understanding with a labor union or labor organization. Except
for such matters that would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, there is no (i)
unfair labor practice, labor dispute or labor arbitration proceeding pending,
(ii) to the knowledge of the Company, any activity or proceeding by a labor
union or representative thereof to organize any employees of the Company or
any of its subsidiaries or (iii) lockout, strike, slowdown, work stoppage or,
to the knowledge of the Company, threat thereof by or with respect to such
employees.
Section 3.12 Environmental Matters. Except as set forth in
Section 3.12 of the Company's Disclosure Schedule or in Recent SEC Documents,
there are no legal, administrative, arbitral or other proceedings, or pending
or, to the knowledge of the Company, threatened claims, actions, causes of
action or required environmental remediation activities or, to the knowledge
of the Company, governmental investigations of any nature seeking to impose,
or that reasonably could be expected to result in the imposition, on the
Company or any of its subsidiaries of any liability or obligations arising
under common law standards relating to environmental protection, human health
or safety, or under any local, state, federal, national or supranational
environmental statute, regulation or ordinance, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(collectively, "Environmental Laws"), pending or, to the knowledge of the
Company, threatened, against the Company or any of its subsidiaries, which
liability or obligation would reasonably be expected to have a Company
Material Adverse Effect. To the knowledge of the Company, during or prior to
the period of (i) its or any of its subsidiaries' ownership or operation of
any of their respective current properties, (ii) its or any of its
subsidiaries' participation in the management of any property, or (iii) its
or any of its subsidiaries' holding of a security interest or other interest
in any property, there was no release or threatened release of hazardous,
toxic, radioactive or dangerous materials or other materials regulated under
Environmental Laws in, on, under or affecting any such property which would
reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any of its subsidiaries is subject to any agreement,
judgment, decree, or other order of any kind by or with any court,
governmental authority, regulatory agency or third party imposing any
material liability or obligations pursuant to or under any Environmental Law
that would reasonably be expected to have a Company Material Adverse Effect.
Section 3.13 Rights Agreement; Takeover Statutes. The Company has
taken all action required so that the entering into of this Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby do not and will not enable or require the Rights to be
separated from the shares of Company Common Stock with which the Rights are
associated, or to be distributed, exercisable, exercised, nonredeemable or
result in the Rights associated with any Company Common Stock beneficially
owned by Parent, Merger Sub, or any of their affiliates or associates (as
defined in the Rights Agreement) to be void or voidable. The Company has
taken all actions necessary such that no restrictive provision of any "fair
price," "moratorium," "control share acquisition," "interested shareholder"
or other similar anti-takeover statute or regulation (including, without
limitation, Article 14 (Section 13.1-728.1 et seq.) of the VSCA) (each a
"Takeover Statute") or restrictive provision of any applicable anti-takeover
provision in the governing documents of the Company is, or at the Effective
Time will be, applicable to the Company, Parent, Merger Sub, the shares of
Company Common Stock (including shares of Company Common Stock acquired in
the Merger), the Merger or any other transaction contemplated by this
Agreement or the Stockholders Agreement.
Section 3.14 Properties. Except as disclosed in the Recent SEC
Documents and for any of the following which would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect, each of the Company and its subsidiaries (i) has good and
indefeasible title to all the properties and assets reflected on the latest
audited balance sheet included in the Recent SEC Documents as being owned by
the Company or one of its subsidiaries or acquired after the date thereof
which are, individually or in the aggregate, material to the Company's
business on a consolidated basis (except properties sold or otherwise
disposed of since the date thereof in the ordinary course of business), free
and clear of (A) all Liens except (1) statutory liens securing payments not
yet due and (2) such imperfections or irregularities of title or other Liens
(other than real property mortgages or deeds of trust) as do not materially
affect the use of the properties or assets subject thereto or affected
thereby or otherwise materially impair business operations at such
properties, and (B) all real property mortgages and deeds of trust except
such secured indebtedness as is properly reflected in the latest audited
balance sheet included in the Recent SEC Documents, and (ii) is the lessee of
all leasehold estates reflected in the latest audited financial statements
included in the Recent SEC Documents or acquired after the date thereof which
are material to its business on a consolidated basis and is in possession of
the properties purported to be leased thereunder, and each such lease is
valid without material default thereunder by the lessee or, to the knowledge
of the Company, the lessor.
Section 3.15 Tax Returns and Tax Payments. Except as set forth in
Section 3.15 of the Company Disclosure Schedule, (i) the Company and its
subsidiaries have timely filed (or, as to subsidiaries, the Company has filed
on behalf of such subsidiaries) all material Tax Returns (as defined below)
required to be filed by it; (ii) the Company and its subsidiaries have paid
(or, as to subsidiaries, the Company has paid on behalf of such subsidiaries)
all Taxes (as defined below) shown to be due on such Tax Returns or has
provided (or, as to subsidiaries, the Company has made provision on behalf of
such subsidiaries) reserves in its financial statements for any Taxes that
have not been paid, whether or not shown as being due on any Tax Returns;
(iii) neither the Company nor any of its subsidiaries has granted any request
that remains in effect for waivers of the time to assess any Taxes; (iv) no
claim for unpaid Taxes has been asserted against the Company or any of its
subsidiaries in writing by a Tax authority which, if resolved in a manner
unfavorable to the Company or any of its subsidiaries, as the case may be,
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect; (v) there are no Liens for Taxes upon the
assets of the Company or any subsidiary, except for Liens for Taxes not yet
due and payable or for Taxes that are being disputed in good faith by
appropriate proceedings and with respect to which adequate reserves have been
taken; (vi) to the knowledge of the Company, no audit of any material Tax
Return of the Company or any of its subsidiaries is being conducted by a Tax
authority; (vii) none of the Company or any of its subsidiaries has made an
election under Section 341(f) of the Code; and (viii) neither the Company nor
any of its subsidiaries has any liability for Taxes of any person (other than
the Company and its subsidiaries) under Treasury Regulation Section 1.1502-6
(or any comparable provision of state, local or foreign law). As used
herein, "Taxes" shall mean all taxes of any kind, including, without
limitation, those on or measured by or referred to as income, gross receipts,
sales, use, ad valorem, franchise, profits, license, value added, property or
windfall profits taxes, customs, duties or similar fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any governmental authority,
domestic or foreign. As used herein, "Tax Return" shall mean any return,
report or statement required to be filed with any governmental authority with
respect to Taxes. As used herein, "Code" shall mean the Code and the
Treasury Regulations promulgated thereunder.
Section 3.16 Intellectual Property. The Company or its
subsidiaries own, or are licensed or otherwise possess legally enforceable
rights to use (i) the trademarks "GARANIMALS" and "GARAN" and (ii) all
patents, other trademarks, trade names, service marks, copyrights and any
applications therefor, technology, know-how, trade secrets, computer software
programs or applications, domain names and tangible or intangible proprietary
information or materials, in each case that are used in the respective
businesses of the Company and its subsidiaries as currently conducted, except
in the case of clause (ii) for any such failures to own, be licensed or
possess that would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. With respect to the countries
and the scope in which they are used in the respective businesses of the
Company and its subsidiaries as currently conducted, the trademark
registrations for "GARANIMALS" and "GARAN" are subsisting and in force and
all patents, other registered trademarks and service marks and registered
copyrights held by the Company or its subsidiaries are subsisting and in
force except where failure to be subsisting and in force would not reasonably
be expected to have a Company Material Adverse Effect.
