Exhibit 99.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of July 14, 1997
among
FLO-SUN INCORPORATED,
XSF Holdings, Inc.,
DXE Merger Corp.
and
Savannah Foods & Industries, Inc.
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.01. The Merger . . . . . . . . . . . . . . . . . . . 2
1.02. Effective Time; Closing . . . . . . . . . . . . . 2
1.03. Effect of the Merger . . . . . . . . . . . . . . 2
1.04. Certificate of Incorporation; By-Laws . . . . . . 3
1.05. Directors and Officers . . . . . . . . . . . . . 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities . . . . . . . . . . . . 3
2.02. Exchange of Certificates . . . . . . . . . . . . 4
2.03. Stock Transfer Books . . . . . . . . . . . . . . 6
2.04. Stock Options . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01. Organization and Qualification; Subsidiaries . . 7
3.02. Certificate of Incorporation and By-Laws . . . . 8
3.03. Capitalization . . . . . . . . . . . . . . . . . 8
3.04. Authority Relative to this Agreement . . . . . . 9
3.05. No Conflict; Required Filings and Consents . . . 10
3.06. Permits; Compliance . . . . . . . . . . . . . . . 10
3.07. SEC Filings; Financial Statements . . . . . . . . 11
3.08. Absence of Certain Changes or Events . . . . . . 12
3.09. Absence of Litigation . . . . . . . . . . . . . . 13
3.10. Employee Benefit Plans; Labor Matters . . . . . . 13
3.11. Intellectual Property . . . . . . . . . . . . . . 16
3.12. Taxes . . . . . . . . . . . . . . . . . . . . . . 17
3.13. Environmental Matters . . . . . . . . . . . . . . 17
3.14. Products . . . . . . . . . . . . . . . . . . . . 18
3.15. Properties and Assets; Real Property and Leases . 18
3.16. Insurance . . . . . . . . . . . . . . . . . . . . 19
3.17. Opinion of Financial Advisor . . . . . . . . . . 20
3.18. Vote Required . . . . . . . . . . . . . . . . . . 20
3.19. Brokers . . . . . . . . . . . . . . . . . . . . . 20
3.20. Company Rights Agreement . . . . . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FSI, NEWCO AND MERGER SUB
4.01. Organization and Qualification; Subsidiaries . . 20
4.02. Certificate of Incorporation and By-Laws . . . . 22
4.03. Capitalization . . . . . . . . . . . . . . . . . 22
4.04. Authority Relative to this Agreement . . . . . . 23
4.05. No Conflict; Required Filings and Consents . . . 24
4.06. Permits; Compliance . . . . . . . . . . . . . . . 24
4.07. Financial Statements; Information Memorandum . . 25
4.08. Absence of Certain Changes or Events . . . . . . 26
4.09. Absence of Litigation . . . . . . . . . . . . . . 27
4.10. Employee Benefit Plans; Labor Matters . . . . . . 27
4.11. Intellectual Property . . . . . . . . . . . . . . 30
4.12. Taxes . . . . . . . . . . . . . . . . . . . . . . 31
4.13. Environmental Matters . . . . . . . . . . . . . . 31
4.14. Products . . . . . . . . . . . . . . . . . . . . 31
4.15. Properties and Assets; Real Property and Leases . 32
4.16. Insurance . . . . . . . . . . . . . . . . . . . . 32
4.17. Brokers . . . . . . . . . . . . . . . . . . . . . 33
4.18. Opinions of Financial Advisors . . . . . . . . . 33
4.19. Contracts . . . . . . . . . . . . . . . . . . . . 33
4.20. Restructuring Agreement . . . . . . . . . . . . . 33
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by the Company Pending the
Merger . . . . . . . . . . . . . . . . . . . . 34
5.02. Conduct of Business by the Flo-Sun Subsidiaries
Pending the Merger . . . . . . . . . . . . . . 37
5.03. Government Filings . . . . . . . . . . . . . . . 40
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Company Stockholders' Meeting . . . . . . . . . . 40
6.02. Registration Statement; Proxy Statement . . . . . 41
6.03. Access to Information; Confidentiality . . . . . 42
6.04. Approvals and Consents; Cooperation . . . . . . . 43
6.05. No Solicitation of Transactions . . . . . . . . . 44
6.06. Employee Benefits Matters . . . . . . . . . . . . 45
6.07. Directors' and Officers' Indemnification and
Insurance . . . . . . . . . . . . . . . . . . . 45
6.08. Obligations of Newco and Merger Sub . . . . . . . 46
6.09. Affiliates' Letters . . . . . . . . . . . . . . . 46
6.10. Letters of Accountants . . . . . . . . . . . . . 46
6.11. Listing Market . . . . . . . . . . . . . . . . . 47
6.12. Tax Matters . . . . . . . . . . . . . . . . . . . 47
6.13. Newco Governance . . . . . . . . . . . . . . . . 48
6.14. Company Rights Plan . . . . . . . . . . . . . . . 48
6.15. Restructuring Agreement . . . . . . . . . . . . . 48
6.16. Public Announcements . . . . . . . . . . . . . . 49
6.17. Subsequent Financial Statements . . . . . . . . . 49
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. Conditions to the Obligations of Each Party . . . 51
7.02. Conditions to the Obligations of FSI, Newco and
Merger Sub . . . . . . . . . . . . . . . . . . 52
7.03. Conditions to the Obligations of the Company . . 52
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination . . . . . . . . . . . . . . . . . . . 53
8.02. Effect of Termination . . . . . . . . . . . . . . 55
8.03. Amendment . . . . . . . . . . . . . . . . . . . . 55
8.04. Waiver . . . . . . . . . . . . . . . . . . . . . 55
8.05. Expenses . . . . . . . . . . . . . . . . . . . . 56
ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . 57
9.02. Notices . . . . . . . . . . . . . . . . . . . . . 57
9.03. Certain Definitions . . . . . . . . . . . . . . . 58
9.04. Severability . . . . . . . . . . . . . . . . . . 60
9.05. Assignment . . . . . . . . . . . . . . . . . . . 60
9.06. Interpretation . . . . . . . . . . . . . . . . . 60
9.07. Specific Performance . . . . . . . . . . . . . . 61
9.08. Governing Law . . . . . . . . . . . . . . . . . . 61
9.09. Parties in Interest . . . . . . . . . . . . . . . 61
9.10. Counterparts . . . . . . . . . . . . . . . . . . 61
9.11. Waiver of Jury Trial . . . . . . . . . . . . . . 61
9.12. Entire Agreement . . . . . . . . . . . . . . . . 61
EXHIBITS
Exhibit A -- Restructuring Agreement
Exhibit 6.09 -- Form of Affiliate Letter
Exhibit 7.03(c) -- Forms of Tax Representation Certificate
ANNEXES
Annex A -- Agreements Respecting Plans and Other Employee
Benefit Matters
Annex B -- Corporate Governance Matters
AGREEMENT AND PLAN OF MERGER dated as of July 14, 1997
(this "AGREEMENT") among XSF Holdings, Inc., a Delaware
corporation ("NEWCO"), DXE Merger Corp., a Delaware corporation
and a wholly owned subsidiary of Newco ("MERGER SUB"), Savannah
Foods & Industries, Inc., a Delaware corporation (the "COMPANY"),
and Flo-Sun Incorporated, a Florida corporation ("FSI").
WHEREAS, FSI and Newco are parties to a Restructuring
Agreement, dated as of July 10, 1997, a copy of which is attached
hereto as Exhibit A (the "RESTRUCTURING AGREEMENT"), pursuant to
which Newco has agreed to acquire securities issued by Okeelanta
Corporation, a Delaware corporation ("OKEELANTA"), Flo-Sun Land
Corporation, a Florida corporation, ("FSL"), and ODH
Corporation, a Delaware corporation ("ODH" and, together with
Okeelanta and FSL, the "RESTRUCTURED COMPANIES"), (a) from the
holders thereof other than FSI, in exchange for shares of Class A
Common Stock, par value $.01 per share ("CLASS A COMMON STOCK"),
of Newco and (b) from FSI, in exchange for shares of Class B
Common Stock, par value $.01 per share ("CLASS B COMMON STOCK"
and, together with Class A Common Stock, "NEWCO COMMON STOCK"),
of Newco (such exchanges being referred to herein as the
"EXCHANGES"; the Exchanges and the other transactions
contemplated by the Restructuring Agreement being referred to
herein as the "RESTRUCTURING");
WHEREAS, Merger Sub, upon the terms and subject to the
conditions of this Agreement and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), will merge
with and into the Company (the "MERGER" and, together with the
other transactions contemplated by this Agreement and with the
Restructuring, the "TRANSACTIONS");
WHEREAS, the Board of Directors of the Company (the
"COMPANY BOARD") (a) has determined that the Merger is in the
best interests of the Company and its stockholders and approved
and adopted this Agreement and approved the transactions
contemplated hereby and (b) has recommended approval and adoption
of this Agreement and approval of the Merger by the stockholders
of the Company;
WHEREAS, the Boards of Directors of Merger Sub and
Newco, as sole stockholder of Merger Sub, have each approved and
adopted this Agreement and have each approved the Merger;
WHEREAS, the Boards of Directors of Newco (the "NEWCO
BOARD") and FSI, as sole stockholder of Newco, have each approved
and adopted this Agreement and the Restructuring Agreement and
have each approved the Transactions;
WHEREAS, the Board of Directors of FSI has approved and
adopted this Agreement and the Restructuring Agreement and has
approved the Transactions;
WHEREAS, for Federal income tax purposes, it is
intended that this Agreement will qualify as a plan of
reorganization, and that the Merger will be treated as a
reorganization governed by Section 368 of the Internal Revenue
Code of 1986, as amended (the "CODE");
WHEREAS, for Federal income tax purposes, it is
intended that the Transactions will be treated as a transfer of
property governed by Section 351 of the Code; and
WHEREAS, for accounting purposes, it is intended that
the Merger shall be accounted for as a "purchase."
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, FSI, Newco, Merger Sub and
the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject
to the conditions set forth in Article VII, and in accordance
with the DGCL, at the Effective Time (as hereinafter defined),
Merger Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "SURVIVING CORPORATION").
SECTION 1.02. Effective Time; Closing. (a) The
closing of the Merger (the "CLOSING") will take place on the day
(the "CLOSING DATE") that is two Business Days (as defined below)
after satisfaction or waiver (subject to applicable Law (as
defined below)) of the conditions set forth in Article VII
(excluding conditions that, by their terms, cannot be satisfied
until the Closing Date), unless another time or date is agreed to
in writing by the parties hereto. The Closing shall be held at
the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, unless another place is agreed to in
writing by the parties hereto.
(b) As soon as practicable following the Closing, the
parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger (the "CERTIFICATE OF MERGER") with the
Secretary of State of the State of Delaware in such form as is
required by, and executed in accordance with, the relevant
provisions of the DGCL. The term "EFFECTIVE TIME" means the date
and time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (or such later time
as may be agreed in writing by each of the parties hereto and
specified in the Certificate of Merger).
SECTION 1.03. Effect of the Merger. At the Effective
Time, the effect of the Merger shall be as provided in the
applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of each of the Company and
Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by Law and such
Certificate of Incorporation.
(b) At the Effective Time, the By-Laws of Merger Sub,
as in effect immediately prior to the Effective Time, shall be
the By-Laws of the Surviving Corporation until thereafter amended
as provided by Law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors
of Merger Sub immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation, each such
director to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in
each case until their respective successors are duly elected or
appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the
Effective Time, by virtue of the Merger and without any action on
the part of Merger Sub, the Company or the holders of any of the
following securities:
(a) each share of common stock, par value $0.25 per
share, of the Company ("COMPANY COMMON STOCK") issued and
outstanding (including the Benefit Trust Shares (as defined
below)) immediately prior to the Effective Time (other than
any shares of Company Common Stock to be cancelled pursuant
to Section 2.01(b)) shall (together, in each case, with the
associated Company Right) be converted into the right to
receive one share (the "EXCHANGE RATIO") of Class A Common
Stock (the "MERGER CONSIDERATION");
(b) each share of Company Common Stock held in the
treasury of the Company and each share of Company Common
Stock owned by Newco or any direct or indirect wholly owned
subsidiary of Newco or of the Company immediately prior to
the Effective Time shall (together, in each case, with the
associated Company Right) be cancelled and extinguished
without any conversion thereof and no payment shall be made
with respect thereto; and
(c) each share of Common Stock of Merger Sub issued
and outstanding immediately prior to the Effective Time
shall be converted into one validly issued fully paid and
nonassessable share of Common Stock of the Surviving
Corporation.
SECTION 2.02. Exchange of Certificates. (a) Exchange
Agent. Newco shall deposit, or shall cause to be deposited, with
a bank or trust company designated by FSI and reasonably
satisfactory to the Company (the "EXCHANGE AGENT"), for the
benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article II through the Exchange
Agent, certificates representing the shares of Class A Common
Stock issuable pursuant to Section 2.01, as of the Effective Time
(such certificates for shares of Class A Common Stock, together
with any dividends or distributions with respect thereto, being
hereinafter referred to as the "EXCHANGE FUND"), in exchange for
outstanding shares of Company Common Stock. The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the Class A
Common Stock contemplated to be issued pursuant to Section 2.01
out of the Exchange Fund. Except as contemplated by Section
2.02(e) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As promptly as practicable
after the Effective Time, Newco shall cause the Exchange Agent to
mail to each holder of a certificate or certificates which
immediately prior to the Effective Time represented outstanding
shares of Company Common Stock (the "CERTIFICATES") (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 proper delivery of the Certificates to the
Exchange Agent and shall be in customary form) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of
Class A Common Stock. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of
transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may be
reasonably required pursuant to such instructions, the holder of
such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares
of Class A Common Stock which such holder has the right to
receive in respect of the shares of Company Common Stock formerly
represented by such Certificate (after taking into account all
shares of Company Common Stock then held by such holder) and any
dividends or other distributions to which such holder is entitled
pursuant to Section 2.02(c), and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of
ownership of shares of Company Common Stock which is not
registered in the transfer records of the Company, a certificate
representing the proper number of shares of Class A Common Stock
and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c) may be issued to a
transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02,
each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender
the certificate representing shares of Class A Common Stock and
any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Shares
of Class A Common Stock. No dividends or other distributions
declared or made after the Effective Time with respect to Class A
Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect
to the shares of Class A Common Stock represented thereby until
the holder of such Certificate shall surrender such Certificate.
Subject to the effect of escheat, tax or other applicable Laws,
following surrender of any such Certificate, there shall be paid
to the holder of the certificates representing whole shares of
Class A Common Stock issued in exchange therefor, without
interest, (i) promptly, the amount of dividends or other
distributions with a record date after the Effective Time and
theretofore paid with respect to such whole shares of Class A
Common Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions, with a record date
after the Effective Time but prior to surrender and a payment
date occurring after surrender, payable with respect to such
whole shares of Class A Common Stock.
(d) No Further Rights in Company Common Stock. All
shares of Class A Common Stock issued upon conversion of the
shares of Company Common Stock in accordance with the terms
hereof (including any cash paid pursuant to Sections 2.02(c))
shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(e) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of
Company Common Stock for three years after the Effective Time
shall be delivered to Newco, upon demand, and any holders of
Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to Newco for the shares of
Class A Common Stock and any dividends or other distributions
with respect to Class A Common Stock to which they are entitled
pursuant to Section 2.02(c). Any portion of the Exchange Fund
remaining unclaimed by holders of shares of Company Common Stock
as of a date which is immediately prior to such time as such
amounts would otherwise escheat to or become property of any
Governmental Entity shall, to the extent permitted by applicable
Law, become the property of Newco free and clear of any claims or
interest of any Person previously entitled thereto.
(f) No Liability. Neither Newco nor the Surviving
Corporation shall be liable to any holder of shares of Company
Common Stock for any such shares of Class A Common Stock (or
dividends or distributions with respect thereto), or cash
delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
(g) Withholding Rights. Each of the Surviving
Corporation and Newco shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of
state, local or foreign tax Law. To the extent that amounts are
so withheld by the Surviving Corporation or Newco, as the case
may be, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares
of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Newco, as
the case may be.
(h) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving
Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the
shares of Class A Common Stock and any cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Class
A Common Stock deliverable in respect thereof pursuant to this
Agreement.
SECTION 2.03. Stock Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers of shares of
Company Common Stock thereafter on the records of the Company.
From and after the Effective Time, the holders of certificates
representing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except
as otherwise provided herein or by Law. On or after the
Effective Time, any Certificates presented to the Exchange Agent
or Newco for any reason shall be converted into shares of Class A
Common Stock and any dividends or other distributions to which
the holders thereof are entitled pursuant to Section 2.02(c).
SECTION 2.04. Stock Options. (a) Prior to the
Effective Time, the Company and Newco shall take such action as
may be necessary to cause each unexpired and unexercised option
to purchase shares of Company Common Stock (a "COMPANY OPTION"),
under the Company's 1996 Equity Incentive Plan (the "COMPANY
STOCK OPTION PLAN"), or otherwise granted by the Company outside
of the Company Stock Option Plan, to be automatically converted
at the Effective Time into an option (a "SUBSTITUTE OPTION") to
purchase a number of shares of Class A Common Stock equal to the
number of shares of Company Common Stock that could have been
purchased (assuming full vesting) under such Company Option at a
price per share of Class A Common Stock equal to the per-share
option exercise price specified in the Company Option. Such
Substitute Option shall otherwise be subject to the same terms
and conditions as such Company Option (including the accelerated
vesting of Company Options which shall occur by virtue of
consummation of the Merger, to the extent required by the terms
of such Company Options or the Company Stock Option Plan). The
date of grant of the Substitute Option shall be the date on which
the corresponding Company Option was granted. From and after the
Effective Time, all references to the Company in the Company
Stock Option Plan and the applicable stock option agreements
issued thereunder shall be deemed to refer to Newco, which shall
have assumed the Company Stock Option Plans as of the Effective
Time. At the Effective Time, Newco shall issue to each holder of
an outstanding Company Option a document evidencing the foregoing
assumption by Newco. It is the intention of the parties that,
subject to applicable Law, the Substitute Options qualify
following the Effective Time as incentive stock options as
defined in Section 422 of the Code to the extent that the Company
Options qualified as incentive stock options prior to the
Effective Time.
(b) Newco shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Class A
Common Stock for delivery upon exercise of Substitute Options
pursuant to the terms set forth in this Section 2.04. Promptly
after the Effective Time, the shares of Class A Common Stock
subject to Substitute Options shall be covered by an effective
registration statement on Form S-8 (or any successor form) or
another appropriate form and Newco shall use all reasonable
efforts to maintain the effectiveness of such registration
statement or registration statements for so long as Substitute
Options remain outstanding. In addition, Newco shall use all
reasonable efforts to cause the shares of Class A Common Stock
subject to Substitute Options to be listed on the Listing Market
(as defined below).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule
delivered by the Company to FSI, Newco and Merger Sub
concurrently with the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant
to the extent specified therein), the Company hereby represents
and warrants to FSI, Newco and Merger Sub that:
SECTION 3.01. Organization and Qualification;
Subsidiaries. Each of the Company and each subsidiary of the
Company (a "COMPANY SUBSIDIARY") is a corporation duly
incorporated, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has the
requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry
on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to
have such power, authority and governmental approvals would not,
individually or in the aggregate, have a Company Material Adverse
Effect (as defined below). The Company and each Company
Subsidiary are duly qualified or licensed as a foreign
corporation to do business, and are in good standing, in each
jurisdiction where the character of the properties owned, leased
or operated by the Company and the respective Company
Subsidiaries or the nature of their respective businesses makes
such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that
would not, individually or in the aggregate, have a Company
Material Adverse Effect. The term "COMPANY MATERIAL ADVERSE
EFFECT" means any adverse change, circumstance or effect that,
individually or in the aggregate with all other adverse changes,
circumstances and effects, is or is reasonably likely to be
materially adverse to the business, operations, assets,
liabilities (including, without limitation, contingent
liabilities), financial condition or results of operations of the
Company and the Company Subsidiaries taken as a whole.
Section 3.01 of the Company Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of all of
the Company Subsidiaries, together with the jurisdiction of
incorporation of each Company Subsidiary and the percentage of
each Company Subsidiary's outstanding capital stock or other
equity interests owned by the Company and Company Subsidiaries,
as the case may be, and the name of each other holder of any such
outstanding capital stock or other equity interests and the
percentage so held with respect to each such Company Subsidiary.
There are no partnerships or joint venture arrangements or other
business entities in which the Company or any Company Subsidiary
owns an equity interest that is material to the business of the
Company and the Company Subsidiaries taken as a whole.
SECTION 3.02. Certificate of Incorporation and
By-Laws. The Company has made available to FSI and Newco
complete and correct copies of its Certificate of Incorporation
and By-Laws and the certificates of incorporation and by-laws or
other comparable charter or organizational documents of the
Company Subsidiaries, in each case as amended to the date of this
Agreement. The Company is not in violation of any of the
provisions of its Certificate of Incorporation or By-Laws.
Except as would not have a Company Material Adverse Effect, no
Company Subsidiary is in violation of any of the provisions of
its Certificate of Incorporation or By-Laws or other comparable
charter or organizational documents.
SECTION 3.03. Capitalization. The authorized capital
stock of the Company consists of 64,000,000 shares of Company
Common Stock and 1,000,000 shares of preferred stock ("COMPANY
PREFERRED STOCK"). As of July 11, 1997, (i) 28,738,196 shares of
Company Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable and 2,500,000 of
which are held by Wachovia Bank, N.A. (formerly Wachovia Bank of
North Carolina, N.A.), as trustee of the trust created pursuant
to the Savannah Foods & Industries, Inc. Benefit Trust Agreement
(the "BENEFIT TRUST"; shares held by the trustee of the Benefit
Trust immediately prior to the Effective Time being referred to
herein as the "BENEFIT TRUST SHARES")), (ii) 2,568,604 shares of
Company Common Stock are held in the treasury of the Company;
(iii) 1,250,000 shares of Company Common Stock are reserved for
future issuance pursuant to Company Options and (iv) 1,000,000
shares of Company Preferred Stock are reserved for issuance
pursuant to the Rights Agreement, dated as of March 31, 1989,
between the Company and Citizens and Southern Trust Company, as
Rights Agent (as amended, the "COMPANY RIGHTS AGREEMENT").
Except for Company Options granted pursuant to the Company Stock
Option Plan or pursuant to agreements or arrangements described
in Section 3.03 of the Company Disclosure Schedule and the
Preferred Stock Purchase Rights (the "COMPANY RIGHTS") issued
pursuant to the Company Rights Agreement, there are no options,
warrants or other rights, agreements, arrangements or commitments
of any character relating to the issued or unissued capital stock
of the Company or any Company Subsidiary or obligating the
Company or any Company Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, the Company or
any Company Subsidiary. All shares of Company Common Stock and
Company Preferred Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or Company Preferred Stock or any capital
stock of any Company Subsidiary. Each outstanding share of
capital stock of each Company Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and each such share
owned by the Company or another Company Subsidiary is free and
clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Company's
or such other Company Subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever. Neither the Company
nor any Company Subsidiary directly or indirectly owns, or has
agreed to purchase or otherwise acquire, 5% or more of the
capital stock of any corporation, partnership, joint venture or
other business association or entity, assuming for such purpose
the conversion of all securities convertible into such capital
stock held by the Company or any Company Subsidiary and the
exercise of all warrants, options and other rights of the Company
or any Company Subsidiary to purchase such capital stock (other
than the Company Subsidiaries set forth in Section 3.01 of the
Company Disclosure Schedule). There are no material outstanding
contractual obligations of the Company or any Company Subsidiary
to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Company
Subsidiary or any other Person.
SECTION 3.04. Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than, with
respect to the Merger, the approval and adoption of this
Agreement by the holders of a majority of the then outstanding
shares of Company Common Stock, and the filing and recordation of
appropriate merger documents as required by the DGCL). This
Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and
delivery by FSI, Newco and Merger Sub, constitutes the legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or principles governing the
availability of equitable remedies).
(b) The Company Board has approved the Merger and this
Agreement, and such approval is sufficient to render inapplicable
to the Merger and this Agreement and the transactions
contemplated by this Agreement the provisions of Section 203 of
the DGCL. To the Knowledge (as defined below) of the Company, no
other state takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this Agreement or any
of the transactions contemplated by this Agreement.
SECTION 3.05. No Conflict; Required Filings and
Consents. (a) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the
Company will not, (i) conflict with or violate the Certificate of
Incorporation or By-laws or equivalent organizational documents
of the Company or any Company Subsidiary, (ii) assuming that all
consents, approvals, authorizations and other actions described
in Section 3.05(b) have been obtained and all filings and
obligations described in Section 3.05(b) have been made, conflict
with or violate any foreign or domestic Law applicable to the
Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or
affected, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any
property or asset of the Company or any Company Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults, or other
occurrences which would not, individually or in the aggregate,
have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the
Company will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental
Entity (as defined below), except (i) for applicable
requirements, if any, of the Exchange Act, state securities or
"blue sky" Laws ("BLUE SKY LAWS"), the New York Stock Exchange,
Inc. (the "NYSE"), the Listing Market and state takeover Laws,
the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR ACT"), and filing and
recordation of appropriate merger documents as required by the
DGCL and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the
Merger, or otherwise prevent the Company from performing its
obligations under this Agreement, and would not, individually or
in the aggregate, have a Company Material Adverse Effect.
SECTION 3.06. Permits; Compliance. Each of the
Company and the Company Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and
orders of any Governmental Entity necessary for the Company or
any Company Subsidiary to own, lease and operate its properties
or to carry on its business as it is now being conducted (the
"COMPANY PERMITS"), except where the failure to have, or the
suspension or cancellation of, any of the Company Permits would
not, individually or in the aggregate, have a Company Material
Adverse Effect, and, as of the date hereof, no suspension or
cancellation of any of the Company Permits is pending or, to the
Knowledge of the Company, threatened, except where the failure to
have, or the suspension or cancellation of, any of the Company
Permits would not, individually or in the aggregate, have a
Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary is in conflict with, or in default or
violation of, (i) any Law applicable to the Company or any
Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, (ii) any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which the Company or any Company Subsidiary is a party or by
which the Company or any Company Subsidiary or any property or
asset of the Company or any Company Subsidiary is bound or
affected or (iii) any Company Permits, except for any such
conflicts, defaults or violations that would not, individually or
in the aggregate, have a Company Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a)
The Company has filed all forms, reports and documents required
to be filed by it with the Securities and Exchange Commission
(the "SEC") since October 3, 1993 (collectively, the "COMPANY SEC
REPORTS"). The Company SEC Reports (i) were prepared in
accordance with the requirements of the Securities Act of 1933,
as amended (the "SECURITIES ACT"), or the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), as the case may be, and
(ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading. No Company Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
Company SEC Reports (the "COMPANY FINANCIAL STATEMENTS") (i) was
prepared from the books of account and other financial records of
the Company and the consolidated Company Subsidiaries, (ii) was
prepared in accordance with United States generally accepted
accounting principles ("U.S. GAAP") applied on a consistent basis
throughout the periods indicated (except as may be indicated in
the notes thereto) and (iii) presented fairly, in all material
respects, the consolidated financial position of the Company and
the consolidated Company Subsidiaries as at the respective dates
thereof and the results of their operations and their cash flows
for the respective periods indicated therein except as otherwise
noted therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to have a Company
Material Adverse Effect and the omission of footnotes).
(c) The books of account and other financial records
of the Company and the Company Subsidiaries from which the
Company Financial Statements were prepared: (i) reflect all
items of income and expense and all assets and liabilities
required to be reflected therein in accordance with U.S. GAAP
applied on a basis consistent with the past practices of the
Company, (ii) are in all material respects complete and correct,
and do not contain or reflect any material inaccuracies or
discrepancies and (iii) have been maintained in accordance with
good business and accounting practices.
(d) Except for liabilities and obligations reflected
on the September 29, 1996 consolidated balance sheet of the
Company (including the notes thereto), liabilities and
obligations disclosed in Company SEC Reports filed prior to the
date of this Agreement and other liabilities and obligations
incurred in the ordinary course of business consistent with past
practice since September 29, 1996, neither the Company nor any
Company Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise)
which, individually or in the aggregate, are or are reasonably
likely to be material to the Company and the Company Subsidiaries
taken as a whole.
(e) The Company has heretofore furnished to FSI
complete and correct copies of (i) all agreements, documents and
other instruments not yet filed by the Company with the SEC but
that are currently in effect and that the Company expects to file
with the SEC after the date of this Agreement and (ii) all
amendments and modifications that have not been filed by the
Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with
the SEC and are currently in effect.
SECTION 3.08. Absence of Certain Changes or Events.
Since September 29, 1996, except as contemplated by this
Agreement or as disclosed in Company SEC Reports filed prior to
the date of this Agreement, the Company and the Company
Subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since
such date, there has not been (a) any Company Material Adverse
Effect, (b) any change by the Company in its accounting methods,
principles or practices, except as may be required by GAAP,
(c) any damage, destruction or loss (whether or not covered by
insurance) with respect to properties or assets of the Company or
any Company Subsidiary that, individually or in the aggregate, is
material to the Company and the Company Subsidiaries taken as a
whole, (d) any declaration, setting aside or payment of any
dividend or distribution in respect of shares of Company Common
Stock or any redemption, purchase or other acquisition of any of
its securities other than the previously declared regular
quarterly dividend of $0.0375 per share of Company Common Stock,
(e) any revaluation by the Company and the Company Subsidiaries
of any asset (including, without limitation, any writing down of
the value of inventory or writing off of notes or accounts
receivable), other than in the ordinary course of business
consistent with past practice, (f) any entry by the Company or
any Company Subsidiary into any commitment or transaction
material to the Company and the Company Subsidiaries taken as a
whole, except in the ordinary course of business consistent with
past practice, (g) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance
awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation
payable or to become payable to any officers or key employees of
the Company or any Company Subsidiary, except in the ordinary
course of business consistent with past practice, (h) any
acquisition or disposition by the Company of any material asset,
except in the ordinary course of business consistent with past
practice, (i) any incurrence, assumption or guarantee of any
indebtedness or obligation relating to any lending or borrowing
except current liabilities and commitments incurred in the
ordinary course of business consistent with past practice, or
(j) any amendment, modification or termination of any existing,
or entering into any new, material contract, or any material
plan, lease, license, permit or franchise, except in the ordinary
course of business consistent with past practice.
SECTION 3.09. Absence of Litigation. (a) There is no
litigation, suit, claim, action, proceeding or investigation
pending or, to the Knowledge of the Company, threatened against
or affecting the Company or any Company Subsidiary, or any
property or asset of the Company or any Company Subsidiary,
before any court, arbitrator or Governmental Entity, which
(i) individually or in the aggregate, has had or is reasonably
likely to have a Company Material Adverse Effect or (ii) seeks to
delay or prevent the consummation of the Transactions.
(b) Neither the Company nor any Company Subsidiary nor
any property or asset of the Company or any Company Subsidiary is
subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the
Knowledge of the Company, continuing investigation by, any
Governmental Entity, or any order, writ, judgment, injunction,
decree, determination or award of any Governmental Entity or
arbitrator having or reasonably like to have, individually or in
the aggregate, a Company Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans; Labor Matters.
(a) Section 3.10(a) of the Company Disclosure Schedule contains
a true and complete list of (i) all "employee benefit plans"
(within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination,
severance or other contracts or agreements to which the Company
or any Company Subsidiary is a party, by which the Company or any
Company Subsidiary is bound, with respect to which the Company or
any Company Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Company or any
Company Subsidiary for the benefit of any current or former
employee, officer or director of the Company or any Company
Subsidiary and (ii) each employee benefit plan for which the
Company or any Company Subsidiary could incur liability under
Section 4069 of ERISA, in the event such plan were terminated, or
under Section 4212(c) of ERISA, or in respect of which the
Company or any Company Subsidiary remains secondarily liable
under Section 4204 of ERISA (collectively, the "COMPANY PLANS").
Each Company Plan is in writing and the Company has previously
made available to FSI a true and complete copy of each Company
Plan and a true and complete copy of (1) each trust or other
funding arrangement, (2) each summary plan description and
summary of material modifications, (3) the most recently filed
Internal Revenue Service ("IRS") Form 5500, (4) the most recently
received IRS determination letter for each such Company Plan, and
(5) the most recently prepared actuarial report and financial
statement in connection with each such Company Plan. Neither the
Company nor any Company Subsidiary has any express or implied
commitment (I) to create, to incur liability with respect to, or
to cause to exist any other employee benefit plan, program or
arrangement, (II) to enter into any contract or agreement to
provide compensation or benefits to any individual or (III) to
modify, change or terminate any Company Plan (other than with
respect to a modification, change or termination required by
ERISA or the Code).
(b) None of the Company Plans is a multiemployer plan,
within the meaning of Section 3(37) or 4001(a)(3) of ERISA (a
"MULTIEMPLOYER PLAN"), or a single employer pension plan, within
the meaning of Section 4001(a)(15) of ERISA, for which the
Company or any Company Subsidiary could incur liability under
Section 4063 or 4064 of ERISA (a "MULTIPLE EMPLOYER PLAN"). None
of the Company Plans (i) provides for the payment of separation,
severance, termination or similar-type benefits to any Person,
(ii) obligates the Company or any Company Subsidiary to pay
separation, severance, termination or other benefits as a result
of the Transactions or (iii) obligates the Company or any Company
Subsidiary to make any payment or provide any benefit that would
be subject to a tax under Section 4999 of the Code. None of the
Company Plans provides for or promises retiree medical,
disability or life insurance benefits to any current or former
employee, officer or director of the Company or any Company
Subsidiary.
(c) Each Company Plan which is intended to be
qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS that such Company
Plan is so qualified, and each trust established in connection
with any Company Plan which is intended to be exempt from federal
income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt.
To the Company's Knowledge, no fact or event has occurred since
the date of any such determination letter from the IRS that would
adversely affect the qualified status of any such Company Plan or
the exempt status of any such trust. Each trust maintained or
contributed to by the Company or any Company Subsidiary which is
intended to be qualified as a voluntary employees' beneficiary
association exempt from federal income taxation under
Sections 501(a) and 501(c)(9) of the Code has received a
favorable determination letter from the IRS that it is so
qualified and so exempt, and, to the Company's Knowledge, no fact
or event has occurred since the date of such determination by the
IRS that would adversely affect such qualified or exempt status.
(d) To the Company's Knowledge, there has been no non-
exempt prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) with respect to any Company
Plan. Neither the Company nor any Company Subsidiary is
currently liable or has previously incurred any liability for any
tax or penalty (other than any tax or penalty that would not have
a Company Material Adverse Effect) arising under Section 4971,
4972, 4979, 4980 or 4980B of the Code or Section 502(c) of ERISA,
and, to the Company's Knowledge, no fact or event exists which
would give rise to any such liability. Neither the Company nor
any Company Subsidiary has incurred any liability (other than any
liability that would not have a Company Material Adverse Effect)
under, arising out of or by operation of Title IV of ERISA that
has not been satisfied in full (other than liability for premiums
to the Pension Benefit Guaranty Corporation arising in the
ordinary course), including, without limitation, any liability in
connection with (i) the termination or reorganization of any
employee pension benefit plan subject to Title IV of ERISA or
(ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and, to the Company's Knowledge, no fact or event
exists which would give rise to any such liability. No complete
or partial termination has occurred within the five years
preceding the date hereof with respect to any Company Plan. No
reportable event (within the meaning of Section 4043 of ERISA)
for which the 30-day notice requirement to the Pension Benefit
Guaranty Corporation has not been waived has occurred or is
expected to occur with respect to any Company Plan subject to
Title IV of ERISA. No asset of the Company or any Company
Subsidiary is the subject of any lien arising under
Section 302(f) of ERISA or Section 412(n) of the Code; neither
the Company nor any Company Subsidiary has been required to post
any security under Section 307 of ERISA or Section 401(a)(29) of
the Code; and no fact or event exists which would give rise to
any such lien or requirement to post any such security.
(e) Each Company Plan is now and has been operated in
all respects in accordance with the requirements of all
applicable Laws, including, without limitation, ERISA and the
Code, except where any failure to so operate would not have a
Company Material Adverse Effect. No Company Plan has incurred an
"accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not
waived. The Company's September 29, 1996 balance sheet reflects
an accrual of all amounts of employer contributions and premiums
accrued but unpaid with respect to the Company Plans. With
respect to each Company Plan subject to Title IV of ERISA, the
accumulated benefit obligations of such Company Plan is set forth
in the footnotes to the Company's September 29, 1996 balance
sheet.
(f) The Company and the Company Subsidiaries have not
incurred any liability under, and have complied in all respects
with, the Worker Adjustment and Retraining Notification Act and
the regulations promulgated thereunder ("WARN") and do not
reasonably expect to incur any such liability as a result of
actions taken or not taken prior to the Effective Time.
Section 3.10(f) of the Company Disclosure Schedule lists all
notices given by the Company and the Company Subsidiaries in
connection with WARN.
(g) (i) Neither the Company nor any Company Subsidiary
is a party to any collective bargaining agreement or other labor
union contract applicable to Persons employed by the Company or
any Company Subsidiary, nor, to the Knowledge of the Company, are
there any activities or proceedings of any labor union to
organize any such employees; (ii) except as would not have a
Company Material Adverse Effect, neither the Company nor any
Company Subsidiary has breached or otherwise failed to comply
with any provision of any such agreement or contract and there
are no grievances outstanding against the Company or any Company
Subsidiary under any such agreement or contract; (iii) there are
no unfair labor practice complaints pending against the Company
or any Company Subsidiary before the National Labor Relations
Board or any current union representation questions involving
employees of the Company or any Company Subsidiary; and
(iv) there is no strike, slowdown, work stoppage or lockout, or,
to the Knowledge of the Company, threat thereof, by or with
respect to any employees of the Company or any Company
Subsidiary. The consent of the labor unions which are parties to
the collective bargaining agreements listed in Section 3.10(g) of
the Company Disclosure Schedule is not required to consummate the
Transactions.
(h) The Board of Directors of the Company has, prior
to its execution of this Agreement, amended each of (i) the
Company's Supplemental Executive Retirement Plan, (ii) the
Deferred Compensation Plan for Key Employees of Michigan Sugar
Company, (iii) the Deferred Compensation Plan for Key Employees
of the Company, as amended and restated as of August 12, 1983,
and (iv) the Deferred Compensation Plan for Key Employees of the
Company, as amended and restated as of August 1, 1990
(collectively, the "EXECUTIVE DEFERRED COMPENSATION PLANS"), to
provide that neither the execution of this Agreement, nor the
consummation of the transactions contemplated by this Agreement,
shall constitute a "change in control" for purposes of such
Executive Deferred Compensation Plan or otherwise will result in
the acceleration of vesting or payment of any benefit, or the
triggering of any ancillary or supplemental benefit or subsidy,
under such plan. The Company has the authority and power to
amend the Executive Deferred Compensation Plans as described in
this Section 3.10(h) without limitation or restriction with
respect to any current participants or beneficiaries, and none of
such participants or beneficiaries shall have a valid claim in
law or equity that such amendment was not effective against them,
or otherwise that they are entitled to rights or benefits that
would have accrued to them under such plans had they not been so
amended.
SECTION 3.11. Intellectual Property. "INTELLECTUAL
PROPERTY RIGHTS" means trademarks, trademark rights, trade names,
trade name rights, patents, patent rights, industrial models,
inventions, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and
other proprietary rights and information. The Company and the
Company Subsidiaries own, or possess adequate licenses or other
valid rights to use, all Intellectual Property Rights used or
held for use in connection with the business of the Company and
the Company Subsidiaries as currently conducted. The conduct of
the business of the Company and the Company Subsidiaries as
currently conducted does not and will not conflict in any way
with any Intellectual Property Rights of any third party that,
individually or in the aggregate, would have a Company Material
Adverse Effect. To the Knowledge of the Company, there are no
infringements of any Intellectual Property Rights owned by or
licensed by or to the Company or any Company Subsidiary that,
individually or in the aggregate, would have a Company Material
Adverse Effect. Neither the Company nor any Company Subsidiary
has licensed or otherwise permitted the use by any third party of
any Intellectual Property Rights on terms or in a manner which,
individually or in the aggregate, would have a Company Material
Adverse Effect. Neither the Company nor any Company
Subsidiary is in breach of any agreements pursuant to which the
Company or any Company Subsidiary has a license to use
Intellectual Property Rights which breach has had or is
reasonably likely to have a Company Material Adverse Effect, and
the Transactions will not constitute such a breach or otherwise
reduce or impair, in any material respect, the rights of the
Company or any Company Subsidiary under such license agreements.
No claims are pending or, to the Knowledge of the Company,
threatened by any Person with respect to the ownership, validity
or enforceability of any Intellectual Property Rights owned by or
licensed to or by the Company or any Company Subsidiary or
challenging or questioning the right of the Company or any
Company Subsidiaries to use any Intellectual Property Rights,
except claims that would not, if determined adversely to the
Company or any Company Subsidiary, individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 3.12. Taxes. The Company and each of the
Company Subsidiaries have (a) filed all federal, state, local and
foreign tax returns required to be filed by them prior to the
date of this Agreement (taking into account extensions), (b) paid
or accrued all taxes shown to be due on such returns and have
paid all applicable ad valorem and value added taxes as are due,
and (c) paid or accrued all taxes for which a notice of
assessment or collection has been received (other than amounts
being contested in good faith by appropriate proceedings), except
in the case of clause (a), (b) or (c) for any such filings,
payments or accruals which would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company
has open years for federal income tax returns and state income
and franchise tax returns only as set forth in the Section 3.12
of the Company Disclosure Schedule. The Company and each Company
Subsidiary have withheld or collected and paid over to the
appropriate Governmental Entity (or are properly holding for such
payment) all taxes required by Law to be withheld or collected,
except for amounts which would not, individually or in the
aggregate, have a Company Material Adverse Effect. Neither the
Company nor any Company Subsidiary has made an election under
Section 341(f) of the Code.
SECTION 3.13. Environmental Matters. (a) For
purposes of this Agreement, the following terms shall have the
following meanings: (i) "HAZARDOUS SUBSTANCES" means (A) those
substances defined in or regulated under the following federal
statutes and their state counterparts, as each may be amended
from time to time, and all regulations thereunder: the Hazardous
Materials Transportation Act, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air
Act; (B) petroleum and petroleum products including crude oil and
any fractions thereof; (C) natural gas, synthetic gas, and any
mixtures thereof; (D) radon; (E) any other pollutant or
contaminant; and (F) any substance with respect to which a
federal, state or local agency requires environmental
investigation, monitoring, reporting or remediation; and
(ii) "ENVIRONMENTAL LAWS" means any Law relating to (A) releases
or threatened releases of Hazardous Substances or materials
containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous
Substances or materials containing Hazardous Substances; or
(C) otherwise relating to pollution of the environment or the
protection of human health and safety and natural resources.
(b) Except as would not, individually or in the
aggregate, have a Company Material Adverse Effect: (i) neither
the Company nor any Company Subsidiary has violated or is in
violation of any Environmental Law; (ii) none of the properties
owned or leased by the Company or any Company Subsidiary
(including, without limitation, soils and surface and ground
waters) are contaminated with any Hazardous Substance;
(iii) neither the Company nor any Company Subsidiary is actually
or potentially or, to the Knowledge of the Company, allegedly
liable for any off-site contamination; (iv) neither the Company
nor any Company Subsidiary is actually or potentially or, to the
Knowledge of the Company, allegedly liable under any
Environmental Law (including, without limitation, pending or
threatened liens); (v) the Company and each Company Subsidiary
has all permits, licenses and other authorizations required under
any Environmental Law ("COMPANY ENVIRONMENTAL PERMITS"); and
(vi) the Company and each Company Subsidiary has always been and
is in compliance with its Environmental Permits.
SECTION 3.14. Products. Except as would not have a
Company Material Adverse Effect, (a) there have been no written
notices, citations or decisions by any Governmental Entity that
any product produced, manufactured, marketed or distributed by
the Company or any Company Subsidiary (the "COMPANY PRODUCTS") is
defective or fails to meet any applicable standards promulgated
by such Governmental Entity, (b) the Company and the Company
Subsidiaries have complied with all Laws applicable to design,
manufacture, labelling, testing and inspection of Company
Products, and (c) there have been no recalls ordered or, to the
Knowledge of the Company, threatened by any Governmental Entity
with respect to any of the Company Products. Neither the Company
nor any Company Subsidiary has entered into any agreement or
arrangement that limits or otherwise restricts the Company or any
Company Subsidiary or any successor thereto, or that would limit
Newco or any subsidiary thereof or any successor thereto, from
engaging or competing in any line of business or in any
geographic area.