Section 3.17 Identified Agreements. Other than the contracts or
agreements of the Company included as exhibits to the Recent SEC Documents,
and contracts or agreements between the Company and its subsidiaries or
between subsidiaries of the Company, Section 3.17 of the Company Disclosure
Schedule lists each of the contracts and agreements to which the Company or
any of its subsidiaries is a party as of the date hereof, which are (a)
material contracts or agreements between the Company and any of its
affiliates, (b) contracts or arrangements between the Company and its
subsidiaries, on the one hand, and executive officers or directors of the
Company or their affiliates and associates (as defined in the Exchange Act),
on the other hand, or (c) stockholder, voting trust or similar contracts or
agreements relating to the voting of Company Common Stock or other equity
interests of the Company or any of its subsidiaries.
Section 3.18 Investment Company. Neither the Company nor any of
its subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Section 3.19 Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has (A) unanimously approved this
Agreement and the transactions contemplated hereby, including the Merger, (B)
determined that the Merger is advisable and that the terms of the Merger are
fair to, and in the best interests of, the Company's stockholders, and (C)
subject to Section 5.2, resolved to recommend that the Company's stockholders
approve and adopt this Agreement and the Merger.
Section 3.20 Opinion of Financial Advisor. The Financial
Advisor has delivered to the Company's Board of Directors its opinion (in
writing or to be confirmed in writing) to the effect that, as of the date
hereof and based upon and subject to the factors and assumptions set forth
therein, $60.00 per Share (and associated Rights) in cash to be received by
the holders of the Shares pursuant to the Merger is fair to such holders from
a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant
to the Company as follows:
Section 4.1 Corporate Organization. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and the Commonwealth of Virginia,
respectively, and has the requisite corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is
now being conducted.
Section 4.2 Authority. Each of Parent and Merger Sub has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Parent and Merger Sub of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly
authorized and approved by their Boards of Directors and by Parent as the
sole stockholder of Merger Sub and no other corporate action on the part of
Parent or Merger Sub is necessary to authorize the execution and delivery by
Parent and Merger Sub of this Agreement and the consummation by them of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Merger Sub, and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of each of Parent and Merger Sub, enforceable against each
of them in accordance with its terms, except that such enforceability may be
limited by (a) bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally or
(b) general principles of equity.
Section 4.3 Consents and Approvals; No Violation.
(a) Except for (i) the filing with the SEC of the
preliminary proxy statement and the Proxy Statement, (ii) the filing of the
Articles of Merger with the Commission pursuant to the VSCA, and (iii)
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, the HSR Act, the Mexican Competition Act (if required) or any other
applicable antitrust or competition law, no consents or approvals of, or
filings, declarations or registrations with, any Governmental Entity are
necessary for the consummation by Parent and Merger Sub of the transactions
contemplated hereby, other than such other consents, approvals, filings,
declarations or registrations that, if not obtained, made or given, would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent (a "Parent Material Adverse Effect").
(b) Neither the execution and delivery of this Agreement
by Parent or Merger Sub, nor the consummation by Parent or Merger Sub of the
transactions contemplated hereby, nor compliance by Parent or Merger Sub with
any of the terms or provisions hereof, will (i) conflict with or violate any
provision of the Restated Certificate of Incorporation or Bylaws of Parent or
any of the similar organizational documents of Merger Sub or (ii) assuming
that the authorizations, consents and approvals referred to in Section 4.3(a)
are obtained, (A) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Parent, Merger Sub,
or any of their respective properties or assets, or (B) violate, conflict
with, result in the loss of any material benefit under, constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or result in the
creation of any Lien upon any of the properties or assets of Parent or Merger
Sub under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Parent or Merger Sub is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except, in the case of clause (ii) above, for such violations,
conflicts, breaches, defaults, losses, terminations of rights thereof,
accelerations or Lien creations which, individually or in the aggregate,
would not reasonably be expected to have a Parent Material Adverse Effect.
Section 4.4 Broker's Fees. Neither Parent nor Merger Sub nor any
of their respective officers or directors on behalf of Parent or Merger Sub
has employed any financial advisor, broker or finder in a manner that would
result in any liability of the Company for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated hereby
or that would result in any reduction of the consideration payable to the
stockholders of the Company.
Section 4.5 Merger Sub's Operation and Capitalization. Merger
Sub was formed solely for the purpose of engaging in the transactions
contemplated hereby and has not engaged in any business activities or
conducted any operations other than in connection with the transactions
contemplated hereby. The authorized capital stock of Merger Sub consists of
100 shares of common stock, no par value, all of which shares have been
validly issued, are fully paid and nonassessable and are owned by Parent free
and clear of any Liens.
Section 4.6 Parent or Merger Sub Information. The information
relating to Parent and its subsidiaries to be provided by Parent to be
contained in the Proxy Statement, or in any other document filed with any
other Governmental Entity in connection herewith, at the respective time
filed with the SEC or such other Governmental Entity and, in addition, in the
case of the Proxy Statement, at the date it or any amendment or supplement is
mailed to holders of the Shares and at the time of the Special Meeting, will
not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading.
Section 4.7 Litigation. There are no claims, suits, actions or
proceedings pending or, to Parent or Merger Sub's knowledge, threatened in
writing, nor are there, to the knowledge of Parent and Merger, any
investigations or reviews pending or threatened in writing against, relating
to or affecting Parent or Merger Sub or any of their respective subsidiaries
that (i) seek to question, delay or prevent the consummation of the Merger or
the other transactions contemplated hereby or (ii) would reasonably be
expected to affect adversely the ability of Parent or Merger Sub to fulfill
its obligations hereunder.
Section 4.8 Financing. Parent and Merger Sub collectively have
and will have at the Effective Time sufficient funds in immediately available
U.S. dollars to pay the Merger Consideration in cash for all outstanding
shares of Company Common Stock converted into cash pursuant to the Merger, to
perform Parent's and Merger Sub's obligations under this Agreement and to pay
all fees and expenses related to the transactions contemplated by this
Agreement payable by them.
Section 4.9 Stock Ownership. As of the date hereof, neither
Parent nor Merger Sub nor any of their respective subsidiaries beneficially
own any Shares.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Businesses Prior to the Effective Time.
Except as set forth in Section 5.1 of the Company Disclosure Schedule or as
expressly contemplated or permitted by this Agreement, or as required by
applicable law, rule or regulation (including the rules of any applicable
securities exchange), during the period from the date of this Agreement to
the earlier of (x) the termination of this Agreement and (y) the Effective
Time, unless Parent otherwise agrees in writing, the Company shall, and shall
cause its subsidiaries to, in all material respects, conduct its business in
the usual, regular and ordinary course consistent with past practice and use
all reasonable efforts to maintain and preserve intact its business
organization and the good will of those having business relationships with it
and retain the services of its present officers and key employees. Without
limiting the generality of the foregoing, and except as set forth in Section
5.1 of the Company Disclosure Schedule, as expressly contemplated or
permitted by this Agreement, or as required by applicable law, rule or
regulation (including the rules of any applicable securities exchange),
during the period from the date of this Agreement to the earlier of (x) the
termination of this Agreement and (y) the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to, without the prior
written consent of Parent in each instance:
(a) (i) issue, sell, grant, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale, disposition
or pledge or other encumbrance of (A) any additional shares of its capital
stock or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of its capital stock, or any
rights, warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock of the Company or any of
its subsidiaries, or (B) any other securities in respect of, in lieu of, or
in substitution for, any shares of capital stock of the Company or any of its
subsidiaries outstanding on the date hereof, other than pursuant to the
exercise of Company Stock Options outstanding as of the date hereof;
(ii) redeem, purchase or otherwise acquire, or propose to redeem, purchase or
otherwise acquire, any of its outstanding shares of capital stock of the
Company or any of its subsidiaries; or (iii) split, combine, subdivide or
reclassify any shares of its capital stock or declare, set aside for payment
or pay any dividend, or make any other actual, constructive or deemed
distribution, in respect of any shares of its capital stock or otherwise make
any payments to its stockholders in their capacity as such, other than
(A) dividends and distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent and (B) regular quarterly cash
dividends on Company Common Stock, not in excess of $0.25 per share, for the
quarter ended June 30, 2002, provided that the Company may accelerate its
usual quarterly dividend record and payment dates such that those dates
precede the Closing Date;
(b) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed money or
guarantee any such indebtedness except for amounts not in excess of $1
million in the aggregate;
(c) sell, transfer, mortgage, encumber or otherwise
dispose of any of its properties or assets with a minimum value in excess of
$10 million to any individual, corporation or other entity other than a
direct or indirect wholly owned subsidiary, or cancel, release or assign any
indebtedness in excess of $1 million to any such person or any claims held by
any such person, in each case that is material to the Company and its
subsidiaries, taken as a whole, except (i) in the ordinary course of business
consistent with past practice, or (ii) pursuant to contracts or agreements in
force at the date of this Agreement;
(d) other than in the ordinary course of business
consistent with past practice, make any material acquisition or investment in
a business either by purchase of stock or securities, merger or
consolidation, contributions to capital, loans, advances, property transfers,
or purchases of any property or assets of any other individual, corporation
or other entity other than a wholly owned subsidiary thereof;
(e) increase in any manner the compensation of any of its
directors, officers or employees or enter into, establish, amend or terminate
any Company Benefit Plans, for or in respect of, any stockholder, officer,
director, other employee, agent, consultant or affiliate other than (i) as
required pursuant to the terms of agreements in effect on the date of this
Agreement, and (ii) increases in salaries, wages and benefits of directors,
officers, or employees of the Company made in the ordinary course of business
and in a manner consistent with past practice;
(f) amend the Company Charter or the Company Bylaws;
(g) waive or fail to enforce any provision of any
confidentiality or standstill agreement to which it is a party (including the
Agreement dated as of July 27, 2001 between the Company and Private Capital
Management, L.P. and the Standstill Agreement dated as of November 7, 2001
among the Company, Royce & Associates, Inc., Brandywine Asset Management,
Inc., and Xxxx Xxxxx, Inc.); provided, however, that this clause (g) shall
not prohibit the Company from consenting to a request from one or more of the
parties thereto that it be permitted to make a Superior Proposal or a
proposal that may reasonably be expected to lead to a Superior Proposal; or
(h) make any commitment to take any of the actions
prohibited by this Section 5.1.
Section 5.2 No Solicitation.
(a) The Company shall immediately cease any discussions
or negotiations with any parties that may be ongoing with respect to a
Takeover Proposal (as hereinafter defined) and shall seek to have returned to
the Company any confidential information that has been provided in any such
discussions or negotiations. From the date hereof, the Company shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its officers, directors or employees or any affiliate,
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or knowingly encourage (including by way of
furnishing information which has not been previously publicly disseminated),
or take any other action intended to facilitate, any inquiries or the making
of any proposal which constitutes, or may reasonably be expected to lead to,
any Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that following the
receipt of a Superior Proposal (as hereinafter defined) or a proposal which
is reasonably expected to lead to a Superior Proposal that was unsolicited
and made after the date hereof in circumstances not otherwise involving a
breach of this Agreement, the Company may, in response to such Takeover
Proposal and subject to compliance with Section 5.2(c), (A) request
information from the party making such Takeover Proposal for the purpose of
the Board of Directors of the Company informing itself about the Takeover
Proposal that has been made and the party that made it, (B) furnish
information with respect to the Company to the party making such Takeover
Proposal pursuant to a confidentiality agreement, provided that (1) such
confidentiality agreement contains substantially the same terms as (or terms
no less favorable to the Company) than those contained in the Confidentiality
Agreement dated as of June 17, 2002 among Parent and the Company (as it may
be amended, the "Confidentiality Agreement") and (2) the Company advises
Parent of all such nonpublic information delivered to such person
concurrently with its delivery to the requesting party, and (C) participate
in negotiations with such party regarding such Takeover Proposal; provided
further, that the actions described in clauses (B) and (C) may be taken only
on or before August 7, 2002. It is agreed that any violation of the
restrictions set forth in the preceding sentence by any executive officer,
director, investment banker, attorney or other advisor or representative of
the Company or any of its subsidiaries shall be deemed to be a breach of this
Section 5.2(a) by the Company.
(b) Except as expressly permitted in this Section 5.2(b),
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Parent, the approval, determination of advisability, or
recommendation by such Board of Directors or such committee of this
Agreement, the Merger, and the other transactions contemplated hereby, (ii)
approve, determine to be advisable, or recommend, or propose publicly to
approve, determine to be advisable, or recommend, any Takeover Proposal or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Takeover Proposal (other than a confidentiality agreement referred to in
Section 5.2(a)). Notwithstanding the foregoing, in the event that the Board
of Directors of the Company determines in good faith, in response to a
Superior Proposal that was unsolicited and made after the date hereof in
circumstances not otherwise involving a breach of this Agreement, after
considering applicable provisions of state law and after consultation with
outside counsel, that the failure to do so would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law, the
Board of Directors of the Company may (subject to compliance with this and
the following sentences and to compliance with Sections 5.2(a) and 5.2(c)),
(x) withdraw or modify its approval, determination of advisability, or
recommendation of this Agreement, the Merger, and the other transactions
contemplated hereby or (y) determine to be advisable or recommend a Superior
Proposal, provided, however, that any actions described in clause (x) or (y)
may be taken only at a time that is after the second business day following
Parent's receipt of written notice from the Company advising Parent that the
Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal.
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 5.2, the Company shall
promptly advise Parent in writing of any request for confidential information
in connection with a Takeover Proposal, of any Takeover Proposal, the
material terms and conditions of such request or the Takeover Proposal, the
identity of the person making such request or Takeover Proposal, and any
requests made by the Company for information about the Takeover Proposal or
the party that made it; and the Company shall keep Parent promptly advised of
all significant developments in respect of such Takeover Proposal.
(d) Nothing contained in this Section 5.2 shall prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders; provided, however,
neither the Company nor its Board of Directors nor any committee thereof
shall, except as in accordance with Section 5.2(b), withdraw or modify, or
propose publicly to withdraw or modify, its approval, determination or
recommendation or approve, determine to be advisable, or recommend, or
propose publicly to approve, determine to be advisable, or recommend, a
Takeover Proposal.
(e) For purposes of this Agreement:
(i) "Takeover Proposal" means any inquiry, proposal
or offer from any person (other than Parent and its subsidiaries, affiliates,
and representatives) relating to any direct or indirect acquisition or
purchase of 25% or more of the assets of the Company or any of its
subsidiaries or 25% or more of any class of equity securities of the Company
or any of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 25% or more of any
class of equity securities of the Company or any of its subsidiaries, or any
merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its subsidiaries, in each case other than the
transactions contemplated by this Agreement.