SECTION 3.15. Properties and Assets; Real Property and
Leases. (a) The Company and the Company Subsidiaries have
sufficient title to all their respective properties and assets to
conduct their respective businesses as currently conducted or as
contemplated to be conducted, with only such exceptions as,
individually or in the aggregate, would not have a Company
Material Adverse Effect.
(b) Set forth on Schedule 3.15(b) is a true, correct
and complete list (including a general description of the uses
for such real property) of all real property owned or leased by
the Company and each of the Company Subsidiaries.
(c) Except as would not have a Company Material
Adverse Effect, each parcel of real property owned or leased by
the Company or any Company Subsidiary (i) is owned or leased free
and clear of all mortgages, pledges, liens, security interests,
conditional and installment sale agreements, encumbrances,
charges or other claims of third parties of any kind
(collectively, "LIENS"), other than (A) Liens for current taxes
and assessments not yet past due, (B) inchoate mechanics' and
materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the
ordinary course of business of the Company or such Company
Subsidiary consistent with past practice, and (D) all matters of
record, Liens and other imperfections of title and encumbrances
(including, without limitation, (1) reservations specified in
instruments of conveyance such as deeds and indentures, reserving
in favor of the grantor under such instrument ("DEED
RESERVATIONS"), the right to make or construct canals, cuts,
sluice-ways, dikes and other works ("WATERWAY WORKS") for the
drainage or reclamation of any lands, (2) Deed Reservations for
the exclusive possession of a portion of the land on either side
of such Waterway Works, (3) Deed Reservations reserving an
interest in mineral rights, including without limitation,
petroleum, petroleum products, phosphate minerals, oil and gas,
(4) any covenant or restriction pursuant to any deed or recorded
plat affecting the property and (5) any other Deed Reservation)
which, individually or in the aggregate, would not adversely
affect the use of the property for its intended purpose (Liens
described in clauses (A) through (D) being referred to herein as
"PERMITTED LIENS"), and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned,
expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the Knowledge
of the Company, has any such condemnation, expropriation or
taking been proposed.
(d) All leases of real property leased for the use or
benefit of the Company or any Company Subsidiary to which the
Company or any Company Subsidiary is a party or by which the
Company or any Company Subsidiary is bound, and all amendments
and modifications thereto are in full force and effect and have
not been modified or amended, and there exists no default under
any such lease by the Company or any Company Subsidiary or any
other party thereto, nor any event which with notice or lapse of
time or both would constitute a default thereunder by the Company
or any Company Subsidiary or any other party thereto, except as,
individually or in the aggregate, would not have a Company
Material Adverse Effect.
SECTION 3.16. Insurance. The Company and the Company
Subsidiaries have obtained and maintained in full force and
effect insurance with responsible and reputable insurance
companies or associations in such amounts, on such terms, with
such deductibles, and covering such risks, including fire and
other risks insured against by extended coverage, as is
customarily carried by reasonably prudent Persons conducting
businesses or owning assets similar to those of the Company and
the Company Subsidiaries, and each has maintained in full force
and effect public liability insurance, insurance against claims
for personal injury or death or property damage occurring in
connection with the activities of the Company and the Company
Subsidiaries or any properties owned, occupied or controlled by
the Company or any Company Subsidiary, in such amount as is
customarily carried by reasonably prudent Persons conducting
businesses or owning assets similar to those of the Company and
the Company Subsidiaries.
SECTION 3.17. Opinion of Financial Advisor. The
Company has received a fairness opinion of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation ("DLJ") on the date of this
Agreement and the Company will promptly, after the date of this
Agreement, deliver a copy of such opinion to Newco.
SECTION 3.18. Vote Required. The only vote of the
holders of any class or series of capital stock of the Company
necessary to approve this Agreement and the transactions
contemplated hereby is the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock.
SECTION 3.19. Brokers. Other than DLJ, no broker,
finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the
Company. The Company has heretofore made available to FSI a
complete and correct copy of all agreements between the Company
and DLJ pursuant to which such firm would be entitled to any
payment relating to the Transactions.
SECTION 3.20. Company Rights Agreement. The Company
Rights Agreement has been amended so as to provide that none of
FSI, Newco or Merger Sub will become an "Acquiring Person" and
that no "Stock Acquisition Date" or "Distribution Date" (as such
terms are defined in the Company Rights Agreement) will occur as
a result of the approval, execution or delivery of this Agreement
or the consummation of the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FSI, NEWCO AND MERGER SUB
Except as set forth in the Disclosure Schedule
delivered by FSI, Newco and Merger Sub to the Company
concurrently with the execution of this Agreement (the "FLO-SUN
DISCLOSURE SCHEDULE") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant
to the extent specified therein), FSI, Newco and Merger Sub
hereby jointly and severally represent and warrant to the Company
that:
SECTION 4.01. Organization and Qualification;
Subsidiaries. (a) Each entity that would be a subsidiary of
Newco after giving effect to the Restructuring but without giving
effect to the Merger (a "FLO-SUN SUBSIDIARY") is a corporation
duly incorporated, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation and has the
requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry
on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to
have such power, authority and governmental approvals would not,
individually or in the aggregate, have a Flo-Sun Material Adverse
Effect (as defined below). Each Flo-Sun Subsidiary is duly
qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature
of its business makes such qualification or licensing necessary,
except for such failures to be so qualified or licensed and in
good standing that would not, individually or in the aggregate,
have a Flo-Sun Material Adverse Effect. The term "FLO-SUN
MATERIAL ADVERSE EFFECT" means any adverse change, circumstance
or effect that, individually or in the aggregate with all other
adverse changes, circumstances and effects, is or is reasonably
likely to be materially adverse to the business, operations,
assets, liabilities (including, without limitation, contingent
liabilities), financial condition or results of operations of the
Flo-Sun Subsidiaries taken as a whole. Section 4.01 of the Flo-
Sun Disclosure Schedule sets forth, as of the date of this
Agreement, a true and complete list of all of the Flo-Sun
Subsidiaries, together with the jurisdiction of incorporation of
each Flo-Sun Subsidiary, the percentage of each Flo-Sun
Subsidiary's outstanding capital stock or other equity interests
owned by FSI or other Flo-Sun Subsidiaries, as the case may be,
and the name of each other holder of any such outstanding capital
stock or other equity interests and the percentage so held with
respect to each such Flo-Sun Subsidiary. There are no
partnerships or joint venture arrangements or other business
entities in which Newco or any Flo-Sun Subsidiary owns an equity
interest that is material to the business of the Flo-Sun
Subsidiaries taken as a whole.
(b) Newco is a corporation duly incorporated, validly
existing and in good standing under the Laws of Delaware. FSI is
a corporation duly incorporated, validly existing and in good
standing under the Laws of Florida. Newco has not conducted any
activities other than in connection with the organization of
Newco and Merger Sub, the negotiation and execution of this
Agreement and the Restructuring Agreement and the consummation of
the transactions contemplated hereby and thereby. Newco has no
Subsidiaries other than Merger Sub. As of the date hereof and
the Effective Time, except for obligations or liabilities
incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement and the
Restructuring Agreement, Newco has not and will not have
incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any Person. From the
date of this Agreement until the consummation of the
Restructuring, all of the outstanding capital stock of Newco will
be owned directly by FSI.
(c) Merger Sub is a corporation duly incorporated,
validly existing and in good standing under the Laws of Delaware.
Merger Sub has not conducted any activities other than in
connection with the organization of Merger Sub, the negotiation
and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no
Subsidiaries. Except for obligations or liabilities incurred in
connection with its incorporation or organization and the
transactions contemplated by this Agreement and the Restructuring
Agreement, Merger Sub has not incurred, directly or indirectly,
through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements
with any Person. From the date of this Agreement until the
Effective Time, all of the outstanding capital stock of Merger
Sub will be owned directly by Newco.
SECTION 4.02. Certificate of Incorporation and
By-Laws. Newco has made available to the Company complete and
correct copies of its Certificate of Incorporation and By-Laws
and the certificates of incorporation and by-laws or other
comparable charter or organizational documents of the Flo-Sun
Subsidiaries, in each case as amended to the date of this
Agreement. Newco is not in violation of any of the provisions of
its Certificate of Incorporation or By-Laws. Except as would not
have a Flo-Sun Material Adverse Effect, no Flo-Sun Subsidiary is
in violation of any of the provisions of its Certificate of
Incorporation or By-Laws or other comparable charter or
organizational documents.
SECTION 4.03. Capitalization. (a) The authorized
capital stock of Newco consists of (i) 5,500,000 shares of common
stock, par value $0.01 per share ("EXISTING NEWCO COMMON STOCK")
and (ii) 500,000 shares of preferred stock, par value $.01 per
share ("NEWCO PREFERRED STOCK"). As of the date of this
Agreement, one share of Existing Newco Common Stock is issued and
outstanding and such share is validly issued, fully paid and
nonassessable and no shares of Newco Preferred Stock are issued
and outstanding. Except as provided in this Agreement and the
Restructuring Agreement: (A) there are no options, warrants or
other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of
Newco or any Flo-Sun Subsidiary or obligating Newco or any Flo-
Sun Subsidiary to issue or sell any shares of capital stock of,
or other equity interests in, Newco or any Flo-Sun Subsidiary and
(B) there are no outstanding contractual obligations of Newco or
any Flo-Sun Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of Newco or of any Flo-Sun
Subsidiary. Each outstanding share of capital stock of each Flo-
Sun Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by Newco or another Flo-
Sun Subsidiary is free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Newco's or such other Flo-Sun
Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever. Neither Newco nor any Flo-Sun Subsidiary
directly or indirectly owns, or has agreed to purchase or
otherwise acquire, 5% or more of the capital stock of any
corporation, partnership, joint venture or other business
association or entity, assuming for such purpose the conversion
of all securities convertible into such capital stock held by any
Flo-Sun Subsidiary and the exercise of all warrants, options and
other rights of any Flo-Sun Subsidiary to purchase such capital
stock (other than the entities set forth in Section 4.01 of the
Flo-Sun Disclosure Schedule). Except as provided in this
Agreement and the Restructuring Agreement, there are no material
outstanding contractual obligations of Newco or any Flo-Sun
Subsidiary to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Flo-
Sun Subsidiary or any other Person.
(b) Immediately following the Effective Time, the
authorized capital stock of Newco will consist of the shares of
capital stock provided for in Exhibit C to the Restructuring
Agreement, as amended pursuant to Section 6.15(c) of this
Agreement.
(c) Immediately following the Effective Time, the only
shares of capital stock of Newco outstanding will be: (A) shares
of Class A Common Stock to be issued in the Merger to the holders
of Company Common Stock, other than the holder of the Benefit
Trust Shares, in an amount equal to the amount (the "COMPANY
COMMON STOCK AMOUNT") of shares of Company Common Stock
outstanding immediately prior to the Effective Time, other than
the Benefit Trust Shares; and (B) shares of Class A Common Stock
and Class B Common Stock in amounts to be determined in
accordance with Section 6.15(c) below; and (C) shares of Class A
Common Stock to be issued in the Merger to the trustee of the
Benefit Trust in an amount equal to the amount of Benefit Trust
Shares outstanding immediately prior to the Effective Time. The
"OWNERSHIP RATIO" means a fraction the numerator of which is 58.5
and the denominator of which is 41.5.
(d) Except as otherwise agreed by the parties hereto,
immediately following the Effective Time, there shall be no
options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued
capital stock of Newco or obligating Newco to issue or sell any
shares of capital stock of, or other equity interests in, Newco,
except for: (i) Substitute Options, (ii) options to purchase
shares of Class A Common Stock issued in exchange for options to
purchase shares of Class B Okeelanta Common Stock in the
Restructuring, (iii) obligations of Newco to issue shares of
Class A Common Stock in exchange for Class B Common Stock as
contemplated pursuant to the form of Amended and Restated
Certificate of Incorporation of Newco attached as Exhibit C to
the Restructuring Agreement and (iv) any such rights, agreements,
arrangements or commitments of the Company or any affiliate of
the Company in existence as of the Effective Time and that are
assumed by Newco (whether voluntarily, by operation of law or
otherwise) as a result of or in connection with the Merger,
including any such rights, agreements, arrangements or
commitments pursuant to or in connection with the Benefit Trust.
SECTION 4.04. Authority Relative to this Agreement.
Each of FSI, Newco and Merger Sub has all necessary corporate
power and authority to execute and deliver this Agreement, to
perform their respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery
of this Agreement by each of FSI, Newco and Merger Sub and the
consummation by each of FSI, Newco and Merger Sub of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other
corporate proceedings on the part of FSI, Newco or Merger Sub are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the filing and
recordation of appropriate merger documents as required by the
DGCL). This Agreement has been duly and validly executed and
delivered by each of FSI, Newco and Merger Sub and, assuming the
due authorization, execution and delivery by the Company,
constitutes legal, valid and binding obligations of each of FSI,
Newco and Merger Sub, enforceable against each of FSI, Newco and
Merger Sub in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or principles governing the
availability of equitable remedies).
SECTION 4.05. No Conflict; Required Filings and
Consents. (a) The execution and delivery of this Agreement by
each of FSI, Newco and Merger Sub do not, and the performance of
this Agreement by each of FSI, Newco and Merger Sub will not,
(i) conflict with or violate the Certificate of Incorporation or
By-laws or equivalent organizational documents of FSI, Merger Sub
or Newco, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.05(b)
have been obtained and all filings and obligations described in
Section 4.05(b) have been made, conflict with or violate any Law
applicable to FSI, Merger Sub, Newco or any Flo-Sun Subsidiary or
by which any property or asset of FSI, Merger Sub, Newco or any
Flo-Sun Subsidiary is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give
to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of FSI, Merger Sub, Newco or
any Flo-Sun Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation, except, with respect to
clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults, or other occurrences which would not,
individually or in the aggregate, have a Flo-Sun Material Adverse
Effect.
(b) The execution and delivery of this Agreement by
each of FSI, Newco and Merger Sub do not, and the performance of
this Agreement by each of FSI, Newco and Merger Sub will not,
require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except
(i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, Blue Sky Laws, the NYSE, the Listing Market and
state takeover Laws, the pre-merger notification requirements of
the HSR Act, and filing and recordation of appropriate merger
documents as required by the DGCL and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications would not prevent or delay
consummation of the Merger, or otherwise prevent FSI, Newco or
Merger Sub from performing their respective obligations under
this Agreement, and would not, individually or in the aggregate,
have a Flo-Sun Material Adverse Effect.
SECTION 4.06. Permits; Compliance. Each of the Flo-
Sun Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity necessary for such Flo-Sun Subsidiary to own,
lease and operate its properties or to carry on its business as
it is now being conducted (the "FLO-SUN PERMITS"), except where
the failure to have, or the suspension or cancellation of, any of
the Flo-Sun Permits would not, individually or in the aggregate,
have a Flo-Sun Material Adverse Effect, and, as of the date
hereof, no suspension or cancellation of any of the Flo-Sun
Permits is pending or, to the Knowledge of FSI, threatened,
except where the failure to have, or the suspension or
cancellation of, any of the Flo-Sun Permits would not,
individually or in the aggregate, have a Flo-Sun Material Adverse
Effect. No Flo-Sun Subsidiary is in conflict with, or in default
or violation of, (i) any Law applicable to it or by which any of
its properties or assets is bound or affected, (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to it is a
party or by which it or any of its properties or assets is bound
or affected or (iii) any Flo-Sun Permits, except for any such
conflicts, defaults or violations that would not, individually or
in the aggregate, have a Flo-Sun Material Adverse Effect.
SECTION 4.07. Financial Statements; Information
Memorandum. (a) No Flo-Sun Subsidiary is required to file any
form, report or other document with the SEC.
(b) FSI has delivered to the Company true and complete
copies of (i) the audited consolidated balance sheets of
Okeelanta and FSL for each of the three fiscal years ended as of
March 31, 1997, 1996 and 1995 and the audited consolidated
balance sheets of ODH for each of three fiscal years ended as of
September 30, 1996, 1995 and 1994 and for the six months ended as
of March 31, 1997, and the related audited consolidated
statements of earnings and retained earnings and cash flows,
together with all related notes and schedules thereto,
accompanied by the reports thereon of KPMG Peat Marwick LLP
("KPMG") (collectively, the "FLO-SUN FINANCIAL STATEMENTS"). The
Flo-Sun Financial Statements (1) were prepared from the books of
account and other financial records of the respective
Restructured Companies and their respective consolidated
subsidiaries, (2) were prepared in accordance with U.S. GAAP
applied with respect to the respective Restructured Companies on
a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto) and (3) presented fairly,
in all material respects, the consolidated financial position of
the respective Restructured Companies as at the respective dates
thereof and the results of their respective operations and their
respective cash flows for the respective periods indicated
therein except as otherwise noted therein.
(c) FSI has delivered to the Company true and complete
copies of the unaudited pro forma condensed combined balance
sheet of the Restructured Companies for the three fiscal years
ended as of March 31, 1997, 1996 and 1995 and the related
unaudited pro forma condensed combined statements of earnings
(collectively, the "NEWCO UNAUDITED FINANCIAL STATEMENTS"). The
Newco Unaudited Financial Statements (i) were prepared from the
books of account and other financial records of the respective
Restructured Companies and their respective consolidated
subsidiaries, (ii) were prepared in accordance with U.S. GAAP
(except for the omission of the statement of cash flows and
footnotes) applied on a consistent basis throughout the periods
indicated and (iii) presented fairly, in all material respects,
the combined financial position of the Restructured Companies as
at the respective dates thereof and the results of their
operations for the respective periods indicated therein except as
otherwise noted therein (subject to normal and recurring year-end
adjustments which were not and are not expected, individually or
in the aggregate, to have a Flo-Sun Material Adverse Effect and
the omission of footnotes and a statement of cash flows).
(d) The books of account and other financial records
of each of the Restructured Companies from which the Flo-Sun
Financial Statements and the Newco Unaudited Financial Statements
were prepared: (i) reflect all items of income and expense and
all assets and liabilities required to be reflected therein in
accordance with U.S. GAAP applied on a basis consistent with the
past practices of the respective Restructured Companies, (ii) are
in all material respects complete and correct, and do not contain
or reflect any material inaccuracies or discrepancies and
(iii) have been maintained in accordance with good business and
accounting practices.
(e) Except for liabilities and obligations reflected
on the March 31, 1997 consolidated balance sheets of the
Restructured Companies (including the notes thereto) and other
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since March 31, 1997, the
Flo-Sun Subsidiaries do not have any liabilities or obligations
of any nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, are or are
reasonably likely to be material to the Flo-Sun Subsidiaries
taken as a whole.
(f) The Information Memorandum, dated July 3, 1997 and
supplemented on July 10, 1997, with respect to the Transactions
(as so supplemented, the "INFORMATION MEMORANDUM"; the
Information Memorandum, as it may be further supplemented or
amended from time to time, being referred to herein as the
"DISCLOSURE MATERIALS") did not, as of the date thereof, and the
Disclosure Materials at the time delivered to any Memorandum
Recipient (as such term is defined in the Disclosure Materials),
will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the
statements made therein not misleading; provided, however, that
no representation is made hereby with respect to any estimates,
projections, forecasts, plans or budgets for the Company
contained in the Disclosure Materials or that may have been made
available to or discussed with any Memorandum Recipient.
SECTION 4.08. Absence of Certain Changes or Events.
Since March 31, 1997, except as contemplated by this Agreement or
the Restructuring Agreement, the Flo-Sun Subsidiaries have
conducted their businesses only in the ordinary course and in a
manner consistent with past practice and, since such date, there
has not been (a) any Flo-Sun Material Adverse Effect, (b) any
change by the Flo-Sun Subsidiaries in their respective accounting
methods, principles or practices, except as may be required by
GAAP, (c) any damage, destruction or loss (whether or not covered
by insurance) with respect to properties or assets of any Flo-Sun
Subsidiary that, individually or in the aggregate, is material to
the Flo-Sun Subsidiaries taken as a whole, (d) any declaration,
setting aside or payment of any dividend or distribution in
respect of shares of common stock of any Flo-Sun Subsidiary other
than dividends or distributions to another Flo-Sun Subsidiary,
(e) any revaluation by any Flo-Sun Subsidiary of any asset
(including, without limitation, any writing down of the value of
inventory or writing off of notes or accounts receivable), other
than in the ordinary course of business consistent with past
practice, (f) any entry by any Flo-Sun Subsidiary into any
commitment or transaction material to the Flo-Sun Subsidiaries
taken as a whole, except in the ordinary course of business
consistent with past practice, (g) any increase in or
establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options,
stock appreciation rights, performance awards, or restricted
stock awards), stock purchase or other employee benefit plan, or
any other increase in the compensation payable or to become
payable to any officers or key employees of the Flo-Sun
Subsidiaries, except in the ordinary course of business
consistent with past practice, (h) any acquisition or disposition
by the Flo-Sun Subsidiaries of any material asset, except in the
ordinary course of business consistent with past practice, (i)
any incurrence, assumption or guarantee of any indebtedness or
obligation relating to any lending or borrowing except current
liabilities and commitments incurred in the ordinary course of
business consistent with past practice, or (j) any amendment,
modification or termination of any existing, or entering into any
new, material contract, or any material plan, lease, license,
permit or franchise, except in the ordinary course of business
consistent with past practice.
SECTION 4.09. Absence of Litigation. (a) There is no
litigation, suit, claim, action, proceeding or investigation
pending or, to the Knowledge of FSI, threatened against or
affecting any Flo-Sun Subsidiary, or any property or asset of any
Flo-Sun Subsidiary, before any court, arbitrator or Governmental
Entity, which (i) individually or in the aggregate, has had or
would, if determined adversely to a Flo-Sun Subsidiary, be
reasonably likely to have a Flo-Sun Material Adverse Effect or
(ii) seeks to delay or prevent the consummation of the
Transactions.
(b) No Flo-Sun Subsidiary nor any property or asset of
any Flo-Sun Subsidiary is subject to any continuing order of,
consent decree, settlement agreement or other similar written
agreement with, or, to the Knowledge of FSI, continuing
investigation by, any Governmental Entity, or any order, writ,
judgment, injunction, decree, determination or award of any
Governmental Entity or arbitrator having or reasonably like to
have, individually or in the aggregate, a Flo-Sun Material
Adverse Effect.
SECTION 4.10. Employee Benefit Plans; Labor Matters.
(a) Section 4.10(a) of the Flo-Sun Disclosure Schedule contains
a true and complete list of (i) all "employee benefit plans"
(within the meaning of Section 3(3) of ERISA) and all bonus,
stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination,
severance or other contracts or agreements to which any Flo-Sun
Subsidiary is a party, by which any Flo-Sun Subsidiary is bound,
with respect to which any Flo-Sun Subsidiary has any obligation
or which are maintained, contributed to or sponsored by any Flo-
Sun Subsidiary for the benefit of any current or former employee,
officer or director of any Flo-Sun Subsidiary and (ii) each
employee benefit plan for which any Flo-Sun Subsidiary could
incur liability under Section 4069 of ERISA, in the event such
plan were terminated, or under Section 4212(c) of ERISA, or in
respect of which any Flo-Sun Subsidiary remains secondarily
liable under Section 4204 of ERISA (collectively, the "FLO-SUN
PLANS"). Each Flo-Sun Plan is in writing and FSI has previously
made available to the Company a true and complete copy of each
Flo-Sun Plan and a true and complete copy of (1) each trust or
other funding arrangement, (2) each summary plan description and
summary of material modifications, (3) the most recently filed
IRS Form 5500, (4) the most recently received IRS determination
letter for each such Flo-Sun Plan, and (5) the most recently
prepared actuarial report and financial statement in connection
with each such Flo-Sun Plan. No Flo-Sun Subsidiary has any
express or implied commitment (I) to create, to incur liability
with respect to, or to cause to exist any other employee benefit
plan, program or arrangement, (II) to enter into any contract or
agreement to provide compensation or benefits to any individual
or (III) to modify, change or terminate any Flo-Sun Plan (other
than with respect to a modification, change or termination
required by ERISA or the Code).
(b) Each of the Flo-Sun Plans that is a Multiemployer
Plan or a Multiple Employer Plan is designated as such on Section
4.10(a) of the Flo-Sun Disclosure Schedule and, with respect to
each Flo-Sun Plan so designated, except as would not have a Flo-
Sun Material Adverse Effect: (i) neither any Flo-Sun Subsidiary
nor any trade or business, whether or not incorporated (an "ERISA
Affiliate") that together with any Flo-Sun Subsidiary would be
deemed a "single employer" within the meaning of Section 4001(b)
of ERISA has made or suffered a "complete withdrawal" or a
"partial withdrawal," as such terms are respectively defined in
sections 4203 and 4205 of ERISA (or any liability resulting
therefrom has been satisfied in full), (ii) no event has occurred
that presents a risk of a partial withdrawal, (iii) neither a
Flo-Sun Subsidiary nor any ERISA Affiliate has any contingent
liability under Section 4204 of ERISA, and (iv) no circumstances
exist that present a risk that any such plan will go into
reorganization. With respect to Multiemployer Plans and Multiple
Employer Plans, except as would not have a Flo-Sun Material
Adverse Effect, no Flo-Sun Subsidiary would incur withdrawal
liability in the event of a complete withdrawal within the
meaning of Title IV of ERISA from any such Plan. None of the
Flo-Sun Plans (1) provides for the payment of separation,
severance, termination or similar-type benefits to any Person,
(2) obligates any Flo-Sun Subsidiary to pay separation,
severance, termination or other benefits as a result of the
Transactions or (3) obligates any Flo-Sun Subsidiary to make any
payment or provide any benefit that would be subject to a tax
under Section 4999 of the Code. None of the Flo-Sun Plans
provides for or promises retiree medical, disability or life
insurance benefits to any current or former employee, officer or
director of any Flo-Sun Subsidiary.
(c) Each Flo-Sun Plan which is intended to be
qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS that such Flo-Sun
Plan is so qualified, and each trust established in connection
with any Flo-Sun Plan which is intended to be exempt from federal
income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt.
To FSI's Knowledge, no fact or event has occurred since the date
of any such determination letter from the IRS that would
adversely affect the qualified status of any such Flo-Sun Plan or
the exempt status of any such trust. Each trust maintained or
contributed to by any Flo-Sun Subsidiary which is intended to be
qualified as a voluntary employees' beneficiary association
exempt from federal income taxation under Sections 501(a) and
501(c)(9) of the Code has received a favorable determination
letter from the IRS that it is so qualified and so exempt, and,
to FSI's Knowledge, no fact or event has occurred since the date
of such determination by the IRS that would adversely affect such
qualified or exempt status.
(d) To FSI's Knowledge, there has been no non-exempt
prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) with respect to any Flo-Sun
Plan. No Flo-Sun Subsidiary is currently liable or has
previously incurred any liability for any tax or penalty (other
than any tax or penalty that would not have a Flo-Sun Material
Adverse Effect) arising under Section 4971, 4972, 4979, 4980 or
4980B of the Code or Section 502(c) of ERISA, and, to FSI's
Knowledge, no fact or event exists which would give rise to any
such liability. No Flo-Sun Subsidiary has incurred any liability
(other than any liability that would not have a Flo-Sun Material
Adverse Effect) under, arising out of or by operation of Title IV
of ERISA that has not been satisfied in full (other than
liability for premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination
or reorganization of any employee pension benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any Multiemployer
Plan or Multiple Employer Plan, and, to FSI's Knowledge, no fact
or event exists which would give rise to any such liability. No
complete or partial termination has occurred within the five
years preceding the date hereof with respect to any Flo-Sun Plan.
No reportable event (within the meaning of Section 4043 of ERISA)
for which the 30-day notice requirement to the Pension Benefit
Guaranty Corporation has not been waived has occurred or is
expected to occur with respect to any Flo-Sun Plan subject to
Title IV of ERISA. No asset of any Flo-Sun Subsidiary is the
subject of any lien arising under Section 302(f) of ERISA or
Section 412(n) of the Code; no Flo-Sun Subsidiary has been
required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and no fact or event exists which
would give rise to any such lien or requirement to post any such
security.
(e) Each Flo-Sun Plan is now and has been operated in
all respects in accordance with the requirements of all
applicable Laws, including, without limitation, ERISA and the
Code, except where any failure to so operate would not have a
Flo-Sun Material Adverse Effect. No Flo-Sun Plan has incurred an
"accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not
waived. Each Restructured Company's March 31, 1997 balance sheet
reflects an accrual of all amounts of employer contributions and
premiums accrued but unpaid with respect to the Flo-Sun Plans.
With respect to each Flo-Sun Plan subject to Title IV of ERISA,
the accumulated benefit obligations of such Flo-Sun Plan is set
forth in the audited consolidated balance sheets of each of the
Restructured Companies for the fiscal year ended March 31, 1997.
With respect to each Flo-Sun Plan subject to Title IV of ERISA,
the present value of accrued benefits under such plan, based upon
the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such plan's actuary with
respect to such plan, did not exceed, as of its latest valuation
date, the then current value of the assets of such plan allocable
to such accrued benefits.
(f) The Flo-Sun Subsidiaries have not incurred any
liability under, and have complied in all respects with, WARN and
do not reasonably expect to incur any such liability as a result
of actions taken or not taken prior to the Effective Time.
Section 4.10(f) of the Flo-Sun Disclosure Schedule lists all
notices given by each Flo-Sun Subsidiary in connection with WARN.
(g) (i) Section 4.10(g) of the Flo-Sun Disclosure
Schedule lists each collective bargaining agreement and other
labor union contract applicable to Persons employed by any Flo-
Sun Subsidiary and, to the Knowledge of FSI, there are no
activities or proceedings of any labor union to organize any such
employees; (ii) except as would not have a Flo-Sun Material
Adverse Effect, no Flo-Sun Subsidiary has breached or otherwise
failed to comply with any provision of any such agreement or
contract and there are no grievances outstanding against any Flo-
Sun Subsidiary under any such agreement or contract; (iii) there
are no unfair labor practice complaints pending against any Flo-
Sun Subsidiary before the National Labor Relations Board or any
current union representation questions involving employees of any
Flo-Sun Subsidiary; and (iv) there is no strike, slowdown, work
stoppage or lockout, or, to the Knowledge of FSI, threat thereof,
by or with respect to any employees of any Flo-Sun Subsidiary.
The consent of the labor unions which are parties to the
collective bargaining agreements listed in Section 4.10(g) of the
Flo-Sun Disclosure Schedule is not required to consummate the
Transactions.
SECTION 4.11. Intellectual Property. The Flo-Sun
Subsidiaries own, or possess adequate licenses or other valid
rights to use, all Intellectual Property Rights used or held for
use in connection with the business of the Flo-Sun Subsidiaries
as currently conducted. The conduct of the business of the Flo-
Sun Subsidiaries as currently conducted does not and will not
conflict in any way with any Intellectual Property Rights of any
third party that, individually or in the aggregate, would have a
Flo-Sun Material Adverse Effect. To the Knowledge of FSI, there
are no infringements of any Intellectual Property Rights owned by
or licensed by or to any Flo-Sun Subsidiary that, individually or
in the aggregate, would have a Flo-Sun Material Adverse Effect.
No Flo-Sun Subsidiary has licensed or otherwise permitted the use
by any third party of any Intellectual Property Rights on terms
or in a manner which, individually or in the aggregate, would
have a Flo-Sun Material Adverse Effect. No Flo-Sun Subsidiary is
in breach of any agreements pursuant to which any Flo-Sun
Subsidiary has a license to use Intellectual Property Rights
which breach has had or is reasonably likely to have a Flo-Sun
Material Adverse Effect, and the Transactions will not constitute
such a breach or otherwise reduce or impair, in any material
respect, the rights of any Flo-Sun Subsidiary under such license
agreements. No claims are pending or, to the Knowledge of FSI,
threatened by any Person with respect to the ownership, validity
or enforceability of any Intellectual Property Rights owned by or
licensed to any Flo-Sun Subsidiary or challenging or questioning
the right of any Flo-Sun Subsidiary to use any Intellectual
Property Rights, except claims that would not, if determined
adversely to any Flo-Sun Subsidiary, individually or in the
aggregate, have a Flo-Sun Material Adverse Effect.
SECTION 4.12. Taxes. (a) Each of the Flo-Sun
Subsidiaries has (i) filed all federal, state, local and foreign
tax returns required to be filed by them prior to the date of
this Agreement (taking into account extensions), (ii) paid or
accrued all taxes shown to be due on such returns and have paid
all applicable ad valorem and value added taxes as are due, and
(iii) paid or accrued all taxes for which a notice of assessment
or collection has been received (other than amounts being
contested in good faith by appropriate proceedings), except in
the case of clause (i), (ii) or (iii) for any such filings,
payments or accruals which would not, individually or in the
aggregate, have a Flo-Sun Material Adverse Effect. Flo-Sun
Subsidiaries have open years for federal income and Florida
consolidated income tax returns only as set forth in Section 4.12
of the Flo-Sun Disclosure Schedule. Each Flo-Sun Subsidiary has
withheld or collected and paid over to the appropriate
Governmental Entities (or are properly holding for such payment)
all taxes required by Law to be withheld or collected, except for
amounts which would not, individually or in the aggregate, have a
Flo-Sun Material Adverse Effect. No Flo-Sun Subsidiary has made
an election under Section 341(f) of the Code.
(b) As of the date of the Closing Time as defined in
the Restructuring Agreement (the "CLOSING TIME DATE"), FSL will
have no outstanding liabilities or obligations arising under any
tax sharing agreement between FSL and FSI or between FSL and any
other member of any consolidated group of which FSL has been a
member prior to the Closing Time Date, except for liabilities and
obligations arising under a tax sharing agreement substantially
in the form set forth in Section 4.12(b) of the Flo-Sun
Disclosure Schedule and which shall survive the Closing.
SECTION 4.13. Environmental Matters. Except as would
not, individually or in the aggregate, have a Flo-Sun Material
Adverse Effect: (a) no Flo-Sun Subsidiary has violated or is in
violation of any Environmental Law; (b) none of the properties
owned or leased by any Flo-Sun Subsidiary (including, without
limitation, soils and surface and ground waters) are contaminated
with any Hazardous Substance; (c) no Flo-Sun Subsidiary is
actually or potentially or, to the Knowledge of FSI, allegedly
liable for any off-site contamination; (d) no Flo-Sun Subsidiary
is actually or potentially or, to the Knowledge of FSI, allegedly
liable under any Environmental Law (including, without
limitation, pending or threatened liens); (e) each Flo-Sun
Subsidiary has all permits, licenses and other authorizations
required under any Environmental Law ("FLO-SUN ENVIRONMENTAL
PERMITS"); and (f) each Flo-Sun Subsidiary has always been and is
in compliance with its Flo-Sun Environmental Permits.
SECTION 4.14. Products. Except as would not have a
Flo-Sun Material Adverse Effect, (a) there have been no written
notices, citations or decisions by any Governmental Entity that
any product produced, manufactured, marketed or distributed by
any Flo-Sun Subsidiary (the "FLO-SUN PRODUCTS") is defective or
fails to meet any applicable standards promulgated by such
Governmental Entity, (b) the Flo-Sun Subsidiaries have complied
with all Laws applicable to design, manufacture, labelling,
testing and inspection of Flo-Sun Products, and (c) there have
been no recalls ordered or, to the Knowledge of FSI, threatened
by any Governmental Entity with respect to any of the Flo-Sun
Products. No Flo-Sun Subsidiary has entered into any agreement
or arrangement that limits or otherwise restricts such Flo-Sun
Subsidiary or any successor thereto, or that would limit Newco or
any subsidiary thereof or any successor thereto, from engaging or
competing in any line of business or in any geographic area.
SECTION 4.15. Properties and Assets; Real Property and
Leases. (a) The Flo-Sun Subsidiaries have sufficient title to
all their respective properties and assets to conduct their
respective businesses as currently conducted or as contemplated
to be conducted, with only such exceptions as, individually or in
the aggregate, would not have a Flo-Sun Material Adverse Effect.
(b) Set forth on Schedule 4.15(b) is a true, correct
and complete list (including a general description of the uses
for such real property) of all real property owned or leased by
the Flo-Sun Subsidiaries.
(c) Except as would not have a Flo-Sun Material
Adverse Effect, each parcel of real property owned or leased by
any Flo-Sun Subsidiary (i) is owned or leased free and clear of
all Liens, other than Permitted Liens, and (ii) is neither
subject to any governmental decree or order to be sold nor is
being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, nor,
to the Knowledge of FSI, has any such condemnation, expropriation
or taking been proposed.
(d) All leases of real property leased for the use or
benefit of any Flo-Sun Subsidiary to which any Flo-Sun Subsidiary
is a party, or by which any Flo-Sun Subsidiary is bound, and all
amendments and modifications thereto, are in full force and
effect and have not been modified or amended, and there exists no
default under any such lease by any Flo-Sun Subsidiary or any
other party thereto, nor any event which with notice or lapse of
time or both would constitute a default thereunder by any Flo-Sun
Subsidiary or any other party thereto, except as, individually or
in the aggregate, would not have a Flo-Sun Material Adverse
Effect.
SECTION 4.16. Insurance. The Flo-Sun Subsidiaries
have obtained and maintained in full force and effect insurance
with responsible and reputable insurance companies or
associations in such amounts, on such terms, with such
deductibles, and covering such risks, including fire and other
risks insured against by extended coverage, as is customarily
carried by reasonably prudent Persons conducting businesses or
owning assets similar to those of the Flo-Sun Subsidiaries, and
each has maintained in full force and effect public liability
insurance, insurance against claims for personal injury or death
or property damage occurring in connection with the activities of
the Flo-Sun Subsidiaries or any properties owned, occupied or
controlled by any Flo-Sun Subsidiary, in such amount as is
customarily carried by reasonably prudent Persons conducting
businesses or owning assets similar to those of the Flo-Sun
Subsidiaries.
SECTION 4.17. Brokers. Other than Xxxxxxx, Xxxxx &
Co. ("XXXXXXX, SACHS"), no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by
or on behalf of FSI or Newco. FSI and Newco have heretofore made
available to the Company a complete and correct copy of all
agreements between FSI or Newco and Xxxxxxx, Xxxxx pursuant to
which such firm would be entitled to any payment relating to the
Transactions.
SECTION 4.18. Opinions of Financial Advisors. (a) On
July 3, 1997, FSI received the written opinion of Willamette
Management Associates, dated as of June 5, 1997, that the ODH
Exchange Ratio, the Okeelanta Exchange Ratio and the FSL Exchange
Ratio (as such terms are defined in the Restructuring Agreement)
represent fair equity exchange rates, and FSI has delivered a
copy of such opinion to the Company.
(b) On the date of this Agreement, FSI has received
the opinion of Goldman, Sachs, dated as of July 14, 1997, that
the Exchange Ratio is fair to Newco.
SECTION 4.19. Contracts. Schedule 4.19 lists and
briefly describes (including the parties to and the date and
subject matter of) each and every material contract, agreement,
lease, license, commitment or arrangement (or, in the case of
oral contracts, summaries thereof) to which Newco or any Flo-Sun
Subsidiary is a party or by or to which Newco, any of the Flo-Sun
Subsidiaries or any of their respective assets or properties is
bound or subject, which would be required to be filed with the
SEC as exhibits to a registration statement on Form S-1 for Newco
after giving effect to the Restructuring.
SECTION 4.20. Restructuring Agreement. (a) The
execution and delivery of the Restructuring Agreement and the
consummation of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of
Newco and FSI. The Restructuring Agreement has been duly
executed and delivered by Newco and FSI, and, assuming the due
authorization, execution and delivery by the other parties to the
Restructuring Agreement, constitutes the legal, valid and binding
obligation of Newco and FSI, enforceable against each of Newco
and FSI in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the rights and remedies of creditors
generally or principles governing the availability of equitable
remedies.
(b) A sufficient number of Investors (as defined in
the Restructured Agreement) to satisfy the 80% Condition (as
defined in the Restructuring) have executed and delivered
signature pages to the Restructuring Agreement and waived all
rights to revoke such execution and delivery under Section 7.01
of the Restructuring Agreement. FSI is not aware of any reason
that all conditions to the obligations of the parties to the
Restructuring Agreement will not be satisfied at a closing to be
held on the day of the Effective Time.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company
Pending the Merger. The Company covenants and agrees that,
between the date of this Agreement and the Effective Time, except
as set forth in Section 5.01 of the Company Disclosure Schedule
or as specifically contemplated by any other provision of this
Agreement, unless FSI shall otherwise agree in writing:
(a) the Company and the Company Subsidiaries shall
carry on their respective businesses in the usual, regular
and ordinary course in all material respects, in
substantially the same manner as heretofore conducted, and
shall use all reasonable efforts to preserve intact their
present lines of business, maintain their rights and
franchises and preserve their relationships with employees,
customers, suppliers and others having business dealings
with them to the end that their ongoing businesses shall not
be impaired in any material respect at the Effective Time;
provided, however, that no action by the Company or any
Company Subsidiary specifically permitted by any other
provision of this Section 5.01 shall be deemed a breach of
this Section 5.01(a);
(b) neither the Company nor any Company Subsidiary
shall amend or otherwise change its Certificate of
Incorporation or By-Laws or equivalent organizational
documents;
(c) neither the Company nor any Company Subsidiary
shall issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of, (i) any shares of capital stock of the
Company or any Company Subsidiary of any class, or any
options, warrants, convertible securities or other rights of
any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any
phantom interest), of the Company or any Company Subsidiary
(except for (A) the issuance of a maximum of 280,000 shares
of Company Common Stock issuable pursuant to Company Options
outstanding on the date hereof in accordance with the terms
thereof and (B) the issuance, in the ordinary course of
business and consistent with past practice, of Company
Options to purchase a maximum of 200,000 shares of Company
Common Stock pursuant to Company Plans in effect on the date
of this Agreement and the shares of Company Common Stock
issuable pursuant to such Company Options, in accordance
with the terms of the Company Plans and (C) issuances by a
direct or indirect wholly owned subsidiary of the Company of
capital stock to such subsidiary's parent) or (ii) any
assets of the Company or any Company Subsidiary, except in
the ordinary course of business and in a manner consistent
with past practice;
(d) neither the Company nor any Company Subsidiary
shall declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, other than (i) any
regular quarterly dividends declared and paid in accordance
with past practice and not in excess of $0.0375 per share of
Company Common Stock and (ii) dividends by a direct or
indirect wholly owned subsidiary of the Company to such
subsidiary's parent;
(e) neither the Company nor any Company Subsidiary
shall reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any
of its capital stock, except for any such transaction by a
wholly owned subsidiary of the Company that remains a wholly
owned subsidiary of the Company after the consummation of
such transaction;
(f) neither the Company nor any Company Subsidiary
shall (i) acquire or dispose of (including, without
limitation, by merger, consolidation, or acquisition or
disposition of stock or assets) any interest in any
corporation, partnership, other business organization or any
division thereof or any assets, other than the acquisition
or disposition of assets in the ordinary course of business
consistent with past practice and any other acquisitions for
consideration which is not, in the aggregate, in excess of
$10,000,000 and any other dispositions for consideration
which is not, in the aggregate, in excess of $10,000,000,
(ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the
obligations of any Person, or make any loans or advances,
except for (A) indebtedness incurred in the ordinary course
of business and consistent with past practice, (B)
indebtedness of the Company to a direct or indirect wholly
owned Company Subsidiary or indebtedness of a direct or
indirect wholly owned Company Subsidiary to the Company or
another direct or indirect wholly owned Company Subsidiary
and (C) other indebtedness with a maturity of not more than
one year incurred in the ordinary course of business
consistent with past practice; (iii) enter into any contract
or agreement material to the business, results of operations
or financial condition of the Company and the Company
Subsidiaries taken as a whole other than in the ordinary
course of business, consistent with past practice; (iv) to
authorize any capital expenditure, other than capital
expenditures, for the Company and the Company Subsidiaries
as a whole, in an aggregate amount not exceeding the sum of
(A) the amount provided in the capital expenditure budget
for the fiscal year ending September 28, 1997 previously
provided to FSI and (B) $5,000,000; or (v) enter into or
amend any contract, agreement, commitment or arrangement
that, if fully performed, would not be permitted under this
subsection (f);
(g) neither the Company nor any Company Subsidiary
shall (i) increase the compensation payable or to become
payable to its officers or employees, except for increases
in accordance with past practices in salaries or wages of
employees of the Company or any Company Subsidiary who are
not officers of the Company, or (ii) except pursuant to
existing policies and agreements, grant any severance or
termination pay to any director, officer or other employee
of the Company or any Company Subsidiary, or (iii) enter
into any employment or severance agreement with any
director, officer or other employee of the Company or any
Company Subsidiary or (iv) establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director,
officer or employee;
(h) neither the Company nor any Company Subsidiary
shall take any action, other than reasonable and usual
actions in the ordinary course of business and consistent
with past practice, with respect to accounting policies or
procedures (including, without limitation, procedures with
respect to the payment of accounts payable and collection of
accounts receivable);
(i) neither the Company nor any Company Subsidiary
shall make any tax election or settle or compromise any
material federal, state, local or foreign income tax
liability;
(j) neither the Company nor any Company Subsidiary
shall take any action that would prevent or impede any party
to this Agreement or the Restructuring Agreement from
obtaining any consent or approval the receipt of which is a
condition to the consummation of the Merger or the
Restructuring;
(k) neither the Company nor any Company Subsidiary
shall enter into any agreement or arrangement that would
limit or otherwise restrict the Company or any Company
Subsidiary or any successor thereto or, after consummation
of the Transactions, Newco or any subsidiary thereof or any
successor thereto, from engaging or competing in any line of
business or in any geographic area;
(l) neither the Company nor any Company Subsidiary
shall pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge
or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or
reserved against in the March 31, 1997 consolidated balance
sheet of the Company (including the notes thereto) or
subsequently incurred in the ordinary course of business and
consistent with past practice;
(m) neither the Company nor any Company Subsidiary
shall take any action that would result in (i) any of the
representations or warranties of the Company set forth in
this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations or warranties that
are not so qualified becoming untrue in any material respect
or (iii) except as otherwise permitted by Section 6.05, any
of the conditions to the Merger set forth in Article VII not
being satisfied; and
(n) neither the Company nor any Company Subsidiary
shall authorize or enter into any agreement to do anything
prohibited by Sections 5.01(b) through (m).