(ii) For purposes of this Agreement, a "Superior
Proposal" means a bona fide written offer from any person (other than Parent
and its subsidiaries, affiliates and representatives) for a direct or
indirect acquisition or purchase of 50% or more of the assets of the Company
or any of its subsidiaries taken as a whole, or 50% or more of any class of
equity securities of the Company or any of its subsidiaries, any tender offer
or exchange offer that if consummated would result in any person beneficially
owning 50% or more of any class of equity securities of the Company or any of
its subsidiaries, or any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries, in each case
other than the transactions contemplated by this Agreement, which provides
for consideration on a per share basis to the stockholders of the Company
with a value (it being understood that securities retained by the Company's
stockholders be included for purposes of that determination) that the Board
of Directors of the Company determines in good faith (after consultation with
independent financial advisors and outside counsel and taking into account
all relevant factors, including whether financing for such offer is committed
and the likelihood of such offer resulting in a consummated transaction) to
be more favorable from a financial point of view to the Company's
stockholders than the Merger Consideration. Any Superior Proposal is a
Takeover Proposal.
Section 5.3 Publicity. The initial press release with respect to
the execution of this Agreement shall be a joint press release reasonably
acceptable to Parent and the Company. Thereafter, so long as this Agreement
is in effect, none of the Company, Parent, Merger Sub, nor any of their
respective affiliates, shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or
the other transactions contemplated hereby without the prior consultation of
the other parties, except any publication of any press release or other
announcement made in connection with any Superior Proposal or as may be
required by law or by any listing agreement with a national securities
exchange as determined in the good faith judgment of the party wanting to
make such release.
Section 5.4 Notification of Certain Matters. Each of the Company
and Parent shall give prompt notice to the other if any of the following
occur after the date of this Agreement: (i) receipt of any notice or other
communication in writing from any person alleging that the consent or
approval of such third party is or may be required in connection with the
transactions contemplated by this Agreement; (ii) receipt of any notice or
other communication from any Governmental Entity or the AMEX or New York
Stock Exchange (or any other securities market), as applicable, in connection
with the transactions contemplated by this Agreement; or (iii) the occurrence
of an event which would be reasonably likely to (A) have a Company Material
Adverse Effect or prevent or delay the consummation of the Merger or (B)
cause any condition to the Merger to be unsatisfied at any time prior to the
Outside Date (as defined in Section 7.1(b)); provided, however, that the
delivery of any notice pursuant to this Section 5.4 shall not limit or
otherwise affect the remedies of the parties available hereunder.
Section 5.5 Access to Information.
(a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, the Company shall, and shall cause
each of its subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of the Parent, during normal business hours
during the period prior to the Effective Time, reasonable access to all its
properties, books, contracts, commitments and records, and to its officers,
employees, accountants, counsel and other representatives and, during such
period, the Company shall, and shall cause its subsidiaries to, make
available to Parent (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of federal securities laws and (ii) all other
information concerning its business, properties and personnel as such other
party may reasonably request. Parent shall, and shall cause its subsidiaries
and Representatives to, hold in strict confidence all Evaluation Material (as
defined in the Confidentiality Agreement) concerning the Company and it
subsidiaries furnished to it in connection with the transactions contemplated
by this Agreement, pursuant to this Section 5.5(a) or otherwise, in
accordance with the Confidentiality Agreement.
(b) No investigation by any of the parties or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other set forth herein.
Section 5.6 Further Assurances.
(a)Subject to the terms and conditions of this
Agreement, each of Parent and the Company shall, and shall cause its
subsidiaries to, use all reasonable efforts (i) to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its subsidiaries
with respect to the Merger and, subject to the conditions set forth in
Article VI hereof, to consummate the transactions contemplated by this
Agreement, including, without limitation, the Merger, as promptly as
practicable and (ii) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity and any other third party which is required to be
obtained by the Company or Parent or any of their respective subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement, and to comply with the terms and conditions of any such consent,
authorization, order or approval.
(b) Subject to the terms and conditions of this
Agreement, each of Parent and the Company shall use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective, as
soon as practicable after the date of this Agreement, the transactions
contemplated hereby, including, without limitation, using all reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby and using all reasonable efforts to defend any litigation
seeking to enjoin, prevent or delay the consummation of the transactions
contemplated hereby or seeking material damages.
Section 5.7 Indemnification.
(a) From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date of this
Agreement or who becomes such prior to the Effective Time, an officer,
director or fiduciary of the Company or any of its subsidiaries (the
"Indemnified Parties") against (i) any and all losses, claims, damages,
costs, expenses (including reasonable attorneys' fees and expenses), fines,
liabilities or judgments or amounts that are paid in settlement with the
approval of Parent (which approval shall not be unreasonably withheld or
delayed) of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was a director, officer or fiduciary of
the Company or any of its subsidiaries whether pertaining to any action or
omission existing or occurring at or prior to the Effective Time and whether
asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities"), and (ii) all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby; provided, however,
that, in the case of the Company and the Surviving Corporation such
indemnification shall be to the fullest extent a corporation is permitted
under Section 13.1-704 of the VSCA to indemnify its own directors, officers
or fiduciaries, and in the case of Parent such indemnification shall not be
limited by the VSCA but such indemnification shall not be applicable to any
claims made against the Indemnified Parties to the extent that a judgment or
other final adjudication established that (A) their acts or omissions were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so deliberated or (B) arising out
of, based upon or attributable to the gaining in fact of any financial profit
or other advantage to which they were not legally entitled. Parent, the
Company, and the Surviving Corporation, as the case may be, will pay all
expenses of each Indemnified Party in advance of the final disposition of any
such action or proceeding to the fullest extent permitted by law upon receipt
of any undertaking contemplated by Section 13.1-699 of the VSCA. Without
limiting the foregoing, in the event any such claim, action, suit, proceeding
or investigation is brought against any Indemnified Party (whether arising
before or after the Effective Time), (i) the Indemnified Parties may retain
counsel reasonably satisfactory to them and Parent and Merger Sub, (ii)
Parent shall, and shall cause the Surviving Corporation to, pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, and (iii) Parent shall, and
shall cause the Surviving Corporation to, use all reasonable efforts to
assist and cooperate in the vigorous defense of any such matter, provided
that none of Parent, Merger Sub or the Surviving Corporation shall be liable
for any settlement of any claim effected without its written consent, which
consent, however, shall not be unreasonably withheld or delayed. Any
Indemnified Party wishing to claim indemnification under this Section 5.7,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify Parent, Merger Sub or the Surviving Corporation (but the failure
so to notify an indemnifying party shall not relieve it from any liability
which it may have under this Section 5.7 except to the extent such failure
materially prejudices such party), and shall deliver to the Merger Sub and
the Surviving Corporation the undertaking contemplated by Section 13.1-699 of
the VSCA. The Indemnified Parties as a group may retain only one law firm
(in addition to local counsel in each applicable jurisdiction if reasonably
required) to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified
Parties. In the event any Indemnified Party is required to bring any action
to enforce rights or to collect moneys due under this Agreement and is
successful in such action Parent shall reimburse such Indemnified Party for
all its expenses in bringing and pursuing such action. Each Indemnified
Party shall be entitled to the advancement of expenses to the full extent
contemplated in this Section 5.7(a) in connection with any such action.