SECTION 5.02. Conduct of Business by the Flo-Sun
Subsidiaries Pending the Merger. FSI covenants and agrees that,
between the date of this Agreement and the Effective Time, except
as set forth in Section 5.02 of the Flo-Sun Disclosure Schedule
or as specifically contemplated by any other provision of this
Agreement or by the Restructuring Agreement, unless the Company
shall otherwise agree in writing:
(a) FSI shall cause the Flo-Sun Subsidiaries to carry
on their respective businesses in the usual, regular and
ordinary course in all material respects, in substantially
the same manner as heretofore conducted, and to use all
reasonable efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve
their relationships with employees, customers, suppliers and
others having business dealings with them to the end that
their ongoing businesses shall not be impaired in any
material respect at the Effective Time; provided, however,
that no action by any Flo-Sun Subsidiary specifically
permitted by any other provision of this Section 5.02 shall
be deemed a breach of this Section 5.02(a);
(b) FSI shall cause each Flo-Sun Subsidiary not to
amend or otherwise change its Certificate of Incorporation
or By-Laws or equivalent organizational documents;
(c) FSI shall cause each Flo-Sun Subsidiary not to
issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of, (i) any shares of its capital stock of any
class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of such Flo-Sun
Subsidiary (except for (A) the issuance of a maximum of
24,000 shares of Class B Common Stock, par value $1.00 per
share, of Okeelanta ("OKEELANTA CLASS B COMMON STOCK")
issuable upon conversion of its outstanding 10% Convertible
Subordinated Debentures in accordance with the terms
thereof, (B) the issuance of a maximum of 29,000 shares
Class A Common Stock, par value $1.00 per share, of
Okeelanta ("OKEELANTA CLASS A COMMON STOCK") issuable in
exchange for shares of Class B Common Stock of Okeelanta in
accordance with the terms thereof, and (C) issuances by a
Flo-Sun Subsidiary that is wholly owned by another Flo-Sun
Subsidiary to such Flo-Sun Subsidiary's parent) or (ii) any
of its assets, except in the ordinary course of business and
in a manner consistent with past practice;
(d) FSI shall cause each Flo-Sun Subsidiary not to
declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except for any
such dividend by a Flo-Sun Subsidiary that is wholly owned
by another Flo-Sun Subsidiary to such Flo-Sun Subsidiary;
(e) FSI shall cause each Flo-Sun Subsidiary not to
reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its
capital stock, except for any such transaction by a Flo-Sun
Subsidiary that is wholly owned by another Flo-Sun
Subsidiary and that remains wholly owned by another Flo-Sun
Subsidiary after the consummation of such transaction;
(f) FSI shall cause each Flo-Sun Subsidiary not (i) to
acquire or dispose of (including, without limitation, by
merger, consolidation, or acquisition or disposition of
stock or assets) any interest in any corporation,
partnership, other business organization or any division
thereof or any assets, other than the acquisition or
disposition of assets in the ordinary course of business
consistent with past practice and any other acquisitions for
consideration which is not, in the aggregate, in excess of
$10,000,000 and any other dispositions for consideration
which is not, in the aggregate, in excess of $10,000,000;
(ii) to incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the
obligations of any Person, or make any loans or advances,
except for (A) indebtedness incurred in the ordinary course
of business and consistent with past practice, (B)
indebtedness of a Flo-Sun Subsidiary that would be a direct
or indirect wholly owned subsidiary of Newco after giving
effect to the Restructuring to another such Flo-Sun
Subsidiary and (C) other indebtedness with a maturity of not
more than one year incurred in the ordinary course of
business consistent with past practice; (iii) to enter into
any contract or agreement material to the business, results
of operations or financial condition of the Flo-Sun
Subsidiaries taken as a whole other than in the ordinary
course of business, consistent with past practice; (iv) to
authorize any capital expenditure, other than capital
expenditures, for the Flo-Sun Subsidiaries as a whole, in an
aggregate amount not exceeding the sum of (A) the amount
provided in the capital expenditure budget for the fiscal
year ending March 31, 1998 previously provided to the
Company and (B) $5,000,000; or (v) to enter into or amend
any contract, agreement, commitment or arrangement that, if
fully performed, would not be permitted under this
subsection (f);
(g) FSI shall cause each Flo-Sun Subsidiary not to (i)
increase the compensation payable or to become payable to
its officers or employees, except for increases in
accordance with past practices in salaries or wages of
employees of such Flo-Sun Subsidiary who are not officers of
FSI, or (ii) except pursuant to existing policies and
agreements, grant any severance or termination pay to any
director, officer or other employee of any Flo-Sun
Subsidiary, or (iii) enter into any employment or severance
agreement with any director, officer or other employee of
any Flo-Sun Subsidiary or (iv) establish, adopt, enter into
or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director,
officer or employee;
(h) FSI shall cause each Flo-Sun Subsidiary not to
take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past
practice, with respect to accounting policies or procedures
(including, without limitation, procedures with respect to
the payment of accounts payable and collection of accounts
receivable);
(i) FSI shall cause each Flo-Sun Subsidiary not to
make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(j) FSI shall not and shall cause each Flo-Sun
Subsidiary not to take any action that would prevent or
impede any party to this Agreement or the Restructuring
Agreement from obtaining any consent or approval the receipt
of which is a condition to the consummation of the Merger or
the Restructuring;
(k) FSI shall cause each Flo-Sun Subsidiary not to
enter into any agreement or arrangement that would limit or
otherwise restrict Newco or any Flo-Sun Subsidiary or any
successor thereto or, after the consummation of the
Transactions, the Company or any Company Subsidiary or any
successor thereto, from engaging or competing in any line of
business or in any geographic area;
(l) FSI shall cause each Flo-Sun Subsidiary not to
pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or
reserved against in the consolidated balance sheets of the
respective Flo-Sun Subsidiaries as of March 31, 1997 or
subsequently incurred in the ordinary course of business and
consistent with past practice;
(m) FSI shall cause each Flo-Sun Subsidiary not to
take any action that would result in (i) any of the
representations or warranties of FSI and Newco set forth in
this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations or warranties that
are not so qualified becoming untrue in any material respect
or (iii) any of the conditions to the Merger set forth in
Article VII not being satisfied; and
(n) FSI shall not and shall cause each Flo-Sun
Subsidiary not to authorize or enter into an agreement to do
anything prohibited by Sections 5.02(b) through (m).
SECTION 5.03. Government Filings. (a) The Company
shall file and shall cause the Company Subsidiaries to file all
reports required to be filed by any of them with any Governmental
Entities between the date of this Agreement and the Effective
Time and shall (to the extent permitted by Law or regulation or
any applicable confidentiality agreement) deliver to FSI copies
of all such reports promptly after the same are filed.
(b) FSI shall cause each Flo-Sun Subsidiary to file
all reports required to be filed by any of them with any
Governmental Entities between the date of this Agreement and the
Effective Time and shall (to the extent permitted by Law or
regulation or any applicable confidentiality agreement) deliver
to the Company copies of all such reports promptly after the same
are filed.
(c) Subject to applicable Laws, FSI shall have the
right to review in advance, and to the extent practicable to
consult with the Company, with respect to all the information
relating to FSI or any Flo-Sun Subsidiary or the Transactions
which appears in any Company or Company Subsidiary filings made
with, or written materials submitted to, any Governmental Entity.
(d) Subject to applicable Laws, the Company shall have
the right to review in advance, and to the extent practicable to
consult with FSI, with respect to all the information relating to
the Company or any Company Subsidiary or the Transactions which
appears in any FSI or Flo-Sun Subsidiary filings made with, or
written materials submitted to, any Governmental Entity.
(e) In exercising the rights provided by Sections
5.03(c) and 5.03(d), each of the parties hereto agrees to act
reasonably and as promptly as practicable.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Stockholders' Meeting. Unless
otherwise required pursuant to the applicable fiduciary duties of
the Company Board to the stockholders of the Company (as
determined in good faith by the Company Board based upon the
advice of outside counsel), (a) the Company shall call and hold a
meeting of its shareholders (the "COMPANY STOCKHOLDERS' MEETING")
as promptly as practicable to consider and vote upon the approval
of this Agreement and the Company shall use its reasonable
efforts to hold the Company Stockholders' Meeting as soon as
practicable after the date on which the Registration Statement
becomes effective, (b) the Company Board shall recommend such
approval, and (c) the Company shall take all lawful action to
solicit such approval, including, without limitation, timely
mailing the Proxy Statement.
SECTION 6.02. Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, (i) FSI, Newco and the Company shall prepare and Newco
shall file with the SEC a registration statement on Form S-4
(together with all amendments thereto, the "REGISTRATION
STATEMENT") in connection with the registration under the
Securities Act of the shares of Class A Common Stock to be issued
to the shareholders of the Company in the Merger, a portion of
which Registration Statement shall also serve as the proxy
statement (together with any amendments thereof or supplements
thereto, the "PROXY STATEMENT") relating to the Company
Stockholders' Meeting. The Company shall furnish all information
concerning the Company as Newco may reasonably request in
connection with such actions and the preparation of the
Registration Statement and the Proxy Statement. Newco shall use
all reasonable efforts, and the Company will cooperate with
Newco, to cause the Registration Statement to become effective as
promptly as practicable and to keep the Registration Statement
effective as long as is necessary to consummate the Merger.
Prior to the effective date of the Registration Statement, Newco
shall take all action required under any applicable federal or
state securities Laws in connection with the issuance of shares
of Newco Common Stock pursuant to the Merger. Newco shall, as
promptly as practicable, provide copies of any written comments
received from the SEC with respect to the Registration Statement
to the Company and advise the Company of any verbal comments with
respect to the Registration Statement received from the SEC.
Newco and the Company shall each give the other and its counsel
the opportunity to review the Registration Statement and each
document to be incorporated by reference therein and all
responses to requests for additional information by and replies
to comments of the SEC before their being filed with, or sent to,
the SEC. Newco and the Company shall each use its best efforts,
after consultation with the other party, to respond promptly to
all such comments of and requests by the SEC. Unless otherwise
required by the applicable fiduciary duties of the Company Board
to the stockholders of the Company (as determined in good faith
by the Company Board based upon the advice of outside counsel),
as promptly as practicable after the Registration Statement shall
have become effective, the Company shall mail the Proxy Statement
to its shareholders.
(b) Unless otherwise required pursuant to the
applicable fiduciary duties of the Company Board to the
stockholders of the Company (as determined in good faith by the
Company Board based upon the advice of outside counsel), no
amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Newco or the Company
without the approval of the other party, which approval shall not
be unreasonably withheld. Newco will advise the Company,
promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of
the suspension of the qualification of Class A Common Stock
issuable in connection with the Merger for offering or sale in
any jurisdiction, or of any request by the SEC for amendment of
the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for
additional information.
(c) Notwithstanding anything to the contrary in this
Agreement, (i) Newco shall have no obligation to mail the Proxy
Statement to the Company's stockholders unless and until Newco
shall have received the "comfort letter" referred to in Section
6.10(a) and (ii) the Company shall have no obligation to mail the
Proxy Statement to its stockholders unless and until the Company
shall have received the "comfort letter" referred to in Section
6.10(b).
(d) The information supplied by FSI and Newco for
inclusion in the Registration Statement and the Proxy Statement
shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the
stockholders of the Company and (iii) the time of the Company
Stockholders' Meeting, 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 not
misleading. If at any time prior to the time of the Company
Stockholders' Meeting, any event or circumstance relating to FSI,
Newco or any Flo-Sun Subsidiary, or their respective officers or
directors, should be discovered by FSI or Newco which should be
set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, FSI or Newco shall promptly inform
the Company.
(e) The information supplied by the Company for
inclusion in the Registration Statement and the Proxy Statement
shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the
stockholders of the Company and (iii) the time of the Company
Stockholders' Meeting, 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 not
misleading. If at any time prior to the time of the Company
Stockholders' Meeting any event or circumstance relating to the
Company or any Company Subsidiary, or their respective officers
or directors, should be discovered by the Company which should be
set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, the Company shall promptly inform
FSI and Newco.
(f) All documents that Newco is responsible for filing
with the SEC in connection with the transactions contemplated
herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
(g) All documents that the Company is responsible for
filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all
material aspects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the
Exchange Act and the rules and regulations thereunder.
SECTION 6.03. Access to Information; Confidentiality.
(a) To the fullest extent possible, consistent with applicable
Law, the Company shall afford to FSI and its officers, employees,
accountants, counsel, financial advisors and other
representatives ("REPRESENTATIVES") reasonable access during
normal business hours during the period prior to the Effective
Time to all the officers, employees, agents, properties, books,
contracts, commitments and records of the Company and the Company
Subsidiaries, and during such period, the Company shall furnish
promptly to FSI and its Representatives all information
concerning the businesses, properties and personnel of the
Company and the Company Subsidiaries as FSI may reasonably
request.
(b) Until the Effective Time, FSI will be bound by,
and will hold any information received pursuant to this Agreement
in confidence in accordance with the terms of, the
confidentiality agreement with the Company dated February 25,
1997 (the "FLO-SUN CONFIDENTIALITY AGREEMENT").
(c) To the fullest extent possible, consistent with
applicable Law, FSI shall cause the Flo-Sun Subsidiaries to
afford to the Company and its Representatives, reasonable access
during normal business hours during the period prior to the
Effective Time to all the officers, employees, agents,
properties, books, contracts, commitments and records of the Flo-
Sun Subsidiaries, and during such period, FSI shall cause the
Flo-Sun Subsidiaries to furnish promptly to the Company and its
Representatives all information concerning the businesses,
properties and personnel of the Flo-Sun Subsidiaries as the
Company may reasonably request.
(d) Until the Effective Time, the Company will be
bound by, and will hold any information received pursuant to this
Agreement in confidence in accordance with the terms of, the
confidentiality agreement with FSI dated May 12, 1997 (the
"COMPANY CONFIDENTIALITY AGREEMENT" and, together with the Flo-
Sun Confidentiality Agreement, the "CONFIDENTIALITY AGREEMENTS").
(e) No investigation by either the Company or FSI
shall affect the representations and warranties of the other.
SECTION 6.04. Approvals and Consents; Cooperation.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties (i) shall make promptly its
filings, and thereafter make any other required submissions,
under the HSR Act with respect to the Transactions and (ii) shall
use all reasonable efforts to obtain (A) all necessary actions or
nonactions, waivers, consents and approvals from Governmental
Entities and (B) all necessary consents, approvals or waivers
from third parties and (iii) shall execute and deliver any
additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this
Agreement.
(b) The Company and FSI each agrees that it will
consult with the other party with respect to the obtaining of all
permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement and
the Restructuring Agreement and each party will keep the other
party apprised of the status of matters relating to completion of
the transactions contemplated by this Agreement and the
Restructuring Agreement.
SECTION 6.05. No Solicitation of Transactions. (a)
The Company agrees that neither it nor any Company Subsidiary
shall, and that it shall cause its and each Company Subsidiary's
Representatives not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate (including by way of
furnishing information) any inquiries or the making of any
proposal, or offer with respect to a merger, reorganization,
share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving, or any purchase or sale of all or any significant
portion of the assets or 20% or more of the equity securities of,
the Company or any Company Subsidiary that, in any such case,
could reasonably be expected to interfere with the completion of
the Merger or the other transactions contemplated by this
Agreement (any such proposal or offer being hereinafter referred
to as an "ACQUISITION PROPOSAL"). The Company further agrees
that neither it nor any Company Subsidiaries shall, and that it
shall cause its and each Company Subsidiary's Representatives not
to, directly or indirectly, have any discussion with or provide
any confidential information or data to any Person relating to an
Acquisition Proposal or engage in any negotiations concerning an
Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal or accept an
Acquisition Proposal; provided, however, that nothing contained
in this Agreement shall prevent the Company or the Company Board
from (i) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal; (ii) engaging in any
discussions or negotiations with, or providing any information
to, any Person in response to an unsolicited bona fide written
Acquisition Proposal by any such Person; or (iii) recommending
such an unsolicited bona fide written Acquisition Proposal to the
holders of Company Common Stock if and only to the extent that,
in any such case as is referred to in clause (ii) or (iii), (A)
the Company Board concludes in good faith (after consultation
with its legal counsel and financial advisors) that such
Acquisition Proposal is reasonably capable of being completed,
taking into account all legal, financial, regulatory and other
aspects of the Acquisition Proposal and the Person making the
Acquisition Proposal, and would, if consummated, result in a
transaction more favorable to holders of Company Common Stock
than the transaction contemplated by this Agreement (any such
more favorable Acquisition Proposal being referred to in this
Agreement as a "SUPERIOR PROPOSAL"), (B) the Company Board
determines in good faith after consultation with legal counsel
that such action is necessary for it to act in a manner
consistent with its fiduciary duties under applicable law, (C)
prior to providing any information or data to any Person in
connection with a Superior Proposal by any such Person, the
Company Board receives from such Person an executed
confidentiality agreement on terms substantially similar to those
contained in the Flo-Sun Confidentiality Agreement and (D) prior
to providing any information or data to any Person or entering
into discussions or negotiations with any Person, the Company
Board notifies FSI immediately of such inquiries, proposals or
offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or
continued with, the Company, any Company Subsidiary or any of
their Representatives indicating, in connection with such notice,
the name of such Person and the terms and conditions of any
proposals or offers. The Company agrees that it will immediately
cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. The Company agrees that
it shall keep FSI informed, on a current basis, of the status and
terms of any such proposals or offers and the status of any such
discussions or negotiations.
(b) The Company agrees that it will take the necessary
steps to promptly inform each Company Subsidiary and each
Representative of the Company or any Company Subsidiary of the
obligations undertaken in this Section 6.05.
SECTION 6.06. Employee Benefits Matters. Annex A
hereto sets forth certain agreements among the parties hereto
with respect to employee benefits matters and is incorporated
herein by this reference.
SECTION 6.07. Directors' and Officers' Indemnification
and Insurance. (a) From and after the Effective Time, Newco
shall, and shall cause the Surviving Corporation to, indemnify
and hold harmless, each present and former director, officer,
employee and fiduciary of the Company and each Company Subsidiary
and each Person who served at the request of the Company or any
Company Subsidiary as a director, officer, trustee, partner,
fiduciary or employee of another corporation, partnership, joint
venture, trust, pension or other employee benefit plan or
enterprise (collectively, the "INDEMNIFIED PARTIES"), to the
fullest extent permitted under applicable Law, against all costs
and expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and settlement amounts paid
in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective
Time), whether civil, criminal, administrative or investigative,
arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee or fiduciary, whether
occurring before or after the Effective Time, including, without
limitation, the transactions contemplated by this Agreement (and
shall also advance, or cause to be advanced, expenses as incurred
to the fullest extent permitted under the DGCL, provided that the
Person to whom expenses are advanced provides the undertaking to
repay such advances contemplated by Section 145(e) of the DGCL).
Newco and Merger Sub agree that all rights to indemnification
existing in favor of the Indemnified Parties as provided in the
Company's By-Laws, as in effect as of the date hereof, with
respect to matters occurring through the Effective Time, 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.
(b) Without limiting the foregoing, in the event any
claim, action, suit, proceeding or investigation (a "CLAIM") is
brought against any Indemnified Party (whether arising before or
after the Effective Time) after the Effective Time (i) the
Indemnified Parties may retain counsel satisfactory to them and
reasonably satisfactory to Newco and the Surviving Corporation,
(ii) Newco and the Surviving Corporation shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, and (iii) Newco and
the Surviving Corporation will use all reasonable efforts to
assist in the vigorous defense of any such matter, provided that
neither Newco nor 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. Any
Indemnified Party wishing to claim indemnification under this
Section 6.07, upon learning of any such Claim, shall notify Newco
(but the failure so to notify Newco shall not relieve Newco from
any liability that Newco may have under this Section 6.07 except
to the extent such failure materially prejudices Newco), and
shall deliver to Newco the undertaking contemplated by Section
145(e) of the DGCL. The Indemnified Parties as a group may
retain only one law firm 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.
(c) For a period of six years after the Effective
Time, Newco shall cause to be maintained in effect the current
directors' and officers' liability insurance policies maintained
by the Company (provided that Newco may substitute therefor
policies of at least the same coverage containing terms and
conditions which are no less advantageous) with respect to claims
arising from facts or events that occurred prior to the Effective
Time; provided, however, that in no event shall Newco be required
to expend pursuant to this Section 6.07(c) more than an amount
per year equal to 200% of current annual premiums paid by the
Company for such insurance (which premiums the Company represents
and warrants to be approximately $260,000 per year in the
aggregate).
SECTION 6.08. Obligations of Newco and Merger Sub.
(a) FSI shall take all action necessary to cause Newco to
perform its obligations under this Agreement and to consummate
the Merger on the terms and subject to conditions set forth in
this Agreement.
(b) Newco shall take all action necessary to cause
Merger Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and subject to conditions set
forth in this Agreement.
SECTION 6.09. Affiliates' Letters. No later than 45
days from the date of this Agreement, the Company shall deliver
to Newco a list of names and addresses of those persons who were,
in the Company's reasonable judgment, on such date, affiliates
within the meaning of Rule 145 of the rules and regulations
promulgated under the Securities Act of the Company (each such
person being a "COMPANY AFFILIATE"). The Company shall provide
Newco with such information and documents as Newco shall
reasonably request for purposes of reviewing such list. The
Company shall use its reasonable efforts to deliver or cause to
be delivered to Newco, prior to the Effective Time, a letter
substantially in the form attached hereto as Exhibit 6.09,
executed by each of the Company Affiliates identified in the
foregoing list and of any person who shall have become a Company
Affiliate subsequent to the delivery of such list.
SECTION 6.10. Letters of Accountants. (a) The
Company shall use its reasonable efforts to cause to be delivered
to Newco a "comfort" letter of Price Waterhouse LLP or Xxxxxx
Xxxxxxxx LLP, the Company's independent public accountants, dated
and delivered the date on which the Registration Statement shall
become effective, and addressed to Newco, in the form, scope and
content contemplated by Statement on Auditing Standards No. 72,
as amended, issued by the American Institute of Certified Public
Accountants, Inc. ("SAS 72"), relating to the financial
statements and other financial data with respect to the Company
and its consolidated subsidiaries included or incorporated by
reference in the Proxy Statement and such other matters as may be
reasonably required by Newco, and based upon procedures carried
out to a specified date not earlier than five days prior to the
date thereof.
(b) Newco shall use its reasonable efforts to cause to
be delivered to the Company a "comfort letter" of KPMG, Newco's
independent public accountants, dated the date on which the
Registration Statement shall become effective, and addressed to
the Company, in the form, scope and content contemplated by SAS
72, relating to the financial statements and other financial data
with respect to Newco and the Flo-Sun Subsidiaries included in or
incorporated by reference in the Proxy Statement and such other
matters as may be reasonably required by the Company, and based
upon procedures carried out to a specified date not earlier than
five days prior to the date thereof.
SECTION 6.11. Listing Market. Newco shall promptly
prepare and submit to the NYSE or such other stock exchange or
market as the parties reasonably agree (the "LISTING MARKET") a
listing application covering the shares of Class A Common Stock
to be issued in the Merger and pursuant to Substitute Options,
and shall use its reasonable efforts to obtain, prior to the
Effective Time, approval for the listing of such Class A Common
Stock, subject to official notice to the Listing Market of
issuance, and the Company shall cooperate with Newco with respect
to such listing.
SECTION 6.12. Tax Matters. (a) The parties hereto
(i) shall take any and all actions, both before and after the
Effective Time, necessary for the Transactions to qualify as a
transfer of property governed by Section 351 of the Code and for
the Merger to qualify as a reorganization governed by Section 368
of the Code and (ii) shall not take any action, either before or
after the Effective Time, that would prevent or impede the
Transactions from being treated as a transfer of property
governed by Section 351 of the Code or that would prevent or
impede the Merger from being treated as a reorganization governed
by Section 368 of the Code.
(b) FSI shall be solely responsible for and shall
indemnify, defend and hold Newco harmless from and against any
and all tax liabilities of or attributable to FSL by reason of
FSL being severally liable for the tax attributable to income of
any tax affiliate (other than FSL or any of its subsidiaries)
pursuant to Treasury Regulation Section 1.1502-6 or analogous
state or local tax law with respect to any taxable period that
begins before and ends after the Closing Time Date (a "STRADDLE
PERIOD") and any and all taxable periods ending on or prior to
the Closing Time Date.
(c) For purposes of this Agreement, the amount of
taxes attributable to the Pre-Closing Portion of a Straddle
Period shall be determined based on an interim closing of the
books as of the close of the Closing Time Date, except that the
amount of any such taxes that are imposed on a periodic basis
shall be determined by reference to the relative number of days
in the Pre-Closing and Post-Closing portions of such Straddle
Period.
SECTION 6.13. Newco Governance. Annex B hereto sets
forth certain agreements among the parties hereto with respect to
corporate governance matters and is incorporated herein by this
reference.
SECTION 6.14. Company Rights Plan. The Company Board
shall take all further action (in addition to that described in
Section 3.20) necessary in order to render the Company Rights
inapplicable to the Merger and the other transactions
contemplated by this Agreement, to terminate the Company Rights
Agreement as of the Effective Time and to ensure that FSI, Newco
and Merger Sub will not have any obligations in connection with
the Rights Agreement or the Company Rights (including by
redeeming the Company Rights immediately prior to the Effective
Time or by amending the Company Rights Agreement). Except as
otherwise provided in this Section 6.14 and Section 3.20, the
Company shall not, prior to the Effective Time, redeem the
Company Rights or amend or terminate the Company Rights Agreement
unless (a) required to do so by order of a court of competent
jurisdiction or (b) required by the applicable fiduciary duties
of the Company Board to the stockholders of the Company (as
determined in good faith by the Company Board based upon the
advice of outside counsel).
SECTION 6.15. Restructuring Agreement. (a) Without
the prior written consent of the Company (such consent not to be
unreasonably withheld), FSI and Newco shall not consent to any
amendment of, or otherwise waive any benefit of, or agree to
terminate the Restructuring Agreement or otherwise modify or
amend the Restructuring Agreement in any respect, except the
amendment contemplated by Section 6.15(c).
(b) FSI and Newco agree to cooperate and consult with
the Company with respect to, and otherwise keep the Company
informed of developments relating to, satisfaction of the
conditions to consummation of the Restructuring. FSI and Newco
shall use their reasonable best efforts to consummate the
Restructuring on or prior to the Effective Time.
(c) Prior to the closing of the Restructuring, FSI and
Newco shall cause the Restructuring Agreement to be amended so
that (i) a Proportionate Change (as defined below) occurs, such
Proportionate Change to be in the amount necessary that the
maximum number of shares of Newco Common Stock that could be
issued in the Exchanges (assuming that all securities held by
Memorandum Recipients (as defined in the Information Memorandum)
that could be exchanged in the Exchanges, without regard to
whether Memorandum Recipients became signatories to the
Restructuring Agreement, are so exchanged in accordance with the
terms of the Restructuring Agreement) shall equal the result of
multiplying (A) the Company Common Stock Amount by (B) the
Ownership Ratio and (ii) the name of Newco shall be changed to a
name to be agreed upon by the parties hereto prior to the closing
of the Restructuring. A "PROPORTIONATE CHANGE" means a change to
(1) each of the ODH Exchange Ratio, the Okeelanta Exchange Ratio
and the FSL Exchange Ratio (each as defined in the Restructuring
Agreement) resulting from multiplying each such exchange ratio by
the same positive number (the "MULTIPLIER") and (2) the
authorized amount of shares of Class A Common Stock and Class B
Common Stock from the amounts set forth in Exhibit C to the
Restructuring Agreement as would result from multiplying each
such amount by the Multiplier.
(d) Prior to the closing of the Restructuring, Newco
shall amend its Certificate of Incorporation to read as set
forth in Exhibit C to the Restructuring Agreement, as amended
pursuant to Section 6.15(c) of this Agreement.
(e) Prior to the closing of the Restructuring, Newco
shall amend its By-Laws to read as set forth in Exhibit D to the
Restructuring Agreement, as amended pursuant to Section 6.15 of
this Agreement.
SECTION 6.16. Public Announcements. Unless otherwise
required by applicable Law or stock exchange requirements, FSI
and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with
respect to this Agreement, the Restructuring Agreement or any
Transaction and shall not issue any such press release or make
any such public statement prior to such consultation.
SECTION 6.17. Subsequent Financial Statements.
(a) Within 60 days following the end of each fiscal quarter
ending less than 61 days prior to the Effective Time, Newco shall
deliver to the Company copies of (i) the unaudited consolidated
balance sheets of each of the Restructured Companies as of the
end of such fiscal quarter and the related unaudited consolidated
statements of earnings and retained earnings and cash flows
(collectively, the "FLO-SUN SUBSEQUENT FINANCIAL STATEMENTS") and
(ii) copies of the unaudited combined consolidated balance sheets
of the Restructured Companies as of the end of such fiscal
quarter and the related unaudited combined consolidated
statements of earnings and retained earnings and cash flows
(collectively, the "NEWCO SUBSEQUENT FINANCIAL STATEMENTS"). The
Flo-Sun Subsequent Financial Statements (i) will be prepared from
the books of account and other financial records of the
respective Restructured Companies and their respective
consolidated subsidiaries, (ii) will be prepared in accordance
with U.S. GAAP (except for the omission of footnotes) applied
with respect to the respective Restructured Companies on a
consistent basis throughout the periods indicated and (iii) will
present fairly, in all material respects, the consolidated
financial position of the respective Restructured Companies as at
the respective dates thereof and the results of their respective
operations and their respective cash flows for the respective
periods indicated therein except as otherwise noted therein
(subject to normal and recurring year-end adjustments which shall
not be expected, individually or in the aggregate, to have a Flo-
Sun Material Adverse Effect and the omission of footnotes). The
Newco Subsequent Financial Statements (1) will be prepared from
the books of account and other financial records of the
Restructured Companies and their respective consolidated
subsidiaries, (2) will be prepared in accordance with U.S. GAAP
(except for the omission of footnotes) applied on a consistent
basis throughout the periods indicated and (3) will present
fairly, in all material respects, the combined consolidated
financial position of the Restructured Companies as at the
respective dates thereof and the results of their operations and
their cash flows for the respective periods indicated therein
except as otherwise noted therein (subject to normal and
recurring year-end adjustments which shall not be expected,
individually or in the aggregate, to have a Flo-Sun Material
Adverse Effect and the omission of footnotes).
(b) As soon as practicable but in any event not later
than 60 days after the date of this Agreement, Newco shall
deliver to the Company true and complete copies of the audited
combined consolidated balance sheets of the Restructured
Companies for each of the three fiscal years ended as of March
31, 1997, 1996 and 1995 and the related audited combined
consolidated statements of earnings and retained earnings and
cash flows, together with all related notes thereto, accompanied
by the reports thereon of KPMG (collectively, the "NEWCO AUDITED
FINANCIAL STATEMENTS"). The Newco Audited Financial Statements
(i) shall be prepared from the books of account and other
financial records of the respective Restructured Companies and
their respective consolidated subsidiaries, (ii) shall be
prepared in accordance with U.S. GAAP applied on a consistent
basis throughout the periods indicated (except as may be
indicated in the notes thereto) and (iii) shall present fairly,
in all material respects, the combined consolidated financial
position of the Restructured Companies as at the respective dates
thereof and the results of their operations and their cash flows
for the respective periods indicated therein except as otherwise
noted therein.
(c) As soon as practicable following filing, the
Company shall deliver to Newco a copy of each periodic report on
Forms 10-Q or 10-K, so filed prior to the Effective Time. The
financial statements contained therein are referred to as the
"COMPANY SUBSEQUENT FINANCIAL STATEMENTS". The Company
Subsequent Financial Statements (i) will be prepared from the
books of account and other financial records of the Company and
the consolidated Company Subsidiaries, (ii) will be prepared in
accordance with U.S. GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in
the notes thereto) and (iii) will present fairly, in all material
respects, the consolidated financial position of the Company and
the consolidated Company Subsidiaries as at the respective dates
thereof and the results of their operations and cash flows for
the respective periods indicated therein except as otherwise
noted therein (subject in the case of unaudited statements, to
normal and recurring year-end adjustments which shall not be
expected, individually or in the aggregate, to have a Company
Material Adverse Effect and the omission of footnotes).
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each
Party. The obligations of the Company, FSI, Newco and Merger Sub
to consummate the Merger are subject to the satisfaction of the
following conditions:
(a) this Agreement and the transactions contemplated
hereby shall have been approved and adopted by the
affirmative vote of the stockholders of the Company in
accordance with the DGCL and the Company's Certificate of
Incorporation;
(b) any waiting period (and any extension thereof)
applicable to the consummation of the Transactions under the
HSR Act shall have expired or been terminated;
(c) no Governmental Entity or court of competent
jurisdiction located or having jurisdiction in the United
States shall have enacted, issued, promulgated, enforced or
entered any Law, rule, regulation, executive order or Order
which is then in effect and has the effect of making the
Transactions illegal or otherwise prohibiting consummation
of the Transactions;
(d) the Restructuring shall have been consummated in
accordance with the terms of the Restructuring Agreement;
(e) Newco shall have amended its Certificate of
Incorporation to read as set forth in Exhibit C to the
Restructuring Agreement, as amended pursuant to
Section 6.15(c) of this Agreement;
(f) Newco shall have amended its By-Laws to read as
set forth in Exhibit D to the Restructuring Agreement, as
amended pursuant to Section 6.15(c) of this Agreement;
(g) the Registration Statement shall have been
declared effective, and no stop order suspending the
effectiveness of the Registration Statement shall be in
effect; and
(h) the shares of Class A Common Stock to be issued in
the Merger and pursuant to Substitute Options shall have
been authorized for listing on the Listing Market, subject
to official notice of issuance.
SECTION 7.02. Conditions to the Obligations of FSI,
Newco and Merger Sub. The obligations of FSI, Newco and Merger
Sub to consummate the Merger are subject to the satisfaction of
the following further conditions:
(a) each of the representations and warranties of the
Company set forth in this Agreement that is qualified as to
materiality shall be true and correct on and as of the
Closing Date as if made on and as of such date (other than
representations and warranties which address matters only as
of a certain date which shall be true and correct as of such
certain date), and each of the representations and
warranties of the Company that is not so qualified shall be
true and correct in all material respects on and as of the
Closing Date as if made on and as of such date (other than
representations and warranties which address matters only as
of a certain date which shall be true and correct in all
material respects as of such certain date), and FSI shall
have received a certificate of the chief financial officer
of the Company to such effect;
(b) the Company shall have performed or complied in
all material respects with all agreements and covenants
required by this Agreement to be performed or complied with
by it on or prior to the Effective Time and FSI, Newco and
Merger Sub shall have received a certificate of the chief
financial officer of the Company to that effect; and
(c) FSI, Newco and Merger Sub shall have received the
opinion of KPMG reasonably satisfactory to FSI, Newco and
Merger Sub, to the effect that for Federal income tax
purposes, the Transactions will be treated as a transfer of
property governed by Section 351 of the Code, which opinion
shall not have been withdrawn or modified in any material
respect.
SECTION 7.03. Conditions to the Obligations of the
Company. The obligations of the Company to consummate the Merger
are subject to the satisfaction of the following further
conditions:
(a) each of the representations and warranties of FSI,
Newco and Merger Sub set forth in this Agreement that is
qualified as to materiality shall be true and correct on and
as of the Closing Date as if made on and as of such date
(other than representations and warranties which address
matters only as of a certain date which shall be true and
correct as of such certain date), and each of the
representations and warranties of FSI, Newco and Merger Sub
that is not so qualified shall be true and correct in all
material respects on and as of the Closing Date as if made
on and as of such date (other than representations and
warranties which address matters only as of a certain date
which shall be true and correct in all material respects as
of such certain date), and the Company shall have received a
certificate of the chief financial officer of FSI to such
effect;
(b) FSI, Newco and Merger Sub shall have performed or
complied in all material respects with all agreements and
covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and
the Company shall have received a certificate of the chief
financial officer of FSI to that effect;
(c) the number of shares of Newco Common Stock
outstanding immediately prior to the Effective Time shall
equal the (i) product of (A) the Company Common Stock Amount
multiplied by (B) the Ownership Ratio less (ii) the number
of shares of Company Common Stock that would have been
issued in the Exchanges in respect of securities held by
Memorandum Recipients (without regard to whether Memorandum
Recipients became signatories to the Restructuring
Agreement) that could have been, but were not, exchanged in
the Exchanges; and
(d) the Company shall have received the opinion of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, in form and
substance reasonably satisfactory to the Company,
substantially to the effect that on the basis of facts,
representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated as a tax-free
transaction for federal income tax purposes and the holders
of Company Common Stock will not recognize gain on the
surrender of their shares of Company Common Stock solely in
exchange for shares of Class A Common Stock (in rendering
such opinion, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP may
rely exclusively without an independent investigation upon
representations contained in representation letters of the
Company and Newco substantially in the form of
Exhibit 7.03(c), dated on or about the date of such
opinion).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be
terminated and the Merger and the other Transactions may be
abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby, as follows:
(a) by mutual written consent of FSI and the Company;
(b) by either FSI or the Company, if the Effective
Time shall not have occurred on or before March 31, 1998
(the "TERMINATION DATE"); provided, however, that the right
to terminate this Agreement under this Section 8.01(b) shall
not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on
or before the Termination Date;
(c) by either FSI or the Company, if any Governmental
Entity (i) shall have issued an Order or taken any other
action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement,
and such Order or other action shall have become final and
nonappealable or (ii) shall have failed to issue an Order or
to take any other action necessary to fulfill the conditions
to the Closing of the Merger and such denial of a request to
issue such Order or take such other action shall have become
final and nonappealable;
(d) by FSI or the Company, if this Agreement and the
transactions contemplated hereby shall fail to receive the
requisite vote for approval and adoption at the Company
Stockholders' Meeting;
(e) by FSI, if (i) the Company Board withdraws,
modifies or changes its approval or recommendation of this
Agreement or the Merger in a manner adverse to FSI, Newco or
Merger Sub, (ii) the Company Board shall, at a time when
there is an Acquisition Proposal, fail to reaffirm such
approval or recommendation upon the reasonable request of
FSI, Newco and Merger Sub, (iii) the Company Board shall
approve or recommend any acquisition of the Company or a
material portion of its assets or any tender offer for
shares of its capital stock, in each case, other than by the
other parties hereto or an affiliate thereof; (iv) a tender
offer or exchange offer for 20% or more of the outstanding
shares of capital stock of the Company is commenced, and the
Company Board fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders
(including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its
stockholders); or (v) the Company Board shall resolve to
take any of the actions specified in clauses (i) through
(iv) of this Section 8.01(e);
(f) by the Company, upon five Business Days' prior
notice to FSI, Newco and Merger Sub, if, as a result of a
Superior Proposal received by the Company from a Person
other than a party to this Agreement or any of its
affiliates, the Company Board determines in good faith that
their fiduciary obligations under applicable Law require
that such Superior Proposal be accepted; provided, however,
that (i) the Company Board shall have concluded in good
faith, after considering applicable provisions of Law and
after giving effect to all concessions which may be offered
by FSI, Newco and Merger Sub pursuant to clause (ii) below,
on the basis of advice of counsel, that such action is
necessary for the Company Board to act in a manner
consistent with its fiduciary duties under applicable laws
and (ii) prior to any such termination, the Company shall
provide FSI, Newco and Merger Sub with an opportunity to
make such adjustments in the terms and conditions of this
Agreement as would enable the Company to proceed with the
transactions contemplated hereby; provided, however, that it
shall be a condition to termination by the Company pursuant
to this Section 8.01(f) that the Company shall have made the
payment of the Alternative Transaction Fee (as defined
below) to FSI required by Section 8.05(b);
(g) by FSI, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company
set forth in this Agreement, or if any representation or
warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Section 7.02(a)
and Section 7.02(b) would not be satisfied (a "TERMINATING
COMPANY BREACH"); provided, however, that, if such
Terminating Company Breach is curable by the Company and for
so long as the Company continues to exercise all reasonable
efforts to cure such Terminating Company Breach, FSI may not
terminate this Agreement under this Section 8.01(g); or
(h) by the Company, upon breach of any representation,
warranty, covenant or agreement on the part of FSI, Newco or
Merger Sub set forth in this Agreement, or if any
representation or warranty of Newco and Merger Sub shall
have become untrue, in either case such that the conditions
set forth in Section 7.03(a) and Section 7.03(b) would not
be satisfied ("TERMINATING FLO-SUN BREACH"); provided,
however, that, if such Terminating Flo-Sun Breach is curable
by FSI, Newco and Merger Sub and for so long as Newco and
Merger Sub continue to exercise all reasonable efforts to
cure such Terminating Flo-Sun Breach, the Company may not
terminate this Agreement under this Section 8.01(h).
SECTION 8.02. Effect of Termination. In the event of
termination of this Agreement pursuant to Section 8.01, this
Agreement shall forthwith become void and there shall be no
liability under this Agreement on the part of FSI, Newco, Merger
Sub or the Company or any of their respective officers or
directors and all rights and obligations of each party hereto
shall cease, except (a) as provided in Sections 8.05 and 9.01 and
(b) nothing herein shall relieve any party from liability for any
breach of this Agreement.
SECTION 8.03. Amendment. This Agreement may be
amended by the parties hereto by action taken by or on behalf of
their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after the approval and
adoption of this Agreement and the transactions contemplated
hereby by the stockholders of the Company, no amendment may be
made which would reduce the amount or change the type of
consideration into which each share of Company Common Stock shall
be converted upon consummation of the Merger. This Agreement may
not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 8.04. Waiver. At any time prior to the
Effective Time, any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 8.05. Expenses. (a) Except as set forth in
this Section 8.05, all expenses incurred in connection with this
Agreement and the Transactions shall be paid by the party
incurring such expenses, whether or not any Transaction is
consummated, except that the Company and Newco each shall pay
one-half of all Expenses (as defined below) relating to printing,
filing and mailing the Registration Statement and the Proxy
Statement and all SEC and other regulatory filing fees incurred
in connection with the Registration Statement and the Proxy
Statement. "EXPENSES" as used in this Agreement shall include
all reasonable out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Registration
Statement and the Proxy Statement, the solicitation of
stockholder approvals and all other matters related to the
closing of the Transactions.