(b) Successors. In the event Parent or any of its
successors or assigns (i) consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in either such case, proper
provisions shall be made so that the continuing or surviving entity or
transferee, as appropriate, shall assume the obligations set forth in this
Section 5.7.
(c) Survival of Indemnification. To the fullest extent
not prohibited by law, from and after the Effective Time, all rights to
indemnification as of the date hereof in favor of the directors, officers and
fiduciaries of the Company and its subsidiaries with respect to their
activities as such prior to the Effective Time, as provided in their
respective certificates of incorporation and bylaws or comparable documents
in effect on the date hereof, or otherwise in effect on the date hereof,
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time, provided that in
the event any claim or claims are asserted or made within such six-year
period, all such rights to indemnification in respect of such claim or claims
shall continue until the final disposition thereof.
Section 5.8 Employee Benefit Plans. For purposes of all employee
benefit plans (as defined in Section 3(3) of ERISA) and other employment
agreements, arrangements and policies of Parent under which an employee's
benefits depends, in whole or in part, on length of service, credit will be
given to current employees of the Company for service with the Company prior
to the Effective Time, provided that such crediting of service does not
result in duplication of benefits. Parent shall, and shall cause the
Surviving Corporation to, honor in accordance with their terms all employee
benefit plans (as defined in Section 3(3) of ERISA) and the other Company
Benefit Plans; provided, however, that Parent or the Surviving Corporation
may amend, modify or terminate any individual Company Benefit Plan in
accordance with its terms and applicable law (including obtaining the consent
of the other parties to and beneficiaries of such Company Benefit Plan to the
extent required thereunder) provided, further, that, for a period of two
years, no such amendment, modification or termination shall result in
compensation and benefits to the employees, former employees, directors or
former directors of the Company and its subsidiaries (the "Company
Employees") that are less favorable, in the aggregate, than the compensation
and benefits that are provided to the Company Employees immediately prior to
the Effective Time. Notwithstanding the foregoing or anything else in this
Agreement to the contrary, the Surviving Corporation and its subsidiaries
shall not, after the Effective Time, provide retiree medical health insurance
benefits without the consent of Parent except as may be required by law or as
is provided as of the date hereof to the officer or director set forth in
Section 5.8 of the Company Disclosure Schedule.
Section 5.9 Bonus Payments; Employment Agreements.
(a) The Parent shall, or shall cause the Surviving
Corporation to, pay discretionary bonuses to officers and employees of the
Company in respect of the fiscal year in which the Closing occurs, consistent
with the Company's past practice with respect to such bonuses.
(b) Parent shall, and shall cause the Surviving
Corporation to, honor in accordance with their terms, each of the four
employment agreements filed or incorporated by reference as exhibits to the
Company's Annual Report on Form 10-K/A for the fiscal year ended September
30, 2001, as such agreements are amended as of the date hereof.
Section 5.10 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full
title to all properties, assets, rights, approvals, immunities and franchises
of any of the parties to the Merger, the proper officers and directors of
each party to this Agreement and their respective subsidiaries shall take all
such necessary action as may be reasonably requested by, and at the sole
expense of, Parent.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been
duly approved and adopted by the requisite vote of the holders of Company
Common Stock; and
(b) Statutes and Consents. No statute, rule,
regulation, judgment, order or injunction shall have been promulgated,
entered, enforced, enacted, or issued or be applicable to the Merger by any
Governmental Entity which prohibits, restrains, or makes illegal the
consummation of the Merger; provided that the parties hereto shall use all
reasonable efforts to cause any such statute, rule, regulation, judgment,
order or injunction to be vacated or lifted or any such action or proceeding
to be dismissed; and all domestic governmental consents, orders, approvals
and waiting periods required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and shall be in
effect, or with respect to waiting periods shall have expired or been
terminated, at the Effective Time.
Section 6.2 Condition to Obligations of Parent and Merger Sub to
Effect the Merger. The obligations of Parent and Merger Sub to effect the
Merger are subject to the satisfaction on or prior to the Closing Date of the
further condition (which may be waived in whole or in part by Parent) that
the representations and warranties of the Company set forth in this Agreement
that are qualified by materiality shall be true and correct, and the
representations and warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in all material respects,
in either case, as of the Closing Date as though made on or as of such date,
and the Company shall have performed or complied with all material
obligations, agreements and covenants required by this Agreement to be
performed or complied with by it (including without limitation the Company
not having entered into any definitive agreement or any agreement in
principle with any person with respect to a Takeover Proposal or similar
business combination with the Company in violation of Section 5.2), except,
in the case of the failure of any representation or warranty, for changes
specifically permitted by the Agreement and for those representations and
warranties that address matters only as of a particular date and are true and
correct as of such date. Parent shall have received a certificate signed on
behalf of the Company by its chief executive officer and chief financial
officer to such effect.
Section 6.3 Condition to Obligations of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is subject to the
satisfaction on or prior to the Closing Date of the further condition (which
may be waived in whole or in part by the Company) that the representations
and warranties of Parent and Merger Sub set forth in this Agreement that are
qualified by materiality shall be true and correct, and the representations
and warranties of Parent and Merger Sub set forth in this Agreement that are
not so qualified shall be true and correct in all material respects, in
either case, as of the Closing Date as though made on or as of such date, and
Parent and Merger Sub shall have performed or complied with all material
obligations, agreements and covenants required by this Agreement to be
performed or complied with by them, except, in the case of the failure of any
representation or warranty, for changes specifically permitted by the
Agreement and for those representations and warranties that address matters
only as of a particular date and are true and correct as of such date. The
Company shall have received a certificate signed on behalf of Parent by its
chief executive officer or chief financial officer to such effect.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval thereof:
(a) By the mutual consent of the Parent and the Company.
(b) By either of the Company or Parent:
(i) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action shall have
become final and non-appealable; provided that the party seeking to terminate
this Agreement shall have used all reasonable efforts to challenge such
order, decree, ruling or other action;
(ii) if the Effective Time shall not have occurred
on or before November 15, 2002 (the "Outside Date"), provided, that a party
may not terminate the Agreement pursuant to this Section 7.1(b)(ii) if its
failure to perform any of its obligations under this Agreement results in the
failure of the Effective Time to occur by such time, provided, however, that
the Outside Date shall be extended day-by-day for each day during which any
party shall be subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the consummation of the
Merger, provided further, however, that the Outside Date shall not be
extended past December 15, 2002;
(c) By the Company:
(i) if the required approval of the stockholders of
the Company shall not have been obtained by reason of the failure to obtain
the required vote upon a vote held at a duly held meeting of stockholders or
at any adjournment thereof;
(ii) if it exercises its rights described in clauses
(x) or (y) of Section 5.2(b), provided that prior thereto or simultaneously
therewith the Company has paid the Termination Fee to Parent in accordance
with Section 7.3; or
(iii) if the representations and warranties of Parent
or Merger Sub set forth in this Agreement that are qualified by materiality
shall not be true and correct in any respect, or if the representations and
warranties of Parent and Merger Sub set forth in this Agreement that are not
so qualified shall not be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as if made
on such date, or either Parent or Merger Sub shall have breached or failed in
any material respect to perform or comply with any material obligation,
agreement or covenant required by this Agreement to be performed or complied
with by it, which inaccuracy or breach cannot be cured or has not been cured
within thirty (30) business days after the Company gives written notice of
such inaccuracy or breach to Parent, except, in the case of the failure of
any representation or warranty, for changes specifically permitted by this
Agreement, for those representations and warranties that address matters only
as of a particular date and are true and correct as of such date, and for
such failures as do not individually or in the aggregate have a Parent
Material Adverse Effect.