(b) The Company and FSI agree that
(i) if FSI shall terminate this Agreement
pursuant to Section 8.01(e) and, at the time of the
occurrence of the circumstance permitting termination
pursuant to such Section, there shall exist an Acquisition
Proposal with respect to the Company or
(ii) if the Company shall terminate this
Agreement pursuant to Section 8.01(f) or
(iii) if (A) FSI or the Company shall
terminate this Agreement pursuant to Section 8.01(d) due to
the failure of the Company's stockholders to approve and
adopt this Agreement and (B) at the time of such failure to
so approve and adopt this Agreement there shall exist an
Acquisition Proposal and, within 12 months of the
termination of this Agreement, the Company enters into a
definitive agreement with any third party with respect to an
Acquisition Proposal,
then the Company shall pay to FSI an amount equal to the sum of
(w) $5,000,000 (the "ALTERNATIVE TRANSACTION FEE") and (x) all of
FSI's and Newco's Expenses up to an amount equal to $3,000,000
(the "EXPENSE AMOUNT"). The Company and FSI agree that, if FSI
shall terminate this Agreement pursuant to Section 8.01(e) in
circumstances in which the Alternative Transaction Fee is not
payable, then the Company shall pay to FSI an amount equal to the
sum of (y) $5,000,000 (the "TERMINATION FEE") and (z) all of
FSI's and Newco's Expenses up to an amount equal to the Expense
Amount.
(c) The Alternative Transaction Fee required to be
paid pursuant to Section 8.05(b)(ii) shall be made prior to, and
shall be a pre-condition to effectiveness of termination of this
Agreement pursuant to Section 8.01(f) and the Alternative
Transaction Fee required to be paid pursuant to Section
8.05(b)(iii) shall be made to FSI on the next Business Day after
a definitive agreement is entered into with a third party with
respect to an Acquisition Proposal. Any payment of an
Alternative Transaction Fee or a Termination Fee otherwise
required to be made pursuant to Section 8.05(b) shall be made to
FSI not later than two Business Days after termination of this
Agreement. Payment of Expenses pursuant to Section 8.05(b) shall
be made not later than two Business Days after delivery to the
Company by FSI of notice of demand for payment and an itemization
setting forth in reasonable detail all Expenses of FSI (which
itemization may be supplemented and updated from time to time by
FSI until the 60th day after FSI delivers such notice of demand
for payment). All payments under this Section 8.05 shall be made
by wire transfer of immediately available funds to an account
designated by FSI.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations,
Warranties and Agreements. The representations, warranties and
agreements in this Agreement shall terminate at the Effective
Time or upon the termination of this Agreement pursuant to
Section 8.01, as the case may be, except that the
representations, warranties and agreements set forth in
Articles I and II and Sections 6.06, 6.07, 6.12 and 6.13 and
Article IX shall survive the Effective Time for the respective
periods set forth in such sections or, if no such period is
specified, indefinitely and those set forth in Sections 3.19,
4.17, 6.03(b), 6.03(d), 8.02 and 8.05 and Article IX shall
survive termination for the respective periods set forth in such
sections or, if no such period is specified, indefinitely.
SECTION 9.02. Notices. (a) All notices and other
communications given or made pursuant to this Agreement shall be
in writing and shall be sent by an overnight courier service that
provides proof of receipt, mailed by registered or certified mail
(postage prepaid, return receipt requested) or telecopied to the
parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
if to the Company:
Savannah Foods & Industries, Inc.
Xxx Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Corporate Secretary
Telecopier No.: 000-000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
if to FSI, Newco or Merger Sub:
Flo-Sun Incorporated
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
(b) If this Agreement provides for a designated period
after a notice within which to perform an act, such period shall
commence on the date of receipt or refusal of the notice.
(c) If this Agreement requires the exercise of a right
by notice on or before a certain date or within a designated
period, such right shall be deemed exercised on the date of
delivery to the courier service, telecopying or mailing of the
notice pursuant to which such right is exercised.
(d) Notices of changes of address shall be effective
only upon receipt.
SECTION 9.03. Certain Definitions. For purposes of
this Agreement, the term:
(a) "AFFILIATE" of a specified Person means a Person
who directly or indirectly through one or more
intermediaries controls, is controlled by, or is under
common control with, such specified Person;
(b) "BENEFICIAL OWNER" with respect to any shares
means a Person who shall be deemed to be the beneficial
owner of such shares (i) which such Person or any of its
affiliates or associates (as such term is defined in Rule
12b-2 promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such Person or any of its
affiliates or associates has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of consideration rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or
(iii) which are beneficially owned, directly or indirectly,
by any other Persons with whom such Person or any of its
affiliates or associates or Person with whom such Person or
any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) "BUSINESS DAY" means any day on which the
principal offices of the SEC in Washington, D.C. are open to
accept filings, or, in the case of determining a date when
any payment is due, any day on which banks are not required
or authorized to close in the City of New York;
(d) "CONTROL" (including the terms "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means the possession, directly
or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "GOVERNMENTAL ENTITY" means any United States
(federal, state or local) or foreign government or
governmental, regulatory or administrative authority, agency
or commission;
(f) "KNOWLEDGE" or "KNOWN" means, with respect to any
matter in question, (i) in the case of the Company, if any
of the executive officers of the Company has actual
knowledge of such matter after making due inquiry of all
Persons who directly report to such executive officers and
(ii) in the case of FSI, if any of the executive officers of
FSI has actual knowledge of such matter after making due
inquiry of all executive officers of each Flo-Sun Subsidiary;
(g) "LAW" means any United States (federal, state or
local) or foreign law, statute, ordinance, rule, regulation,
order, judgment or decree;
(h) "ORDER" means any decree, judgment, injunction,
ruling or other order (whether temporary, preliminary or
permanent);
(i) "PERSON" means an individual, corporation,
partnership, limited partnership, syndicate, person
(including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association or
entity or government, political subdivision, agency or
instrumentality of a government; and
(j) "SUBSIDIARY" or "SUBSIDIARIES" of any Person means
any corporation, partnership, joint venture or other legal
entity of which such Person (either alone or through or
together with any other subsidiary) owns, directly or
indirectly, more than 50% of the stock or other equity
interests, the holders of which are generally entitled to
vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 9.04. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of Law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner
materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable
manner in order that the Transactions be consummated as
originally contemplated to the fullest extent possible.
SECTION 9.05. 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.
SECTION 9.06. Interpretation. (a) When a reference
is made in this Agreement to Sections, Exhibits or Schedules,
such reference shall be to a Section of or Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". The phrases "the
date of this Agreement" and "the date hereof" shall be deemed to
refer to July 14, 1997.
(b) The parties hereto acknowledge that certain
matters set forth in the Disclosure Schedule are included for
informational purposes only, notwithstanding the fact that,
because they do not rise above applicable materiality thresholds
or otherwise, they would not be required to be set forth therein
by the terms of this Agreement and that disclosure of such
matters shall not be taken as an admission by the Company that
such disclosure is required to be made under the terms of any
provision of this Agreement and in no event shall the disclosure
of such matters be deemed or interpreted to broaden or otherwise
amplify the representations and warranties contained in this
Agreement. Notwithstanding anything to the contrary in Articles
III and IV, each section of the Disclosure Schedule that includes
an asterisk in its heading is intended to be responsive to
statements in the correspondingly numbered representation or
warranty requesting a listing of specified matters and does not
list exceptions to the correspondingly numbered representation
and warranty.
SECTION 9.07. Specific Performance. The parties
hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 9.08. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the Laws of the
State of Delaware applicable to contracts executed in and to be
performed in that State. All actions and proceedings arising out
of or relating to this Agreement shall be heard and determined in
any Delaware state or federal court.
SECTION 9.09. Parties in Interest. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement, other than Article II (which may be enforced by
the beneficiaries thereof), Section 6.07 (which is intended to be
for the benefit of the persons covered thereby and may be
enforced by such persons) and Section 6.13 and Annex B, to the
extent provided therein.
SECTION 9.10. Counterparts. This Agreement may be
executed in two or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.11. Waiver of Jury Trial. Each of FSI,
Newco, the Company and Merger Sub hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of FSI, Newco, the
Company or Merger Sub in the negotiation, administration,
performance and enforcement thereof.
SECTION 9.12. Entire Agreement. This Agreement
(including the Annexes, the Exhibits, the Company Disclosure
Schedule and the Flo-Sun Disclosure Schedule) constitutes the
entire agreement among the parties with respect to the subject
matter hereof and, except for the Confidentiality Agreements,
supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the
subject matter hereof.
IN WITNESS WHEREOF, FSI, Newco, Merger Sub and the
Company have caused this Agreement to be executed as of the date
first written above by their respective officers thereunto duly
authorized.
FLO-SUN INCORPORATED
By /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
XSF HOLDINGS, INC.
By /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
DXE MERGER CORP.
By /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
SAVANNAH FOODS &
INDUSTRIES, INC.
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
EXHIBIT 6.09 TO THE
AGREEMENT AND PLAN OF MERGER
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[DATE]
[NEWCO]
[ADDRESS]
Ladies and Gentlemen:
I have been advised that as of the date of this letter
I may be deemed to be an "affiliate" of Savannah Foods &
Industries, Inc., a Delaware corporation (the "COMPANY"), as the
term "AFFILIATE" is defined for purposes of paragraphs (c) and
(d) of Rule 145 of the rules and regulations (the "RULES AND
REGULATIONS") of the Securities and Exchange Commission (the
"COMMISSION") under the Securities Act of 1933, as amended (the
"ACT"). Pursuant to the terms of the Agreement and Plan of
Merger dated as of July 14, 1997 (the "Merger Agreement") among
Flo-Sun Incorporated, a Florida corporation ("FSI"), XSF
Holdings, Inc., a Delaware corporation ("NEWCO"), DXE Merger
Corp., a Delaware corporation ("MERGER SUB"), and the Company,
Merger Sub will be merged with and into the Company (the
"MERGER"). Capitalized terms used in this letter without
definition shall have the meanings assigned to them in the Merger
Agreement.
As a result of the Merger, I may receive shares of
Class A common stock, par value $.01 per share, of Newco ("CLASS
A COMMON STOCK"). I would receive such Class A Common Stock in
exchange for shares (or upon exercise of options for shares)
owned by me of common stock, par value $.50 per share, of the
Company ("COMPANY COMMON STOCK").
1. I represent, warrant and covenant to Newco that in the
event I receive any Class A Common Stock as a result of the
Merger:
A. I shall not make any sale, transfer or other
disposition of the Class A Common Stock in violation of the Act
or the Rules and Regulations.
B. I have carefully read this letter and the Merger
Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to sell, transfer or
otherwise dispose of the Class A Common Stock, to the extent I
felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Class
A Common Stock to me pursuant to the Merger has been registered
with the Commission under the Act on a Registration Statement on
Form S-4. However, I have also been advised that, because at the
time the Merger is submitted for a vote of the stockholders of
the Company, (a) I may be deemed to be an affiliate of the
Company and (b) the distribution by me of the Class A Common
Stock has not been registered under the Act, I may not sell,
transfer or otherwise dispose of the Class A Common Stock issued
to me in the Merger unless (i) such sale, transfer or other
disposition is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the
Act, (ii) such sale, transfer or other disposition has been
registered under the Act or (iii) in the opinion of counsel
reasonably acceptable to Newco, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
D. I understand that Newco is under no obligation to
register the sale, transfer or other disposition of the Class A
Common Stock by me or on my behalf under the Act or, except as
provided in paragraph 2(A) below, to take any other action
necessary in order to make compliance with an exemption from such
registration available.
E. I understand that there will be placed on the
certificates for the Class A Common Stock issued to me, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
[____________], 1997 BETWEEN THE REGISTERED HOLDER
HEREOF AND NEWCO, A COPY OF WHICH AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICES OF NEWCO."
F. I understand that unless a sale or transfer is
made in conformity with the provisions of Rule 145, or pursuant
to a registration statement, Newco reserves the right to put the
following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
G. Execution of this letter should not be considered
an admission on my part that I am an "affiliate" of the Company
as described in the first paragraph of this letter, nor as a
waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter.
2. By Newco's acceptance of this letter, Newco hereby
agrees with me as follows:
A. For so long as and to the extent necessary to
permit me to sell the pursuant to Rule 145 and, to the extent
applicable, Rule 144 under the Act, Newco shall (a) use its
reasonable efforts to (i) file, on a timely basis, all reports
and data required to be filed with the Commission by it pursuant
to Section 13 of the Securities Exchange Act of 1934, as amended
(the "1934 ACT"), and (ii) furnish to me upon request a written
statement as to whether Newco has complied with such reporting
requirements during the 12 months preceding any proposed sale of
the Class A Common Stock by me under Rule 145, and (b) otherwise
use its reasonable efforts to permit such sales pursuant to Rule
145 and Rule 144. Newco hereby represents to me that it has
filed all reports required to be filed with the Commission under
Section 13 of the 1934 Act during the preceding 12 months.
B. It is understood and agreed that certificates with
the legends set forth in paragraphs E and F above will be
substituted by delivery of certificates without such legend if
(i) two years shall have elapsed from the date the undersigned
acquired the Class A Common Stock received in the Merger and the
provisions of Rule 145(d)(2) are then available to the
undersigned, (ii) three years shall have elapsed from the date
the undersigned acquired the Class A Common Stock received in the
Merger and the provisions of Rule 145(d)(3) are then applicable
to the undersigned, or (iii) Newco has received either an
opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to Newco, or a "no action" letter obtained by the
undersigned from the staff of the Commission, to the effect that
the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
Very truly yours,
___________________
Name:
Agreed and accepted this __day
of [____________], 1997, by
[NEWCO]
By:_____________________________
Name:
Title:
EXHIBIT 7.03(c)(i) TO THE
AGREEMENT AND PLAN OF MERGER
[SAVANNAH FOODS & INDUSTRIES, INC.]
[FORM OF OFFICER'S CERTIFICATE]
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of Savannah Foods & Industries, Inc. (the
"Company"), the undersigned, in connection with the opinion to be
delivered by you in connection with the Closing relating to the
Agreement and Plan of Merger (the "Agreement"; terms used but not
defined herein have the meaning ascribed to them in the
Agreement) dated as of July 14, 1997 among DXE Merger Corp.
("Merger Sub"), a direct wholly-owned subsidiary of XSF Holdings,
Inc. ("Parent"), Parent, Flo-Sun Incorporated and the Company,
hereby certifies that, to the extent the facts relate to the
Company to his knowledge and after due diligence with respect to
the Company, and to the extent otherwise without knowledge to the
contrary:
1. The fair market value of the Parent Common Stock
and other consideration received by each Company shareholder will
be approximately equal to the fair market value of the Company
Common Stock surrendered in the exchange.
2. There is no plan or intention by the shareholders
of the Company who own 5 percent or more of the Company Common
Stock and, to the best of the knowledge of the management of the
Company, there is no plan or intention on the part of the
remaining shareholders of the Company to sell, exchange, or
otherwise dispose of a number of shares of Parent Common Stock
received in the Merger that would reduce the Company
shareholders' ownership of Parent Common Stock to a number of
shares having a value, as of the date of the Merger, of less than
50 percent of the value of all of the formerly outstanding stock
of the Company as of the same date. For purposes of this
representation, shares of Company Common Stock exchanged for cash
or other property, surrendered by dissenters will be treated as
outstanding Company Common Stock on the date of the Merger.
Moreover, shares of Company Common Stock and shares of Parent
Common Stock held by the Company shareholders and otherwise sold,
redeemed, or disposed of prior to or subsequent to the Merger
will be considered in making this representation.
3. Following the Merger, the Company will hold at
least 90 percent of the fair market value of its net assets and
at least 70 percent of the fair market value of its gross assets
and at least 90 percent of the fair market value of Merger Sub's
net assets and at least 70 percent of the fair market value of
the Merger Sub's gross assets held immediately prior to the
Merger. For purposes of this representation, amounts paid by the
Company or Merger Sub to dissenters, amounts paid by the Company
or Merger Sub to shareholders who receive cash or other property,
amounts used by the Company or Merger Sub to pay reorganization
expenses, and all redemptions and distributions (except for
regular, normal dividends) made by the Company will be included
as assets of the Company or Merger Sub, respectively, immediately
prior to the Merger.
4. The Company has no plan or intention to issue
additional shares of its stock that would result in Parent losing
control of the Company within the meaning of Section 368(c) of
the Internal Revenue Code of 1986, as amended (the "Code").
5. Merger Sub will have no liabilities assumed by the
Company, and will not transfer to the Company any assets subject
to liabilities, in the Merger.
6. Parent, Merger Sub, the Company and the
shareholders of Company will pay their respective expenses, if
any, incurred in connection with the Merger.
7. There is no intercorporate indebtedness existing
between Parent and the Company or between Merger Sub and the
Company that was issued, acquired, or will be settled at a
discount.
8. In the Merger, shares of Company Common Stock
representing control of the Company, as defined in Section 368(c)
of the Code, will be exchanged solely for voting stock of Parent.
For purposes of this representation, shares of Company Common
Stock exchanged for cash or other property originating with
Parent will be treated as outstanding Company Common Stock on the
date of the Merger.
9. At the time of the Merger, the Company will not
have outstanding any warrants, options, convertible securities,
or any other type of right pursuant to which any person could
acquire stock in the Company that, if exercised or converted,
would affect Parent's acquisition or retention of control of the
Company, as defined in Section 368(c) of the Code.
10. The Company is not an investment company as
defined in Sections 368(a)(2)(f)(iii) and (iv) of the Code.
11. On the date of the Merger, the fair market value
of the assets of the Company will exceed the sum of its
liabilities, plus the amount of liabilities, if any, to which the
assets are subject.
12. The Company is not under the jurisdiction of a
court in a title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
13. None of the compensation received by any
shareholder-employees of the Company will be separate
consideration for, or allocable to, any of their shares of
Company Common Stock, none of the shares of Parent Common Stock
received by any shareholder-employees will be separate
consideration for, or allocable to, any employment agreement, and
the compensation paid to any shareholder-employees will be for
services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar
services.
I understand that Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, as special counsel to the Company, will rely on this
certificate in rendering its opinion concerning certain of the
United States federal income tax consequences of the Merger and
thereby commit to inform you if, for any reason, any of the
foregoing representations ceases to be true prior to the
Effective Time.
IN WITNESS WHEREOF, the Company has caused this
Officer's Certificate to be executed on this ____ day of _____,
1997 by its officer hereunto duly authorized.
SAVANNAH FOODS & INDUSTRIES, INC.
By:_______________________________
Name:
Title:
EXHIBIT 7.03(c)(ii) TO THE
AGREEMENT AND PLAN OF MERGER
[XSF HOLDINGS, INC.]
[FORM OF OFFICER'S CERTIFICATE]
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of XSF Holdings, Inc. ("Parent"), the
undersigned, in connection with the opinion to be delivered by
you in connection with the Closing relating to the Agreement and
Plan of Merger (the "Agreement"; terms used but not defined
herein have the meaning ascribed to them in the Agreement) dated
as of July 14, 1997 among Flo-Sun Incorporated, DXE Merger Corp.
("Merger Sub"), a direct wholly-owned subsidiary of Parent,
Parent and Savannah Foods & Industries, Inc. (the "Company"),
hereby certifies that, to the extent the facts relate to the
Parent to his knowledge and after due diligence with respect to
the Parent, and to the extent otherwise without knowledge to the
contrary:
1. The fair market value of the Parent Common Stock
and other consideration received by each Company shareholder will
be approximately equal to the fair market value of the Company
Common Stock surrendered in the exchange.
2. Prior to the Merger, Parent will be in control of
Merger Sub within the meaning of Section 368(c) of the Internal
Revenue Code of 1986, as amended (the "Code").
3. Parent has no plan or intention to reacquire any
of its stock issued in the Merger.
4. Parent has no plan or intention to liquidate the
Company, to merge the Company with or into another corporation,
to sell or otherwise dispose of the stock of the Company except
for transfers of stock to corporations controlled by Parent, or
to cause the Company to sell or otherwise dispose of any of its
assets or of any of the assets acquired from Merger Sub, except
for dispositions made in the ordinary course of business or
transfers of assets to a corporation controlled by the Company.
5. Merger Sub will have no liabilities assumed by the
Company, and will not transfer to the Company any assets subject
to liabilities, in the Merger.
6. Following the Merger, the Company will continue
its historic business or use a significant portion of its
historic business assets in a business.
7. Parent, Merger Sub, the Company and the
shareholders of the Company will pay their respective expenses,
if any, incurred in connection with the Merger.
8. There is no intercorporate indebtedness existing
between Parent and the Company or between Merger Sub and the
Company that was issued, acquired, or will be settled at a
discount.
9. In the Merger, shares of Company Common Stock
representing control of the Company, as defined in Section 368(c)
of the Code, will be exchanged solely for voting stock of Parent.
For purposes of this representation, shares of Company Common
Stock exchanged for cash or other property originating with
Parent will be treated as outstanding Company Common Stock on the
date of the Merger.
10. At the time of the Merger, the Company will not
have outstanding any warrants, options, convertible securities,
or any other type of right pursuant to which any person could
acquire stock in the Company that, if exercised or converted,
would affect Parent's acquisition or retention of control of the
Company, as defined in Section 368(c) of the Code.
11. Parent does not own, nor has it owned during the
past five years, any shares of the stock of the Company.
12. Neither the Parent nor Merger Sub is an investment
company as defined in Sections 368(a)(2)(f)(iii) and (iv) of the
Code.
13. None of the compensation received by any
shareholder-employees of the Company will be separate
consideration for, or allocable to, any of their shares of
Company Common Stock; none of the shares of Parent Common Stock
received by any shareholder-employees will be separate
consideration for, or allocable to, any employment agreement; and
the compensation paid to any shareholder-employees will be for
services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar
services.
I understand that Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, as special counsel to the Company, will rely on this
certificate in rendering its opinion concerning certain of the
United States federal income tax consequences of the Merger and
thereby commit to inform you if, for any reason, any of the
foregoing representations ceases to be true prior to the
Effective Time.
IN WITNESS WHEREOF, the Parent has caused this
Officer's Certificate to be executed on behalf of Parent and
Merger Sub on this ____ day of , 1997 by its officer
hereunto duly authorized.
XSF HOLDINGS, INC.
By:________________________
Name:
Title:
ANNEX A TO THE
AGREEMENT AND PLAN OF MERGER
AGREEMENTS RESPECTING PLANS AND OTHER EMPLOYEE BENEFIT MATTERS
1. (a) For a period of one year immediately
following the Closing Date, Newco shall provide or cause the
Surviving Corporation to provide all employees of the Company who
continue to be employed by Newco or the Surviving Corporation or
any of their respective affiliates as of the Effective Time
("CONTINUING EMPLOYEES") with compensation and benefits on terms
which are, in the aggregate, not substantially less favorable
than those provided to the Continuing Employees immediately prior
to the date hereof.
(b) Newco further agrees that, for purposes of
all employee benefit plans of Newco or the Surviving Corporation
or any of their respective affiliates in which Continuing
Employees participate from and after the Effective Time and under
which an employee's benefit depends, in whole or in part, on
length of service, credit will be given to Continuing Employees
for service previously credited with the Company or its
subsidiaries prior to the Effective Time to the extent that such
crediting of service does not result in duplication of benefits.
(c) Newco shall cause each employee benefit plan
in which Continuing Employees participate from and after the
Effective Time to waive (i) any preexisting condition restriction
which was waived under the terms of any analogous Company plan
prior to the Effective Time and (ii) any waiting period
limitation which would otherwise be applicable to a Continuing
Employee on or after the Effective Time to the extent the
Continuing Employee had satisfied any similar waiting period
under an analogous Company plan prior to the Effective Time.
2. FSI and Newco acknowledge that the consummation of
the Merger shall constitute a "Change in Control" for purposes of
the Company Stock Option Plan.
3. (a) Concurrently with the execution of this
Agreement, Newco and Messrs. Xxxxxxx Xxxxxx, Xxxx Xxxx Xxxxxx and
Xxxxxxx X. Xxxxxxx III have entered into employment agreements in
substantially the forms previously agreed by the parties hereto.
(b) Newco intends to enter into employment
agreements as soon as practicable following the date hereof with
the Continuing Employees listed, and subject to the terms set
forth, in the letter previously delivered by Newco to the
Company.
ANNEX B TO THE
AGREEMENT AND PLAN OF MERGER
CORPORATE GOVERNANCE MATTERS
1. Board of Directors
(a) (i) Immediately following the Effective Time and
subject to applicable Law and the rules of the Listing Market,
FSI shall cause the Newco Board to consist of 12 directors and
shall cause four persons designated by the Company (the "INITIAL
COMPANY DESIGNEES") to be members of the Newco Board, such
Initial Company Designees to be (A) selected by the Company Board
from among its members on the date of this Agreement or (B)
persons selected by the Company Board and reasonably satisfactory
to FSI and Newco.
(ii) Immediately following the Effective Time until the
fifth anniversary of the Effective Time (the "FIFTH ANNIVERSARY")
and subject to applicable Law and the rules of the Listing
Market, FSI and Newco shall take all actions within their power
to cause four Company Designees to be members of the Newco Board
and to cause the Newco Board to continue to consist of 12
directors and FSI shall vote all shares of Newco Voting Stock (as
defined below) held by it, and shall cause to be voted all shares
of Newco Voting Stock held by any other FSI Group Member (as
defined below), for the election of at least such number of
Company Designees up for election as shall, when added to Company
Designees then serving but not up for election, equal four.
"COMPANY DESIGNEE" means a member of the Company Board who is an
Initial Company Designee or who became a member of the Newco
Board pursuant to the provisions of clause (iii) of this Section
1(a). "NEWCO VOTING STOCK" means capital stock of Newco entitled
to vote in the election of directors. An "FSI GROUP MEMBER"
means FSI, any Person that is a subsidiary of FSI and any Person
that is controlled by FSI, other than: (A) Newco, (B)
subsidiaries of Newco and (C) Persons controlled by Newco.
(iii) From the Effective Time until the Fifth
Anniversary and subject to applicable Law and the rules of the
Listing Market, if any Company Designee ceases to be a member of
the Newco Board, FSI and Newco shall take all actions within
their power to cause a replacement chosen by the then remaining
Company Designees and reasonably acceptable to the Newco Board to
become a member of the Newco Board and FSI shall vote all shares
of Newco Voting Stock held by it, and shall cause to be voted all
shares of Newco Common Stock held by any other FSI Group Member,
for the election of such replacement when such replacement comes
up for election by the holders of Newco Common Stock.
(b) (i) From the Effective Time until the Fifth
Anniversary and subject to applicable Law and the rules of the
Listing Market, FSI and Newco shall take all actions within their
power (A) to cause each standing committee of the Newco Board to
include not less than one of the Company Designees as a member of
the committee, such Company Designee to be selected by the Newco
Board and (B) if so requested by a majority of the Company
Designees, to cause any other committee of the Newco Board to
include not less than one of the Company Designees as a member of
the Committee.
(ii) After the Fifth Anniversary and subject to
applicable Law and the rules of the Listing Market, FSI and Newco
shall take all actions within their power (A) to cause each
standing committee of the Newco Board to include not less than
one Independent Director (as defined below) as a member of the
committee, such Independent Director to be selected by the Newco
Board and (B) if so requested by a majority of the Independent
Directors, to cause any other committee of the Newco Board to
include not less than one Independent Director as a member of the
Committee.
(c) After the second anniversary of the Effective Time (the
"SECOND ANNIVERSARY") and subject to applicable Law and the rules
of the Listing Market, FSI and Newco shall take all actions
within their power to cause four members of the Newco Board to be
Independent Directors and FSI shall vote all shares of Newco
Voting Stock held by it, and shall cause to be voted all shares
of Newco Voting Stock held by any other FSI Group Member, for the
election of such number of Independent Directors up for election
as shall, when added to Independent Directors then serving but
not up for election, equal four.
(d) An "INDEPENDENT DIRECTOR" means any member of the Newco
Board (i) who (A) is not a Family Member (as defined below), (B)
is not and has not been in the previous five years a director of
any FSI Group Member or any Family Controlled Entity (as defined
below) or a trustee of any Family Trust (as defined below), (C)
is not and has not been in the previous five years an officer or
employee of any FSI Group Member, any Family Controlled Entity,
the Company, Newco or any Restructured Company, (D) does not have
any Significant Business Relationship with any Family Member, any
Family Controlled Entity, any Family Trust, any FSI Group Member,
any director or officer of an FSI Group Member or of a Family
Controlled Entity, any trustee of a Family Trust, or Newco,
except, in the case of Newco, as a director or as a holder of
securities issued by Newco, and (E) is not a parent, child,
brother, sister or spouse of any Person who would not be an
Independent Director under the foregoing clauses of this sentence
or (ii) who receives Independent Director Approval to be
designated as an "Independent Director," which designation may be
effective for such purpose or purposes and during such periods of
time as specified by the Independent Directors approving such
designation. Company Designees who are also Independent
Directors shall be counted as Company Designees for purposes of
the provisions relating to Company Designees in this Annex B and
as Independent Directors for purposes of provisions relating to
Independent Directors in this Annex B; provided, however, that
Xxxx Xxxxxxxxx'x service on the Board of Directors of Okeelanta
and on the Board of Directors of FSI prior to the Effective Time
shall not be taken into account in determining whether he is an
Independent Director if he resigns such directorships prior to
the Effective Time. As used in this Annex B, (x) the terms
"FAMILY MEMBER," "FAMILY TRUST" and "PERMITTED TRANSFEREE" shall
have the respective meanings given those terms in Exhibit C to
the Restructuring Agreement and (y) the term "FAMILY CONTROLLED
ENTITY" shall have the meaning given that term in Exhibit C to
the Restructuring Agreement, except that Newco and its
subsidaries shall be deemed not to be Family Controlled Entities
for purposes of this Annex B.
(e) A "SIGNIFICANT BUSINESS RELATIONSHIP" with a Person
means (i) a business relationship involving any transaction, or
series of related transactions, with such Person in the twelve
months prior to determination, in which the consideration
received by the member of the Newco Board represented 4% or more
of such member's income during such twelve months or 4% or more
of such member's net worth or which is otherwise financially
significant to the member of the Newco Board; or (ii) the
ownership, by a member of the Newco Board, of equity securities
issued by such Person having a value in excess of 4% or more of
such member's net worth or which is otherwise financially
significant to the member of the Newco Board.
(f) In the event any determination or interpretation is
required with respect to the application of the provisions of
Sections 2(d) and (e) of this Annex B to a particular member of
the Newco Board, such determination or interpretation shall
require Independent Director Approval (with the member as to whom
such determination is being made not participating in the making
of such determination or interpretation).
2. Business Opportunities
(a) Except with respect to operations in the Dominican
Republic and Cuba, FSI shall use all reasonable efforts to
provide Newco with the opportunity to participate, on a
commercially reasonable basis, in any Significant Business
Opportunity (as defined below) that becomes available to any FSI
Group Member (as defined below) after the Effective Time, except
to the extent any such participation would result in a violation
of Law or of any material agreements by which Newco is bound.
(b) With respect to operations in Cuba, FSI shall use all
reasonable efforts to provide Newco with the opportunity to
participate, on a commercially reasonable basis, in any
Significant Business Opportunity that becomes available to any
FSI Group Member after the Effective Time, except (i) with
respect to Sugar Assets that were part of, or become available in
compensation for, Sugar Assets in Cuba owned or controlled,
directly or indirectly, by members (living or deceased) of the
families of the controlling stockholders of FSI at any time prior
to the Effective Time and (ii) to the extent that any such
participation would result in a violation of Law or of any
material agreement by which Newco is bound.
(c) FSI and Newco shall, in connection with all matters
relating to Significant Business Opportunities and Significant
Investments (as defined below), each act promptly, reasonably and
in good faith in all dealings with each other.
(d) A "SIGNIFICANT BUSINESS OPPORTUNITY" means an
opportunity to participate in a Significant Investment (as
defined below). A "SIGNIFICANT INVESTMENT" means (i) a
transaction or series of related transactions involving the
purchase, license, lease or use of Sugar Assets having an
aggregate fair market value in excess of $1,000,000 (as estimated
by FSI in good faith), other than (A) transactions in Sugar
Products (as defined below) in the ordinary course of the then
existing businesses of FSI and its affiliates and (B)
transactions between FSI and its subsidiaries or (ii) an
investment in excess of $1,000,000 (whether paid in cash or in
assets or securities having a fair market value (as estimated by
FSI in good faith) equal to such amount) in any Person in the
business of owning or controlling Sugar Assets (whether directly
or indirectly). "SUGAR ASSETS" are assets used in or in
connection with farming, milling, refining, processing,
distribution or sale of any of the following: sugar cane, sugar
beets, sugar and products made from or in connection with the
refining or processing of sugar cane, sugar beets or sugar
(collectively, "SUGAR PRODUCTS").
3. Related Party Transactions
(a) Significant Transactions between Newco or any
subsidiary of Newco, on the one hand, and any FSI Person (as
defined below), on the other hand, including any such Significant
Transactions in connection with a Significant Investment, shall
be subject to the approval of the Newco Board. The Newco Board
shall, after consulting with outside counsel, implement
appropriate procedures to review and consider such Significant
Transactions and may, in its discretion, delegate its duties
under this Section 3(a) to one or more appropriate committees of
the Newco Board.
(b) A "SIGNIFICANT TRANSACTION" means any transaction or
series of related transactions involving consideration paid or to
be paid in excess of $60,000 in any one twelve month period or
$250,000 in the aggregate, other than transactions in connection
with an employment arrangement approved by or stock options
granted by the Compensation Committee (or other committee
performing the functions of a compensation committee).
(c) An "FSI PERSON" means any Person that is (i) a Family
Member, a Family Controlled Entity or a Family Trust, (ii) an FSI
Group Member, (iii) a director or officer of an FSI Group Member,
or (iv) a parent, child, brother, sister or spouse of any Person
described in clause (iii) of this Section 3(c).
4. Business Combination Transactions With Third Parties
(a) Newco shall not, and FSI agrees not to cause Newco to,
become a party to any Business Combination Transaction not
subject to Section 5 of this Annex B except such a Business
Combination Transaction in which all of the then outstanding
shares of Class A Common Stock and Class B Common Stock are
entitled to be transferred, exchanged or otherwise disposed of
for, or receive, the same consideration; provided, however, that
to the extent that such consideration consists of voting
securities, the voting securities to be received by holders of
then outstanding shares of Class B Common Stock may differ from
the voting securities to be received by holders of then
outstanding shares of Class A Common Stock to the same extent
(and only to the same extent) that Class B Common Stock differs
from Class A Common Stock; provided, further, that the issuer of
such securities continues to be bound by provisions substantially
the same as this Annex B for the remaining periods the respective
provisions hereof would have been applicable if such Business
Combination Transaction had not occurred.
(b) A "BUSINESS COMBINATION TRANSACTION" means a
reorganization, merger or consolidation involving Newco or a sale
or other disposition of all or substantially all assets of Newco.
5. Certain Purchases and Business Combinations
(a) Subject to Sections 5(b) and 5(c) below, after the
Effective Time, (i) FSI shall not, and shall not permit any FSI
Group Member to, enter into a Business Combination Transaction
with Newco or any subsidiary of Newco and Newco shall not enter
into a Business Combination Transaction with any FSI Person,
(ii) FSI shall not, and shall not permit any FSI Group Member to,
purchase or otherwise acquire, any capital stock of Newco, any
warrants or options to purchase capital stock of Newco, any
securities convertible into capital stock of Newco or any other
rights to acquire capital stock of Newco and (iii) Newco shall
not and FSI shall not, and FSI shall not permit any FSI Group
Member to, cause Newco to, purchase or otherwise acquire any
outstanding shares of Newco's capital stock.
(b) Newco and FSI Group Members may engage in any
transaction otherwise prohibited by Section 5(a)(i) if:
(i) (A) (1) such transaction receives Independent Director
Approval (as defined below) and (2) if such Independent Director
Approval occurs prior to the Second Anniversary, such transaction
receives Company Designee Approval (as defined below) in advance
of its consummation and (3) the Newco Board shall have received
an opinion from a nationally recognized investment bank, selected
by the Newco Board with Independent Director Approval, that the
per share consideration to be received by the holders of Newco
Common Stock (other than FSI Persons) is fair, from a financial
point of view, to such holders and would be fair, from a
financial point of view, to the holders of all of the outstanding
shares of Newco Common Stock if all such shares were being sold
in an arms-length transaction in which the holders of such shares
all received such consideration, or (B) (1) a proposal to approve
such transaction receives, in advance of the consummation of such
transaction, Independent Stockholder Approval (as defined below)
and (2) if such Independent Stockholder Approval occurs prior to
the Second Anniversary, such transaction receives Company
Designee Approval and (3) the Newco Board shall have received an
opinion from a nationally recognized investment bank selected by
the Newco Board with Independent Director Approval that the per
share consideration to be received by the holders of Newco Common
Stock (other than FSI Persons) is fair, from a financial point of
view, to such holders and would be fair, from a financial point
of view, to the holders of all of the outstanding shares of Newco
Common Stock if all such shares were being sold in an arms-length
transaction in which the holders of such shares all received such
consideration; or (ii) in the case of a Business Combination
between FSI and Newco in which the only consideration is shares
of capital stock of Newco or FSI or a new company that would own
Newco and FSI (except for cash paid in lieu of fractional shares)
and in which Newco, FSI or such new company, as the case may be,
agrees to be bound by provisions substantially the same as this
Annex B for the remaining periods the respective provisions
hereof would have been applicable if such Business Combination
had not occurred, (A) it occurs at a time when the only material
assets of FSI are its holdings of shares of capital stock of
Newco and FSI has no material liabilities and (B) the
stockholders of Newco other than FSI shall own, immediately after
the consummation of such Business Combination, (1) the same or a
greater aggregate percentage of the outstanding shares of the
capital stock of Newco, FSI or such new company, as the case may
be, as such stockholders owned, in the aggregate, of Newco
immediately prior to the consummation of such Business
Combination and (2) the same or a greater aggregate percentage of
the voting power of the outstanding shares of capital stock of
Newco, FSI or such new company, as the case may be, as such
stockholders owned, in the aggregate, of Newco immediately prior
to the consummation of such Business Combination. "INDEPENDENT
DIRECTOR APPROVAL" means the approval of a majority of the
members of the Newco Board who are Independent Directors, except
any Independent Directors who, after receiving notice of the
meeting at which such approval is to be sought setting forth the
matters to be acted on, abstain or do not vote with respect to
the matter for which their approval is sought. "COMPANY DESIGNEE
APPROVAL" means the approval of a majority of the members of the
Newco Board who are Company Designees other than any such Company
Designee who is or was an officer or employee of Newco, except
any Company Designees who, after receiving notice of the meeting
at which such approval is to be sought setting forth the matters
to be acted on, abstain or do not vote with respect to the matter
for which their approval is sought. "INDEPENDENT STOCKHOLDER
APPROVAL" of a proposal means that such proposal received the
affirmative vote of a majority of the votes cast with respect to
such proposal by holders of Newco Voting Stock, voting together
as a single class, excluding all votes cast with respect to
shares of Newco Voting Stock held by FSI Persons and all votes
cast with respect to shares of Class B Common Stock.
(c) FSI Group Members may engage in any transaction
otherwise prohibited by Section 5(a)(ii) and Newco may engage in
any transaction otherwise prohibited by Section 5(a)(iii) if:
(i) such transaction (A) receives Independent Director Approval
and (B) if such Independent Director Approval occurs prior to the
Second Anniversary, receives Company Designee Approval or (ii)
such transaction would not result in (A) the acquisition, after
the Effective Time, by FSI Persons of beneficial ownership of
more than 5% of the outstanding capital stock of Newco (with any
acquisition by FSI Persons of any warrants, options and other
rights to purchase capital stock of Newco being counted as an
acquisition of the shares for which such options, warrants or
other rights are exercisable and with any acquisition by FSI
Persons of any securitiy convertible into capital stock of Newco
being counted as an acquisition of the shares into which such
security is convertible) in the 12-month period preceding the
consummation of such transaction or (B) the beneficial ownership
by FSI Persons of more than 70% of the shares of Newco Common
Stock outstanding on the date of consummation of such
transaction, after giving effect to the exercise of all warrants,
options and other rights to purchase capital stock of Newco
beneficially owned by FSI Persons and the conversion of all
securities convertible into capital stock of Newco beneficially
owned by FSI Persons, regardless of whether convertible or
exercisable at the time of such consummation or (C) the
beneficial ownership by Family Members, Family Controlled
Entities and Family Trusts of more than 60% of the shares of
Newco Common Stock outstanding on the date of consummation of
such transaction, after giving effect to the exercise of all
warrants, options and other rights to purchase capital stock of
Newco beneficially owned by Family Members, Family Controlled
Entities and Family Trusts and the conversion of all securities
convertible into capital stock of Newco beneficially owned by
such Persons, regardless of whether convertible or exercisable at
the time of such consummation.
6. Sales of Shares of Class B Common Stock
(a) FSI shall not and shall cause the FSI Group Members not
to transfer, exchange or otherwise dispose of any shares of Class
B Common Stock except (i) to a Permitted Transferee that agrees,
in writing, to be bound by the restrictions on transfer
applicable to FSI pursuant to this Section 6, the voting
obligations of FSI pursuant to Section 1 of this Annex B, and, to
the extent it is within the power of such Permitted Transferee to
meet such obligations, the obligations of FSI pursuant to the
other provisions of this Annex B, (ii) by FSI or a Family
Controlled Entity to its stockholders, provided that each such
stockholder agrees, in writing, to be bound by (A) the
restrictions on transfer applicable to FSI pursuant to this
Section 6, (B) the voting obligations of FSI pursuant to Section
1 of this Annex B, and (C) if such stockholder is a Permitted
Transferee, to the extent it is within the power of such
Permitted Transferee to meet such obligations, the obligations of
FSI pursuant to the other provisions of this Annex B or (iii) in
a transaction or series of related transactions permitted under
Section 4 of this Annex B or (iv) after the third anniversary of
the Effective Time, in any transaction that would, pursuant to
Newco's Certificate of Incorporation, require or result in the
conversion of the shares of Class B Common Stock to Class A
Common Stock (including any such transactions pursuant to a
public offering and any such transactions permitted under Rule
144 promulgated under the Exchange Act or any successor rule);
provided, however, that no such transactions or series of related
transactions pursuant to clause (iv) of this Section 6(a) with a
single Person or a related group of Persons shall involve the
transfer of more than 10% of outstanding shares of Newco Common
Stock.
(b) After the third anniversary of the Effective Time, FSI
shall have registration rights with respect to shares of Class A
Common Stock as provided for in Section 4.12 of the Restructuring
Agreement and FSI and any Permitted Transferee shall each be
entitled to assign such registration rights in whole or in part,
to any Permitted Transferee.
7. Parties in Interest; Survival; Amendments to this Annex B
Notwithstanding anything to the contrary contained in this
Agreement: (a) the parties to this Agreement agree that the
holders of shares of Newco Common Stock, other than FSI Persons,
shall be entitled to the benefits of the covenants contained in
this Annex B; (b) the provisions of this Annex B shall survive
until (i) the 90th consecutive day that FSI Persons have
beneficially owned, in the aggregate, shares of Newco Voting
Stock having less than 15% of the voting power of the then
outstanding Newco Voting Stock after (A) giving effect to the
exercise of all warrants, options and other rights to purchase
capital stock of Newco beneficially owned by FSI Persons and the
conversion of all securities convertible into capital stock of
Newco beneficially owned by FSI Persons, regardless of whether
convertible or exercisable at the time of such consummation and
(B) attributing beneficial ownership to FSI of any shares of
Class B Common Stock held by Permitted Transferees (as defined in
the form of Amended and Restated Certificate of Incorporation of
Newco attached as Exhibit C to the Restructuring Agreement) who
are not FSI Persons and (ii) if earlier, the time set forth in
the respective provisions; and (c) any amendment of any provision
of this Annex B shall, in addition to any approval required
pursuant to Section 8.03 of this Agreement, require Independent
Stockholder Approval and, if such amendment occurs before the
Second Anniversary, shall also require Company Designee Approval.
8. Miscellaneous
(a) FSI will not take any action that would cause Newco to
violate the covenants and agreements of Newco contained in this
Annex B.
(b) Nothing contained in this Annex B (including, but not
limited to, the provisions of Section 6(a)(ii)) shall be deemed
to create any right in any Person to hold Class B Common Stock
who would not be permitted to do so pursuant to the Certificate
of Incorporation of Newco.