(d) By Parent:
(i) if the required approval of the stockholders of
the Company shall not have been obtained by reason of the failure to obtain
the required vote upon a vote held at a duly held meeting of stockholders or
at any adjournment thereof;
(ii) if the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified, or proposed publicly to
withdraw or modify, in a manner adverse to Parent, its approval or
recommendation of this Agreement, the Merger, and other transactions
contemplated hereby, or approved or recommended, or proposed publicly to
approve or recommend, any Takeover Proposal, or the Board of Directors of the
Company or any committee thereof shall have resolved to take any of the
foregoing actions; or
(iii) if the representations and warranties of the
Company set forth in this Agreement that are qualified by materiality shall
not be true and correct in any respect, or if the representations and
warranties of the Company set forth in this Agreement that are not so
qualified shall not be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as if made
on such date, or the Company shall have breached or failed in any material
respect to perform or comply with any material obligation, agreement or
covenant required by this Agreement to be performed or complied with by it,
which inaccuracy or breach cannot be cured or has not been cured within
thirty (30) business days after Parent gives written notice of such
inaccuracy or breach to the Company, except, in the case of the failure of
any representation or warranty, for changes specifically permitted by this
Agreement, for those representations and warranties that address matters only
as of a particular date and are true and correct as of such date, and for
such failures as do not individually or in the aggregate have a Company
Material Adverse Effect.
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, written notice
thereof shall forthwith be given to the other party or parties specifying the
provision hereof pursuant to which such termination is made, and this
Agreement (other than Sections 7.2, 7.3, 8.4, 8.6, 8.7, 8.8, 8.9, and 8.11
hereof) shall forthwith become null and void, and there shall be no liability
on the part of the Parent or the Company, except as provided in Section 7.3;
provided, however, that nothing in this Section shall relieve any party for
any intentional breach prior to any such termination of any of the
representations, warranties, covenants, or agreements set forth in this
Agreement.
Section 7.3 Termination Fee; Expenses. Except as provided in
this Section 7.3 and except for the filing fee under the HSR Act (which
filing fee in all events shall be borne by Parent), all fees and expenses
incurred by the parties hereto shall be borne solely by the party which has
incurred such fees and expenses. In the event that (i) a Takeover Proposal
shall have been made known to the Company or shall have been made directly to
its stockholders generally or any person shall have publicly announced an
intention (whether or not conditional) to make a Takeover Proposal and
thereafter this Agreement is terminated pursuant to Section 7.1(b)(ii),
7.1(c)(i), or 7.1(d)(i) hereof and such Takeover Proposal is consummated
within one (1) year of such termination or (ii) this Agreement is terminated
by Parent pursuant to Section 7.1(d)(ii), or is terminated by the Company
pursuant to Section 7.1(c)(ii), then the Company shall pay to Parent within
one business day of such termination, or in the case of subclause (i) upon
such consummation, a termination fee equal to $8 million (the "Termination
Fee"), payable by wire transfer of same day funds. The Company acknowledges
that the agreements contained in this Section 7.3 are an integral part of the
transactions contemplated by this Agreement and that, without these
agreements, Parent and Merger Sub would not enter into this Agreement. In
the event the Termination Fee becomes payable pursuant to this Section 7.3,
the Company shall also promptly pay upon Parent's request, all reasonably
documented out-of-pocket fees and expenses incurred by Parent and Merger Sub
in connection with this Agreement and the transactions contemplated hereby
(not exceeding $1 million in the aggregate), which payments shall be in
addition to the Termination Fee. The fee arrangement contemplated hereby
shall be paid pursuant to this Section 7.3 regardless of any alleged breach
by Parent of its obligations hereunder, provided, that no payment made by the
Company pursuant to this Section 7.3 shall operate or be construed as a
waiver by the Company of any breach of this Agreement by Parent or Merger Sub
or of any rights of the Company in respect thereof. The Termination Fee, if
paid, shall be credited against any damages recovered by Parent or Merger Sub
from the Company arising from a breach of this Agreement by the Company.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that no amendment, modification or supplement of this
Agreement shall be made following the approval of this Agreement by the
stockholders unless, to the extent required, approved by the stockholders.
Section 8.2 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 8.1, waive compliance with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
Section 8.3 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall
survive the Effective Time.
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by an overnight courier
service, such as Federal Express, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Berkshire Hathaway Inc.
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
with a copy to:
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: R. Xxxxxxx Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(b) if to the Company, to:
Garan, Incorporated
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Telephone No.: 000-000-0000
Telecopier No.: (000) 000-0000
with copies to:
Xxxxxxxxxx Xxxxx & Xxxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Section 8.5 Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 8.6 Entire Agreement; Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein),
together with the Confidentiality Agreement: (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and
(b) except as provided in Section 5.7 and Section 5.9(b) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder. Section 5.7 is intended for the benefit of, and shall be
enforceable by, each Indemnified Party (and his or her heirs and
representatives). Section 5.9(b) is intended for the benefit of, and shall
be enforceable by, the four persons (and their respective heirs and
representatives) who are parties with the Company to the agreements referred
to therein.
Section 8.7 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, 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, so long as the economic and legal
substance of the transactions contemplated hereby, taken as a whole, are not
affected in a manner materially adverse to any party hereto.
Section 8.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Virginia without
giving effect to the principles of conflicts of law thereof or of any other
jurisdiction.
Section 8.9 Assignment. 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 other parties, except that the Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned subsidiary of
Parent. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 8.10 Headings; Interpretation. The descriptive headings
used herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. "Include," "includes," and "including" shall be deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import. "Knowledge" and "known" mean the actual
knowledge after reasonable inquiry of the executive officers of the Company
(and including, with respect to Section 3.15, the Company's head of taxes) or
Parent, as the case may be.
Section 8.11 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court
of the Commonwealth of Virginia or of the United States located in the
Commonwealth of Virginia in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, and each
party will not attempt to deny or defeat personal jurisdiction or venue in
any such court by motion or other request for leave from any such court.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
Berkshire Hathaway Inc.
By: /s/ Xxxxxx X. Buffet
----------------------------
Name:
Title:
BG Merger Sub Inc.
By: /s/ Xxxx X. Hamburg
----------------------------
Name:
Title:
Garan, Incorporated
By: /s/ Xxxxxxx Xxxxxxxxxxxx
----------------------------
Name:
Title:
EXHIBIT A
STOCKHOLDER AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of July
2 2002, is made and entered into among Berkshire Hathaway Inc.,, a Delaware
corporation ("Parent"), BG Merger Sub Inc., a Virginia corporation and wholly
owned subsidiary of Parent ("Merger Sub"), and each party listed under the
heading "STOCKHOLDER" on the signature page hereof (each a "Stockholder" and
collectively, the "Stockholders");
W I T N E S S E T H:
WHEREAS, as of the date hereof, each Stockholder is the
beneficial owner ("beneficial owner," "beneficial ownership," "beneficially,"
and related terms, wherever used herein, within the meaning of Section
13(d)(1) of the Securities Exchange Act of 1934, as amended) of the number of
shares of common stock, no par value ("Company Common Stock"), of Garan,
Incorporated, a Virginia corporation (the "Company"), set forth opposite the
Stockholder's name on Exhibit A hereto (the total number of shares of Company
Common Stock beneficially owned by the Stockholder, and any other Company
Common Stock or any stock option that the Stockholder acquires, as record or
beneficial holder, whether by means of purchase, dividend, distribution, or
otherwise, prior to the termination of this Agreement, together with all
associated Rights, being collectively referred to as the "Shares");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company, Parent, and Merger Sub are entering into an Agreement
and Plan of Merger (the "Merger Agreement") of even date herewith, which
(upon the terms and subject to the conditions set forth therein) provides for
the merger of Merger Sub with and into the Company (the "Merger"); and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Merger Sub have requested each Stockholder to
agree, and in order to induce Parent and Merger Sub to enter into the Merger
Agreement each Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants, and agreements hereinafter set forth,
the parties hereto hereby agree as follows:
ARTICLE I
STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES
Each Stockholder hereby severally, and not jointly, represents
and warrants to Parent and Merger Sub as follows:
Section 1.1 Due Organization and Authorization. Stockholder (if
not a natural person) is a corporation or limited liability company duly
organized, validly existing, and in good standing under the laws of the
jurisdiction in which it is formed. Stockholder possesses the requisite
power and authority to execute, deliver, and perform this Agreement, to
appoint or cause to be appointed Merger Sub and Parent (or any nominee
thereof) as its Proxy (as defined below), and to consummate the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement, the appointment of Merger Sub and Parent (or any nominee thereof)
as Stockholder's Proxy, and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite action of Stockholder.
This Agreement has been duly executed and delivered by or on behalf of
Stockholder and constitutes a legal, valid, and binding obligation of
Stockholder, enforceable against Stockholder in accordance with its terms,
except as enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to creditors' rights
generally and (ii) is subject to general principles of equity. Stockholder
consents to each other Stockholder's execution, delivery, and performance of
this Agreement. There is no other beneficial owner of any of the Shares or
other beneficiary or holder of any other interest in any of the Shares whose
consent is required for the execution and delivery of this Agreement or for
the consummation by Stockholder of the transactions contemplated hereby.
Section 1.2 No Conflicts; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Stockholder do not, and the
performance of this Agreement by Stockholder will not, (i) conflict with or
violate the certificate or articles of incorporation, bylaws or other
organizational documents of Stockholder (if Stockholder is an entity), (ii)
conflict with or violate any law applicable to Stockholder or by which
Stockholder or any of Stockholder's assets is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, acceleration, or cancellation of, or result in the
creation of a lien or encumbrance on any assets of Stockholder, including,
without limitation, the Shares, pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which Stockholder is a party or by which
Stockholder or any of Stockholder's assets is bound or affected, except in
the case of clauses (ii) and (iii), for such matters as would not prevent or
in any way impair Stockholder's ability to perform its obligations under this
Agreement.
(b) The execution and delivery of this Agreement by Stockholder
do not, and the performance of this Agreement by Stockholder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, other than (i) filings under the HSR Act and any similar foreign
requirements, and (ii) any necessary filing under the Securities Exchange Act
of 1934, as amended.
Section 1.3 Title to Shares. Stockholder is the beneficial owner
of the shares of Company Common Stock as set forth opposite Stockholder's
name on Exhibit A hereto (or shares beneficial ownership as set forth on
Exhibit A), free and clear of any pledge, lien, security interest, mortgage,
claim, proxy, voting restriction or other voting trust, agreement,
understanding, or arrangement of any kind, right of first refusal or other
limitation on disposition, adverse claim of ownership, or other encumbrance
of any kind, other than restrictions imposed by securities laws or pursuant
to this Agreement. Exhibit A also sets forth the record owner of the Shares.
As of the date hereof, Stockholder does not own beneficially or of record any
other shares of Company Common Stock or option to acquire any such shares.
Section 1.4 Information for Offer Documents and Proxy Statement.
None of the information relating to Stockholder and its affiliates provided
in writing to the Company by or on behalf of Stockholder or its affiliates
specifically for inclusion in the Proxy Statement will, at the times the
Proxy Statement is filed with the SEC or are first published, sent or given
to stockholders of the Company, or at the time of the special meeting of
stockholders to consider the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 1.5 Acknowledgment. Stockholder, on behalf of itself and
its affiliates, acknowledges and agrees that neither it nor they shall be
paid or shall otherwise be entitled to any broker's, finder's, financial
advisor's, or other similar fee or commission in connection with the
transactions contemplated hereby or by the Merger Agreement.
ARTICLE II
STOCKHOLDERS' COVENANTS
Each Stockholder hereby severally, and not jointly, covenants to
Parent and Merger Sub as follows:
Section 2.1 Voting of Shares. Stockholder hereby agrees that
from the date hereof until the termination of the Agreement pursuant to
Section 3.2 (the "Term"), at any meeting of the stockholders of the Company
however called and in any action by written consent of the stockholders of
the Company, in each case before the Effective Time, Stockholder shall vote
(or direct the record owner of its Shares to vote) its Shares (i) in favor of
the Merger and the Merger Agreement, (ii) if so directed by Parent, against
any Takeover Proposal and against any proposal for action or agreement that
would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or
which could reasonably be expected to result in any of the Company's
obligations under the Merger Agreement not being fulfilled, any change in the
composition of the board of directors of the Company (except as contemplated
by the Merger Agreement), any change in the present capitalization of the
Company or any amendment to the Company's corporate structure or business, or
any other action which could reasonably be expected to impede, interfere
with, delay, postpone or materially adversely affect the transactions
contemplated by this Agreement or the Merger Agreement or the likelihood of
such transactions being consummated, and (iii) in favor of any other matter
necessary for consummation of the transactions contemplated by the Merger
Agreement which is considered at any such meeting of shareholders or in such
consent, and in connection therewith to execute any documents which are
necessary or appropriate in order to effectuate the foregoing, including
documents enabling Parent and Merger Sub or their nominee(s) to vote the
Shares directly.
Section 2.2 Proxy. Stockholder hereby revokes all prior proxies
or powers of attorney with respect to any of its Shares. During the Term,
Stockholder hereby constitutes and appoints Parent and Merger Sub, or any
nominee designated by Parent and Merger Sub, with full power of substitution
and resubstitution at any time during the Term, as its true and lawful
attorney and proxy ("Proxy"), for and in its name, place, and stead, in the
Proxy's discretion to demand that the Secretary of the Company call a special
meeting of the stockholders of the Company for the purpose of considering any
matter referred to in Section 2.1 and to vote each Share held by Stockholder
as its Proxy in respect of any such matter, at every annual, special,
adjourned, or postponed meeting of the stockholders of the Company, including
the right to sign its name as stockholder (or to direct the record owner to
sign its name as stockholder) to any consent, certificate, or other document
relating to the Company that the law of the Commonwealth of Virginia might
permit or require. THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE
AND COUPLED WITH AN INTEREST THROUGHOUT THE TERM. Stockholder will take such
further action and execute such other documents as may be necessary to
effectuate the intent of this Section 2.2.
Section 2.3 Restrictions on Transfer, Proxies and Non-
Interference. Stockholder hereby agrees, until the termination of this
Agreement pursuant to Section 3.2, and except as contemplated hereby, not to
(i) sell, transfer, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, any of the Shares (other than to an affiliate of such
Stockholder who agrees to comply with the terms and provisions hereof with
respect to the transferred Shares), (ii) grant any proxies, deposit any
Shares into a voting trust or enter into a voting agreement with respect to
any Shares, or (iii) take any action that would make any representation or
warranty of Stockholder contained herein untrue or incorrect in any material
respect or have the effect of preventing or disabling Stockholder from
performing Stockholder's obligations under this Agreement.
Section 2.4 No Solicitation. Stockholder covenants and agrees
that, during the Term, it shall not, directly or indirectly, solicit,
initiate, knowingly encourage, or take any other action designed to
facilitate any inquiries or the making of any proposal from any person (other
than from Parent or Merger Sub) relating to any transaction that constitutes
a Takeover Proposal. Stockholder further covenants and agrees that, during
the Term, it shall not participate in any discussions or negotiations (except
with Parent or Merger Sub) regarding, or furnish to any person (other than
Parent or Merger Sub or if required by law or compelled by subpoena or
similar legal process) any information with respect to, or otherwise
cooperate in any way with, or assist or participate in or facilitate or
encourage, any effort or attempt by any person (other than Parent and Merger
Sub) to make, any transaction that may constitute a Takeover Proposal.
Stockholder immediately shall cease and cause to be terminated any existing
discussions or negotiations of Stockholder and its agents or other
representatives with any person (other than Parent and Merger Sub) with
respect to any of the foregoing. Stockholder shall notify Parent and Merger
Sub promptly of any specific proposal or offer made to Stockholder relating
to a Takeover Proposal, or any substantive inquiry or contact made to
Stockholder specifically relating to a Takeover Proposal, and shall, in any
such notice to Parent and Merger Sub, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry, or contact and
the material terms and conditions of such proposal, offer, inquiry, or
contact. Notwithstanding the foregoing, if Stockholder or (if Stockholder is
an entity) any officer, director, partner, agent or representative of
Stockholder is an officer of the Company or a member of the Board of
Directors of the Company, such Stockholder may, in his or her capacity as
such, take such actions, if any, as are permitted by Section 5.2 of the
Merger Agreement.
ARTICLE III
MISCELLANEOUS
Section 3.1 Definitions. Terms used but not otherwise defined in
this Agreement, have the meanings assigned to such terms in the Merger
Agreement, as it may be amended from time to time; provided, that no
amendments to the Merger Agreement adverse to the interests of a Stockholder
shall apply to this Agreement unless consented to in writing by such
Stockholder.
Section 3.2 Termination. This Agreement shall terminate and be
of no further force and effect (i) by the written mutual consent of the
parties hereto or (ii) automatically and without any required action of the
parties hereto upon the earliest to occur of (A) the Effective Time, (B) the
termination of the Merger Agreement in accordance with its terms, (C) the
amendment of the Merger Agreement without the written consent of the
Stockholders that (x) provides for a reduction in the Merger Consideration
below $60.00 or (y) changes the form of the Merger Consideration to other
than cash, and (D) December 31, 2002. Notwithstanding the foregoing, the
provisions of this Agreement shall survive and continue in full force and
effect with respect to the Stockholder designated on Exhibit B hereto and to
that number of Shares beneficially owned by such Stockholder shown on Exhibit
B hereto for a period of twelve (12) months after the date of termination of
the Merger Agreement pursuant to Section 7.1(c)(i) or (ii) or 7.1(d)(i) or
(ii) thereof to the extent that such termination relates to or occurs
following a Takeover Proposal that is initially communicated to the Company
or publicly disseminated after August 7, 2002. The termination of this
Agreement shall not relieve any party hereto from any liability for any
breach of this Agreement prior to termination.
Section 3.3 Expenses. All costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid
by the party incurring such costs and expenses.
Section 3.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon hand delivery, (ii) upon confirmation of receipt of facsimile
transmission, (iii) upon confirmed delivery by a standard overnight courier,
or (iv) after five (5) business days if sent by registered or certified mail,
postage prepaid, return receipt requested, to the following address or to
such other address that a party hereto might later specify by like notice:
(a) If to Parent or Merger Sub, to:
Berkshire Hathaway Inc.
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy: 000-000-0000
with copies to:
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: R. Xxxxxxx Xxxxxx
Telecopy: (000) 000-0000
(b) If to Stockholders, to:
c/o Garans, Incorporated
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Telecopy:
with copies to:
Xxxxxxxxxx Xxxxx & Xxxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Section 3.5 Severability. In the event that any provision in
this Agreement is held invalid, illegal, or unenforceable in a jurisdiction,
such provision shall be modified or deleted as to the jurisdiction involved
but only to the extent necessary to render the same valid, legal, and
enforceable. The validity, legality, and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby nor
shall the validity, legality, or enforceability of such provision be affected
thereby in any other jurisdiction.
Section 3.6 Entire Agreement. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect thereto.
Section 3.7 Assignment. No party may assign or delegate this
Agreement or any right, interest, or obligation hereunder, provided that
Parent or Merger Sub, in its sole discretion, may assign or delegate its
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent without obtaining the consent of any other party hereto;
provided further that any such assignment or delegation shall not relieve
Parent or Merger Sub from liability hereunder.
Section 3.8 No Third-Party Beneficiaries. This Agreement shall
be binding upon, inure solely to the benefit of, and be enforceable by only
the parties hereto, their respective successors, and permitted assigns, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any person, other than the parties hereto, their respective successors,
and permitted assigns, any rights, remedies, obligations, or liabilities of
any nature whatsoever.
Section 3.9 Waiver of Appraisal Rights. Each Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger.
Section 3.10 Further Assurance. Each party hereto shall execute
and deliver such additional documents and take all such further action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.
Section 3.11 Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to Stockholder's Shares
and shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or
otherwise. Notwithstanding any transfer of Shares, the transferor shall
remain liable for the performance of all obligations under this Agreement.
Section 3.12 No Waiver. The failure of any party hereto to
exercise any right, power, or remedy provided under this Agreement or
otherwise available at law or in equity, the failure of any party hereto to
insist upon compliance by any other party hereto with its obligations
hereunder, or the existence of any custom or practice of the parties at
variance with the terms hereof shall not constitute a waiver by such party of
its right to exercise any such or other right, power, or remedy or to demand
such compliance.
Section 3.13 Specific Performance. The parties hereto acknowledge
that irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific terms
or were otherwise breached. Accordingly, the parties agree that an aggrieved
party shall be entitled to injunctive relief to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court having jurisdiction, this being in addition to any other right or
remedy to which such party may be entitled under this Agreement, at law, or
in equity.
Section 3.14 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the Commonwealth of Virginia,
without giving effect to provisions thereof relating to conflicts of law.
Section 3.15 Headings. The descriptive headings in this Agreement
were included for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 3.16 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be executed in a manner sufficient to bind them as of the date
first written above.
Berkshire Hathaway Inc.
By:
-------------------------
Its:
------------------------
BG Merger Sub Inc.
By:
-------------------------
Its:
------------------------
Stockholders:
-------------------------------
Xxxxxx Xxxxx
-------------------------------
Xxxxxx Xxxxxx
-------------------------------
Xxxxxxx Xxxxxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx
Exhibit A
No. of Shares of
Name of Beneficial No. of Shares of Company Common Stock
and Record Owner Company Common Stock Subject to Option
------------------ -------------------- --------------------
Exhibit B
No. of Shares of
Name of Beneficial and Record Owner Company Common Stock
----------------------------------- --------------------
